Minister of State for Water and Power Abid Sher Ali has declared that the government will not extend the existing power purchase agreement with K-Electric as the prime minister has called for a review of the arrangement and engaging in consultations with the Sindh government.
Talking to media after inaugurating a 132-kilovolt grid station of the Islamabad Electric Supply Company in the F-16 sector here on Tuesday, Ali ruled out granting any extension to the 650-megawatt supply agreement with K-Electric.
“Minister of Water and Power Khawaja Muhammad Asif will give a policy statement in this regard in the National Assembly,” he announced.
Claiming that K-Electric had failed to honour the promise of increased power generation, Ali said the company did not protect public interest. “We have to take care of the interest of consumers not that of K-Electric.”
He pointed out that if the government went for a fresh agreement, then it would feature new conditions. K-Electric owed Rs100 billion to different government institutions and organisations, he added.
Regarding a stay order got by K-Electric for power purchase, Ali said the government would soon approach the Supreme Court to get the order vacated.
The Ministry of Water and Power and the Sindh government were at loggerheads over the power purchase agreement with K-Electric, which would expire on January 26. The ministry is opposed to any extension while the province insists on continuing supplies to Karachi in the larger public interest.
Meanwhile K-Electric spokesman said the transmission of 650MW from the national grid to Karachi was not an issue restricted to the company but concerned the port city, the government, millions of consumers and thousands of factories.
“While the validity of the agreement is expiring on January 26, it is not written anywhere that the agreement can’t be renewed,” he said.
“K-Electric has added 1,010MW since we (Abraaj Capital) took over in 2009. During these five years, demand has crossed 3,000MW from the initial 2,000MW.”
The company’s installed capacity is 2,300MW and receives around 650MW from the National Transmission and Dispatch Company to meet the growing demand. The federal government is a 25% shareholder in K-Electric. “This city is not just the responsibility of a private company. The government has to support the country’s only privatised utility. No one can deny the turnaround that we have achieved.”
He regretted that K-Electric’s projects including the conversion of power plants from furnace oil to coal had been delayed because of indecision on part of the regulator. Politicians and businessmen in Sindh have also raised concerns about reports that the federal government is considering stopping power supply to Karachi.
Sindh Chief Minister Qaim Ali Shah, in a letter to Prime Minister Nawaz Sharif on January 1, said any withdrawal of power supply from the national pool would lead to a massive increase in social and political problems due to increase in outages.
The letter also stated that “the fallout will also be felt in the shape of lost industrial output, higher consumer tariff and the government bearing increased tariff differential claims”.
