KESC Starts New 220 Megawatts Plant
Karachi Electric Supply Company (KESC) recently inaugurated its new 220 MW (megawatt) Combined Cycle Power Plant located in Korangi. The plant, owned and operated by the KESC, has been completed with an investment of Rs 16 billion. It consists of four latest, state-of-the-art high-efficiency gas turbines, one steam turbine and other plant equipmentNote that Abraj Capital assumed management control of KESC in late 2008. The current deficit of electricity in the system stands at around 3,500 megawatts. The KESC has started pre-construction activities for a new 560 megawatts combined cycle power plant at Bin Qasim which would be functional in one and half year
All the big shots, Prime Minister, Sindh Governor Dr Ishratul Ebad Khan, Chief Minister Qaim Ali Shah, Education Minister Mazharul Haq and others were also present on this occasion. The Prime Minister said that a mix of moderate generation capacity projects like Duber Khwar, Jinnah Low Head Mianwali, Nandipur, 3 Chashnupp, 121 Mega Watts Allai Khwar, Bhikki Power Plant and Liberty Power Tech are some of the prominent power projects in thermal, nuclear and hydro sectors.
Prime Minister said that theft of electricity and non-payment of dues are the biggest reasons of bringing this sector under crisis. “It is a vicious cycle which affects investment in the system and needs to be broken through building better coordination among all stakeholders in the city of Karachi,” he added.
“During the calendar year 2009, we ensured commercial operations of Attock, Atlas and Nishat power generation plants adding 581 megawatts to our national grid”, the PM said, adding that the Cabinet in its meeting of 27th January, 2010 had approved eight RPPs of 1156 megawatts which are at advance stages of implementation and are being keenly pursued for attaining commercial operations within the existing calendar year.
He said he hoped that when the new IPPs and RPPs would become operational and add 1737 megawatts of power to the national grid, it would provide considerable relief to the people of Pakistan. He urged the KESC to become a role model, attracting more investment in power sector and further enhance its generation capacity to meet the power demand of Karachi city.
He said that the current deficit of electricity in the system stands at around 3,500 megawatts. “We are working on a fast track basis to get the required power deficit bridged and today’s occasion is a proof of the fulfilment of our promise to the people of Pakistan”, he added.
The KESC has started pre-construction activities for a new 560 megawatts combined cycle power plant at Bin Qasim which would be functional in one and half year, he said, and added that Karachi which was famous for being city of lights would be free from load shedding when this project becomes operational.
He said that the scope of the government’s economic management should be focused on implementation of such policies which catalyse the economic activities of the private sector. The government alone cannot take upon itself the responsibility of economic development. “We believe in private sector resource mobilisation, which is evident from the 1994 Power Policy, and the subsequent policies, that have primarily evolved around this policy”, he added.
“We all are aware that the mere opening up of the economy is not sufficient to attract foreign investors unless the policy framework is fully supported by institutional arrangements. We have to further transform the investment culture, both at the official and the private level so that it is not only investor-friendly but perceived as such”, he said.
He suggested that KESC may enhance its partnership potential with PPIB, Pepco, Wapda, Aedb and Nepra to attain optimum generation capacity which finally does not require Pepco to supply power to KESC. He congratulated the KESC management and Abraaj Group on launching the combined cycle power plant and said that he would urge them to continue further investment in Pakistan.
Minister for Water and Power Pervaiz Ashraf said that the government is committed to resolve the issue of shortage of power in the country. He appreciated the management of KESC for setting up new power generation plants that would help to overcome this serious issue.
CEO of KESC Tabish Gauhar said that KESC is one of the world’s largest integrated utility companies, responsible for generation, transmission and distribution of electricity to 2.2 million customers spread over an area of 6500 square kilometres covering the entire city of Karachi (with 18 million people) and stretching all the way to Uthal, Bela and Vinder in Balochistan and Gadap and Gharo in Sindh. It was incorporated nearly 100 years ago in 1913 and was privatised in November 2005.
He said that over last 18 months a record equity of $280 million had gone into KESC, including $206 million from Abraj Capital and the rest from the government of Pakistan proportionate to its 25.5 percent stake in the company. Another $220 million of equity will be injected over the next couple of years, taking the total to $500 million over a period of 3 years.
Abraj Capital assumed management control of KESC in late 2008. He said that over the last 18 months, 450 MW of additional generation capacity had been added to the network (including this 220 MW Korangi Power Plant). Another 560 MW Power Plant is under construction at Bin Qasim to be commissioned by 2012 and at least 3 MoUs worth 1000MW have been signed for coal based power plants, including one using indigenous coal from Thar.
He said on the transmission 6 new grid stations have been added to the network and another 3 are expected to be energised before the year-end. “In distribution, we have completed the first two phases of the 4-phase model town project to augment and strengthen our LT network by adding 500 new PMTs, 140 new feeders etc by the summer of this year”, he said, and added: “We have also upgraded our call centre to 350 agents, launched a series of new integrated business centres to provide one-stop solution to our customers, and also initiated a system of weekly Open Kutcharies for our customers across the 18 towns of Karachi”.
He said that over the past several months the KESC has been able to provide uninterrupted power to the major industrial zones of Karachi such as Korangi and Site and to various sensitive installations such as the Karachi Water and Sewerage Board, whilst following a fixed three hours load shedding schedule for the residential and commercial customers on working days (except on Sundays and public holidays when there is no load shedding at all).
“Due to widespread theft of power and non-payment of electricity bills, we are simply unable to provide power and best in-class service to all our customers”, he said, and added that the actions and inactions of the significant minority adversely affect the vast majority of the customers who are law abiding and pay their bills on time, in the form of load shedding and breakdowns.
He said that affordability is another issue for low salaried class and requested the government to seriously think about the pace at which tariff subsidies are being withdrawn and to also revisit the pricing regime for furnace oil, which has increased from Rs 5000/ton to Rs 50,000/ton over 10 years and natural gas, which has increased nearly 4 times over the some period.
Likewise, the issue of Circular Debt plaguing the entire energy sector is affecting them, too. “We have over Rs 50 billon in receivables from various government and public sector entities and, in turn, approximately Rs 35 billion in current dues to various suppliers including Wapda and SSGC.
The issue needs to be resolved as a matter of priority. He said that over the last 18 months, it had paid over Rs 100 billion to various suppliers including Wapda, SSGC, PSO, Gul Ahmed, Tapal, and Kannup. He said that gas supply is another major concern, as the KESC received at least 40 percent less gas than committed in this winter. “We will require an additional 130-150 mmcfd of gas for the new 560 mw power plant due to be commissioned in 2012″, he said.
