The Story of K-electric (KESC)


K ELECTRIC (KE FORMALLY KNOWN AS KESC)

SOME FACTS

· KE has been spreading disinformation on the issue of power supply from NTDC that, if 650 MW is not supplied load shedding will increase. Following is factual position:

o Total Installed Generation Capacity in KE = 2419 MW

o De-rated installed Capacity = 2093 MW

o IPPs = 363 MW

o Total Available Generation Capacity = 2456 MW

o As per PPA, KE may draw from NTDC upto = 650 MW

(Agreement Expired on January 25, 2015)

o Load in KE Area = 1700 MW

Nadeem Malik Live

http://www.awaztoday.tv/News-Talk-Shows/76869/Nadeem-Malik-Live-26th-January-2015.aspx

Nadeem Malik Live - 26th January 2015

o It is very clear that even if 650 MW are not supplied KE has enough generation capacity to have zero load shedding in KE operational area. In fact KE does not operate their own plants as their profit margins reduce. They only run those plants which give them better return and do not consider the load shedding in the city. KE is only interested in 650 MW to continue to have the benefit given by earlier GoP concessions. There will not be any load shedding increase in Karachi area. KE since has enough generation to have zero load shedding in Karachi. It is a matter of fact that KE has not been able to control their losses and remove illegal connections as per their commitments in IA.

· Another part of this disinformation is that if 650 MW is not supplied electricity prices will go up for Karachi. Following is factual position;

o This is an incorrect perception. Karachi is considered at par with other DISCOs under ECC decision. The tariff for Karachi consumer is the same as for rest of the country. The difference of consumer tariff for KE and other DISCOs is picked up by GoP as subsidy. This amounts to about Rs 70 billion per annum for the consumer of KE, which is highest amongst all DISCOs. KE has created these misperceptions about the load shedding and electricity being expensive deliberately to cover up their own inefficiencies by these misperceptions and disinformation to masses. The GoP as per a uniform policy supplies electricity to all consumers across the country at the same rate and that includes Karachi.

· KE was supposed to be self-sufficient in their power generation during the term of PPA (5 years). In fact they are but they want to continue with the concessions given to them at the start of the privatization, and earn more profits. Their claims that Karachi will be affected by the 650 MW non-supply is based on false grounds.

· KE owes NTDC Rs 32 billion, SSGC about 26 billion, PSO about 3 billion.

· Some other important facts:

– The process was finalized on Nov 14, 2005

– GoP transferred 71.5% shares with management control to consortium of Hassan Associates, Saudi Al-Jomiah Group and Kuwait’s National Industries Group (NIG)

– GoP retained 25.66% shares

– 2.84% shares were held by others

– Abraaj Comes in

– Al-Jomaih group sold its share to Dubai based private equity firm Abraaj Capital in October 2008

– The amended agreement (AA) to IA was signed on April 13, 2009

– As per AA, a power purchase agreement (PPA) was signed with KECS by NTDC on January 26, 2010 for power purchase up to 650 MW.

– Current Shareholding

– GoP 24.36%

– Abraaj (KES Power) 69.20%

– IFC and ADB 5.05%

– Others 1.39%

– GoP took up all of the following facilitations

– The Customers who must be supplied Power by the Company under all times without interruption, total of 252.

– Company may be directed by GoP to subsidize the rates of electricity and GoP will pay subsidy amount. KE gets highest subsidy when compared with other discos

– KE was declared a DISCO

– NTDC Electricity Supply max of 650 MW to KE through a PPA for 5 years

– Revised AA was signed on April 13, 2009

– KE Commitments was to make Investment for improvement of generation, transmission and distribution systems and Bring about reduction inline losses and improvement in its transmission and distribution system and be self-

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