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March 6, 2021

Govt approves additional 150 megawatt to KE

Business

March 6, 2021

KARACHI: The government approved transmission of 150 megawatts of wind power from grid to K-Electric to help the utility reduce shortfall in demand and supply ahead of the summer peak season, it was learnt on Friday.

National Electric Power Regulatory Authority (Nepra) accorded final approval of the tripartite power purchase agreement (TPPA) between K-Electric, National Transmission and Dispatch Company (NTDC) and Central Power Purchasing Agency (CPPA) for supply of 150 MW from grid to K-Electric.

The additional 150 MW is supplied through three separate wind power plants: 50 MW Tenaga, 50 MW Zephyr and 50 MW Hydro China Dawood plants.

This arrangement is completely separate and will have no relation whatsoever to existing agreement for supply of 650 MW by NTDC to K-Electric.

The detailed methodology for non-project missed volume (NPMV) allocation and payment mechanism will be agreed separately between K-Electric, CPPA and NTDC as a part of operating procedures to be developed by the operating committee under clause 2.4 of TPPA. Nepra has advised the three parties to finalize the same at the earliest.

“K-Electric remains committed in bringing Karachi to a power surplus position by 2022 through a series of planned investments across the power value chain. These investments, which would be subject to regulatory approvals, will allow K-Electric to benefit consumers and the economy at large,” the company said in an analyst briefing.

The upcoming 900 MW re-gasified liquefied natural gas-based Bin Qasim Power Station (BQPS-III) is proceeding as per expected timelines and the first unit of 450 MW is scheduled to come online by May this year.

The power plant will also help improve K-Electric’s generation fleet efficiency from 38 percent in FY2020 to 48 percent in FY2023. Apart from this, 350 MW of renewable energy projects are also in the pipeline.

Work on the 220 kilo-volt Dhabeji grid and transmission lines started and finalization of contractual arrangements for the off-take of additional 1,400 MW from the grid (including 450 MW from existing interconnections) is in advanced stages.

The company is hopeful NTDC will complete necessary rehabilitation of the 220 KV Dhabeji grid along with implementation of ‘cross trip’ scheme by March of 2021.

“Conclusion of the interconnection agreement with NTDC and power purchase agreement with CPPA-G for 2,050 MW (existing 650 MW existing plus additional 1,400 MW) is crucial for off-take of additional power,” Aamir Ghaziani, CFO at K-Electric said.

As of December 2020, K-Electric’s net receivables from various federal and provincial entities stood at around Rs77 billion on principal basis, which continue to put a strain on the company’s cash-flow position.

Significant delays in approval of tariff adjustments, write-off claims and investments approval remain a key concern for the power utility as they lead to significant accumulation of working capital requirement as well as create regulatory uncertainty.