Once again, Karachi is in the grip of electricity load-shedding for the past few weeks. The massive power outages in the extremely hot weather conditions have made the life of millions of residents miserable. Duration of load-shedding has been over six hours in 61 percent area of the city, including industries, which is exempted from load-shedding, and up to eleven hours in other areas on a daily basis. The large-scale load-shedding has crippled civic life in the metropolis as well as industrial, trade and commercial activities, with a multiplier effect on the national economy.
Traders and some political parties have agitated against the excessive load-shedding and poor performance of K-Electric, to no avail. Prime Minister Imran Khan has taken serious notice of the situation, and high-level meetings are being held to devise strategy to overcome the problem. Meanwhile, the federal government has provided additional 200MW electricity to the K-Electric system, in addition to 350MW already being made available. This has eased the load-shedding hours but not provided full relief to the residents, industrialists and traders in Karachi. The situation may become grave in coming monsoon season, when planned and forced outages in K-Electric system are frequent, long and large in number, historically.
The utility company has failed to provide uninterrupted power supplies, though NEPRA has repeatedly directed K-Electric to resolve the issue on a permanent basis. K-Electric is undergoing a power deficit and unable to meet consumers’ growing demand for electricity. Currently, the utility company has an installed power generation capacity of 2,267MW of its own power stations, whereas it purchases 690MW from IPPs and other small power generating companies in the region. This works out to total installed generation capacity of 2,957MW, which is translated into some 2,660MW available, reliable and dependable power generation capacity in K-Electric system. In addition, NTDC supplies 650MW to K-Electric.
However, the peak demand in the K-Electric licensed area is 3,604MW (2020), or even more with a seven percent growth in annual demand. This causes load management or load-shedding, and in some cases overloading and shutting down of the system. Also, some of the power plants are not being run at full capacity, reportedly owing to inadequate gas supply and the inability of K-Electric to use costly furnace oil. Currently, the NTDC system has surplus power due to constraints of its transmission capacity, and the government has indicated to increase its supplies to K-Electric from 650MW to 2,000MW. But, ironically, the K-Electric transmission and distribution network is not capable of evacuation of additional power supplies.
K-Electric’s power generation through its own sources has improved only marginally in the post-privatisation period that is 2005 onwards. In spite of the company’s repeated claims about having made significant addition to the installed generation capacity, practically there has been no major capacity enhancement. Rather, cumulative installed capacity of its own power stations has comparatively reduced as the old and inefficient power plants were replaced with efficient units. Thus, it currently has a cumulative installed capacity of 2,267MW compared to 2,359MW in 2014-15 that remained virtually static from 2012-13, and slightly higher than 1,946MW in 2009-10.
Poor performance and myopic planning of K-Electric can be analysed from the fact that peak demand in 2006-07 in the company’s licensed area was registered at 2,349MW. Since then, most of the consumers have switched over to diesel generators and solar power systems, and the current power demand is comparatively much low.
On the transmission and distribution side as well, K-Electric has not made the required investment, though in recent years, there has been expansion and modernisation of K-Electric transmission and distribution system. It now consists of 365km long 220kV transmission lines, along 11 grid stations, and managed through 6,951MVA transformation capacity, and 801km long 132kV transmission lines with 68 grid stations and 4,580MVA transformation capacities. This is still inadequate, unreliable, and not keeping pace with the transmission and delivery requirements of present times.
According to its contract with the government, the buyers were to invest Rs2 billion within five years to augment the transmission and distribution system. This did not happen.
It is painfully evident that the federal government has remained indifferent and insensitive to the woes of K-Electric consumers. Obviously, there is major laxity on the part of the federal government, which has allowed the present pathetic state of affairs at K-Electric. It has 24 percent shareholding in the company, and has its nominated three directors on K-Electric’s board, out of total ten till recently. Now, the board consists of 13 directors, and government nominees are only two—Additional Secretary Finance and Additional Secretary Power. Surprisingly, the third government nominee is a businessman and not a government official.
One wonders, why the government-nominated directors have persistently failed to safeguard the interest of the government, which has vested interest in the company as shareholder, and that of the consumers in general. But, then a hefty sum of Rs10 million being paid annually by the company as remuneration to its directors to attend board meetings perhaps explains.
It is interesting that K-Electric has reported a net profit of Rs6.872 billion for the six months of the financial year 2020-21. But, shockingly, by March 31, 2021, K-Electric’s total liabilities were around Rs569 billion, whereas it was privatised in 2005 with zero liabilities. Ironically, its payables only to state-controlled entities like the NTDC, PSO and Sui Southern Gas (SSGC) were over Rs116 billion by end-March. Still, the government continues to favour the company by supplying power through NTDC at subsidised rates, and practically on long-term credit.
Meanwhile, there have been renewed demands by some industrial circles and civil society representatives that the federal government take over control of the privatised utility company in order to provide some relief to its consumers who have long suffered at the hands of the company. However, the government has not moved in this direction. Special Assistant to the Prime Minister on Power Tabish Gauhar has recently indicated that the government is considering unbundling the power utility company into generation, transmission and distribution companies. This is not likely to achieve the objective as experienced in case of unbundling of the then WAPDA.
The writer is retired chairman of the State Engineering Corporation