ISLAMABAD

It has been over a month now that the National Power Regulatory Authority held K-Electric responsible for the hours-long blackouts, but the government has yet to initiate any action against the company. Ministry of Water and Power bosses are sitting today with the distribution company high-ups to negotiate the new contract .
Nepra’s final report has been compiled and sent to Prime Minister’s office for approval. The detailed report not only contains all the irregularities found in the contracts of K-Electric after privitisation but it also comprehensively covers the causes which resulted in hours-long laodshedding in Karachi recently, said a source.
Along with report all possible legal actions the authority can take are also mentioned in the summary and now it is up to Prime Minister that what action he recommends to the authority, he said.
The report, which has yet to be made public, was compiled after the reports that up to 20 hours of loadshedding in Karachi during the month of June, added to the death toll mainly caused by heat wave.
According to the final investigation report Nepra sent to PM office, the company was sold at a price of Rs15.8 billion and the government invested Rs13.6 billion in it including Rs10 billion after privatisation.
The 2005 agreement was amended in 2008, which gave major concessions to K-Electric.
The major benefit given to the company was revising the cost of electricity. Previously the cost of highest electricity production sources was charged but after the amendment the lowest rate was granted to the company for the purchase of 650MW electricity from federal government.
The then government wrote off Rs31 billion worth of K-Electric liabilities with a single stroke of pen, while agreeing to sell 650 megawatts at a marginal cost resulted in a loss of Rs68 billion to the government.
The National Transmission and Dispatch Company provided Rs111 billion worth of electricity to K-Electric, but under the revised agreement it billed only Rs43 billion,” the report said.
The company also did not spent 11 billion rupees given by the government at the time of privitisation to strengthen its infrastructure of power supply.
Despite minting profit of Rs 7 billion a year, the power supply company failed to enhance its generation to agreed 1000 MW, as per privitisation agreement, however, the net addition stood at only 350MW.
At the time of privatisation, the K-Electric’s generation capacity was over 1,800MW, which has now reduced to 1,247MW.
Despite holding the K-Electric responsible for irregularities, the regulator has yet to take any action against the company.
According to insiders, government has directed Nepra to take no strict action on the matter due to political reasons, but take measures to enhance productivity of the Karachi based company.
Despite no action has been taken by the authority due to political pressure, the ministry of Water and Power is all set to hold second round of talks to review the 2008 agreement, and agree on a new set of conditions for the continuation of supply of 650MW, from national grid. .
According to sources, K-Electric would present its plan to enhance the power generation and supply infrastructure.
During the first meeting held on July 2, Ministry of Water and Power and K-Electric failed to reach any conclusion, after officials accused the company for receiving illegal financial benefits during the PPP government and warned that those benefits would not be available in future.
Nepra has already served a 15-day show-cause notice for the company’s failure to honour the privatisation agreement, whose time has been lapsed but neither Nepra have imposed any fine nor appointed administrator.
K-Electric’s has been denying all the Nepra allegations, claiming that the supply situation had improved in the city.