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September 22, 2020

K-Electric plans Rs250bln investment

Business

September 22, 2020

KARACHI: K-Electric Limited (KE) planned Rs250 billion of investment to increase its power generation capacity to 4,511 megawatts in the next three years, its official said on Monday.

KE’s Chief Finance Officer Muhammad Aamir said the company has invested around Rs335 billion since 2005. The power generation capacity has been increased by 1,057MW to 3,202MW presently, while transmission and distribution network has also been improved, Aamir said during a public hearing conducted by the National Electric Power Regulatory Authority (Nepra).

On the directives of the Supreme Court of Pakistan, Nepra is holding public hearings on the matter of authority proposed modification in the distribution licence of KE to ascertain whether or not exclusive service rights to KE are in the public interest.

KE is contesting to maintain its exclusivity in the service area. KE’s distribution licence is valid till 2023.

The improvements in generation fleet reliability and availability, including efficiency improvements, were passed on to consumers along with significant improvements at consumer level, which includes reduction in load-shedding with over 75 percent of the feeders being load-shedding exempted.

“KE has been reinvesting its profits since 2012, and its performance is far better than other distribution companies in the country,” Aamir said. Nepra Chairman Tauseef Farooqui said the representations received by the authority from KE’s consumers have presented a different situation.

“If your service has improved then why the number of complaints has increased,” Farooqui said. “Despite having exclusivity for the last 15 years, KE has not been able to overcome the power outages, which ranged from three hours/day to nine hours/day. There are still very high-losses areas, high-losses areas and medium-losses areas in your territory. How would you solve the problems in the next three years.”

The KE officials had no answer to the question asked by Nepra chairman whether KE has introduced pre-paid meters, or is planning to do so.

Businessmen Group Chairman Siraj Kassam Teli opposed the exclusivity of K-Electric in its service area and urged the authority to open the market for other players, which would create a competitive market and improvement in service.

“Private sector should be allowed to conduct business of distribution and sale of electric power to consumers in Karachi,” Teli said. “Exclusivity granted to a single company to undertake sale and distribution of electric power is tantamount to creation of monopoly on a vital source of energy.”

Teli said the businessmen have already deliberated on investment in power distribution. “Many local foreign parties would be interested to venture into this field, once the market is opened.”

Sohail Tabba of Yunus Brothers Group (YBG) said KE has no competition and their balance sheet is good, which was why the

power utility is least interested in improving the service. “Private businesses are already in generation business, and they would definitely come into electricity sale and distribution if provided the opportunity,” Tabba said.

A representative of SITE Association of Trade and Industry called for unbundling of generation, transmission and distribution business of K-Electric. K-Electric Chief Executive Officer Moonis Alvi said the company is not against healthy competition, but there should be a level playing field.

“If allowed the new entrants should have the same obligations as KE,” Alvi said. Countering the claims of KE on 75 percent of the feeders being load-shedding exempted, Ameer Jamat-e-Islami Karachi Hafiz Naeem-ur-Rehman