Despite expiry of agreement between K-Electric and Ministry of Water and Power to supply 650 MW electricity from NTDC, on January 25, the power supply is still continued. Energy starved Ministry of Water and Power is lobbying to discontinue supply, whereas K-Electric is exerting political pressure to renew the contract from Islamabad.

According to sources after failing to add any additional electricity to national grid, Ministry of Water and Power is using all powers to curb the power supply to K-Electric. Whereas K-electric is using political forces to lobby with Prime Minister that they receive the power supply for another five years.

According to official data, the total Installed Generation Capacity of KE is 2419 MW, whereas De-rated installed Capacity is 2093 MW. IPPs contribute 363 MW and the total generation capacity sums up to 2456MW.

As per agreement (PPA) expired on January 25, 2015, K-electric may draw up to 650 MW, from NTDC.

After the expiry of agreement, K-Electric wants to get subsidised electricity from NTDC, whereas Ministry of Water and Power in no mood to continue the supply due to shortage of electricity which will intensify in summers. In tug-of-war, K-electric is not only exerting political pressure on Prime Minister to extend the supply for another five years, but also threatening that if supply would be disconnected, Karachiites would face severe load shedding and the rate of electricity in the area would also rise. Ministry has been rejecting the claim.

The officials said the total load in K-Electric jurisdiction is merely 1700 MW, even if 650MW is not supplied KE has enough generation capacity to have zero load shedding in KE operational area.  They claimed that KE does not operate their own plants as their profit margins would reduce. They only run those plants which give them better return and do not consider the load shedding in the city. KE is only interested in 650 MW to continue to have the benefit given by earlier GoP concessions. There will not be any load shedding increase in Karachi area. KE since has enough generation to have zero load shedding in Karachi. It is a matter of fact that KE has not been able to control their losses and remove illegal connections as per their commitments in IA.

The officials strongly rejected impression that if supply from Center is disconnected Karachiites would face high tariff. According to Ministry of Water and Power officials KE was supposed to be self-sufficient in their power generation during the term of PPA (5 years), which it not only failed but it continued with the concessions given to them at the start of the privatisation, and earn more profits. Their claims that Karachi will be affected by the 650 MW non-supply is based on false grounds.

According to official data KE has to pay Rs 32 billion to NTDC, Rs26 billion to SSGC, and around Rs3 billion to PSO.

According to data, the privatisation of the company was finalised on Nov 14, 2005, and government transferred 71.5pc shares with management control to consortium of Hassan Associates, Saudi Al-Jomiah Group and Kuwait’s National Industries Group (NIG).

Government retained 25.66pc shares, while 2.84pc shares were held by others. Al-Jomaih Group sold its share to Dubai based private equity firm Abraaj Capital in October 2008, and the amended agreement (AA) to IA was signed on April 13, 2009. The present power purchase agreement (PPA) was signed with KESC by NTDC on January 26, 2010 for power purchase up to 650 MW.

According to sources, the new agreement would be signed next month, but Ministry of Water and Power, first tried to avert it but after bowing to political pressure, now trying to save as much as they could.