Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
March 30, 2018

K-Electric falls short of 500MW on gas supply paucity


March 30, 2018

ISLAMABAD: K-Electric (KE), the country’s only vertically-integrated power utility, has to pull the plug on its 500 megawatts of electricity production due to gas supply paucity, officials said on Thursday, although Sui Southern Gas Company (SSGC) denied of fuel shortage.

The officials said currently KE is receiving approximately 90 million metric cubic feet/day (mmcfd) of gas from Sui Southern Gas Company as against 276 mmcfd allocated by the Economic Coordination Committee of the cabinet. The gas requirement is estimated at 166 mmcfd.

“Due to a reduced gas supply, 500MW gas- fired plants are not operational, creating an additional shortfall in the system,” an official told The News.

KE produces electricity from its own generation units with an installed capacity of 2,267MW in addition to receive another 1,152MW from different other sources.

Officials said as temperature rises, the demand touches 2,600MW and power shortfall is expected to increase. Customers in residential and commercial areas will experience a temporary outage of one hour whereas industrial customers will experience outage for four hours a day on an average, they added.

KE spokesperson said the utility has not skipped a single payment to SSGC in the past five years. “We have made payments close to Rs10 billion since 2014 to bring outstanding principal amount to Rs13.7 billion.”

An SSGC’s spokesman rejected the notion of reducing gas supply to KE.

“Gas supply to K-Electric has neither been reduced nor increased,” the spokesman said. “We are receiving low gas supply from the fields and since domestic demand has substantially increased the company has to cater to it on top priority, as per the government’s gas load management plan.”

The spokesman said SSGC is supplying gas on priority basis to all those customers with whom it has contractual agreements. “Despite we have no gas supply agreement with K-Electric and its mounting outstanding dues, we continue to provide reasonable amount of gas to the power company in the larger interest of the people of Karachi,” the SSGC’s official added.

KE official said the issue of late payment surcharge (LPS) and markup has been sub judice for the past several years. The SSGC quoted dues date back to the days of KE’s transition from Al Jomaih Group of Saudi Arab to Dubai-based Abraaj Group in 2005. In 2015, the power ministry attempted to resolve the issue of disputed LPS. Main dispute is on interest and LPS on principal amount, according to officials having knowledge of the issue.

Officials said KE is defaulter of Rs78 billion and the SSGC wants an agreement on a comprehensive pay plan along with acknowledgement of LPS. Principal amounts and dues are less than Rs14 billion, they added.

KE contended that if LPS and markup are being demanded on the company's payables then the formula should also apply on receivables. The matter of interest and LPS remains a pending court decision.

Industrial officials expressed concern over power shortfall. “We ramp up productions ahead of Ramazan as industries work slowly during the month so this is a very critical time for us,” an official said. “Industrial sector is expected to face losses in billions of rupees if the problem persists.”

The officials said there seems to be no sign of power crisis letting up with SSGC bent on recovering its disputed amounts.

“This is not a new power play by SSGC. In 2017, it demanded a signed guarantee before signing a gas supply agreement for a 100MW power plant in Nooriabad despite threats from CM Sindh Murad Ali Shah to disconnect gas pipeline and storm its head office in Karachi,” a senior official said. “At the end, the brunt will be borne by the people of Karachi and its businesses who will suffer from power cuts.”

Industrial officials said gas supply cut at this juncture when the KE’s sale process is under consideration is very critical. SSGC feared that if KE is sold the new management may not honour the previous dues.

Topstory minus plus

Opinion minus plus

Newspost minus plus

Editorial minus plus

National minus plus

World minus plus

Sports minus plus

Business minus plus

Karachi minus plus

Lahore minus plus

Islamabad minus plus

Peshawar minus plus