KE submits additional Rs140bln investment plan to NEPRA

KARACHI: K-Electric has submitted a plan to the National Electric Power Regulatory Authority (NEPRA) for investing Rs140 billion in the city’s power sector in addition to the previously approved Rs299 billion for the tariff control period of 2017-2023, a statement said.

If the NEPRA approves the submission, it would bring K-Electric’s total investment plan to Rs440 billion for the period. Per the Multi Year Tariff 2017-2023 notified in May 2019, the utility was allowed an investment plan of Rs299 billion.

K-Electric CEO Moonis Alvi CEO said, “The additional investment is critical to meet the requirements of Karachi, which continues to expand rapidly compared to other urban centres. This additional investment is also required to improve the resilience of KE’s system against inclement weather and the impact of climate change, and is therefore critical to ensure continued supply of safe and

reliable power to our 3.2 million customers.”

Karachi’s power situation becomes worse during summer, as unannounced load shedding increases. In June, 70 percent of the city had suffered from blackout for several hours following major breakdowns.

K-Electric has already invested over Rs255 billion as of 2021 since the start of the tariff control period. The utility company’s 900MW RLNG-based power plant at a cost of around $650 million is expected to complete by the end of the calendar year 2021.

“Our investment plan has also been revisited and enhanced in line with the evolving global economy, which has been affected by several factors including a global pandemic,” the CEO added.

The company was working with the federal government to build 500kV and 220kV interconnection at key locations, where KE’s network connects with the national grid would enable the utility to off-take up to 2,050MW additional power.

Further, coupled with rapid installation of aerial bundled cables that have resulted in curtailing theft, K-Electric also plans to expand deployment of automated meter readers on its network, which improves visibility of the network and provides greater transparency.

The combined impact of these potential investments in generation, transmission and distribution would enable load-shedding exemption from around 78 percent of the city to more than 90 percent by 2023, the statement said.

Since the tariff determined by NEPRA is a cost-plus tariff, the power company’s investment plans are limited to those costs allowed as recoverable in the tariff. “Allowance of these plans have no direct impact on the customer end tariff,” it said.

“On the other hand, if excluded, this could impact KE’s ability to seek funding for these projects thereby adversely affecting the customers, particularly new connections as well as affect safety and reliability upgradation projects,” the statement clarified.

K-Electric has invested over $3.8 billion since privatisation, which has resulted in reduced transmission and distribution losses.

According to NEPRA’s 2019-20 Performance Evaluation Report, K-Electric reported 19.73 percent T&D losses against a target of 17.76 percent, showing a breach of 1.97 percent.