Govt asks K-Electric to renegotiate agreement

ISLAMABAD: The federal government on Wednesday asked the management of K-Electric to renegotiate the power purchase agreement with new terms and conditions as the last agreement got expired in January 2015 thus having no legal binding on the Centre to continuously provide 650 MW to the company.
Chairman Nepra Tariq Sadozai testified before a panel of the Senate that the KE had violated different aspects of its agreement as its net power generation stood at 350 MW against commitment of 1,000 MW and it did not invest in distribution and transmission system that resulted into continuous tripping and forced loadshedding during Ramadan.
Under the revised agreement with the KE in 2008-9, the federal government had waived off Rs31 billion, and provided cheap electricity of 650MW for five years but the company did not enhance its capacity to generate 1,000 MWs.
“The KE should come out of ‘political mode’ and sit with us to sign the new agreement with fresh terms and conditions for getting electricity from the national grids. The KE management is in a denial mode and the way forward is to handle crisis-like situation in a professional manner,” Federal Secretary Water, Power Younus Dagha told the Senate Standing Committee on Finance and Revenues which met under chairmanship of Senator Saleem Mandviwalla here at the Parliament House on Wednesday.
He said that the management of the KE was exploiting the situation on political grounds knowingly that the Centre could not disconnect 650 MW all of a sudden in order to avoid problems for the residents of Karachi.
He said that there was a need to renegotiate the new agreement with the KE as he would assure that the government could not disconnect the additional supply all of a sudden but there was a need to put in place new terms and conditions.
When chairman of the Senate panel inquired about the solution, the Ministry of Water and Power and the KE management agreed to hold meeting on August 12, 2015 and come up with solid plan to improve the situation.
Senator Nasreen Jalil of MQM raised the issue of government’s nominated members’ participation into the board of directors meeting of KE. Zargham Khan, Joint Secretary Ministry of Water & Power, replied that he had attended only two meetings of the BoD. Asked why he did not attend the meetings to represent government’s view, he said that he remained busy in other official engagements.
The government argued before the committee that the losses of KE stood at 25 percent. They said that the KE possessed the capacity of 2,600 to 2,700 MW and there should have zero loadshedding but its system could not absorb load especially in those areas where it did not invest to improve its system.
The chief financial officer (CFO) of KE told the meeting that despite reminders, only one of three members of the BoD had participated in four meetings.Senator Saeed Ghani of PPP raised the issue that the power outages had mainly hit wellers heatwave during Ramazan. The KE denied having any role for causing deaths in Karachi and said that people living on roads died in unprecedented heatwave and it had nothing to do with the loadshedding.
The Senate Committee asked NAB to devise a mechanism for sharing 21 folders having details of investigation into alleged privatisation scam of Muslim Commercial Bank (MCB).Senator Saeed Ghani severely grilled DG NAB during the meeting saying that he could prove in this meeting that the NAB did not want to investigate this scam. The DG NAB denied these allegations and said that they never took pressures of any influential in any case.
The Senate panel cleared Demutualisation Amendment Bill 2015 by allowing four-year relaxations to brokers to enjoy their monopoly when the SECP and Law Ministry tabled vetted draft of amendments by inserting that the existing brokers could enjoy monopoly for four year after enactment of this law which had become effective in 2012 so their monopoly would end by 2016. Earlier the SECP had proposed extension of two years which was going to end by December 2017.