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Direct transmission line by the end of the year

S. Khurshid Husain, Chief Executive, HUBCO talks to PAGE

Apr 16 - 22, 2001

The direct transmission of power from Hubco to KESC and switching over of 1200mw Hubco power plant from oil to gas-fired system are going to be the significant features of the energy sector in Pakistan.

The power consumers might get rid of the tortuous load shedding and breakdowns currently being experienced these days.

Hubco, country's largest power producing project in the private sector may start direct supply to KESC by the end of the year 2001.

S. Khurshid Husain, the Chief Executive of Hubco Power Company, while talking to PAGE disclosed that at present two technical teams comprising representatives of the government of Pakistan, WAPDA, Hubco and KESC are studying various aspects both technical and financial to accomplish the task.

During peak hours Karachi needs around 1750-1800mw while the first power generating capacity of KESC's comes to around 1350mw, which results in a shortfall of 400mw to meet the total requirement of the city. In order to meet the deficit, KESC has to bridge the gap by importing around 400mw from WAPDA.

Power supplied to KESC by WAPDA in effect is the double exercise. Since WAPDA is the sole buyer of Hubco it has to dispatch power into WAPDA's national grid at Jamshoro and from where it is redirected into KESC's system. This uncalled for exercise often creates problem in transmission-line or tripping of the system causing power breakdowns in Karachi.

In order to address the problem, the concerned parties have agreed for a direct transmission arrangement from Hubco to KESC.

Replying to a question Khurshid said that the technical team is taking all the aspects into consideration including route of the transmission lines. Besides meeting the current shortfall of the KESC power generation, the experts are also taking into account the future requirement in accordance with the growth rate of power consumption in Karachi.

It may be noted that with the completion of Hubco-KESC transmission line, the problem of load shedding and breakdowns will be resolved once for all.

Another technical team is working either for complete shift from oil to gas fired provision or allowing the dual system both for gas or oil. Talks have already been held with Lasmo which has expressed its willingness to meet the natural gas requirement of Hubco for power generation. He agreed that cost of power generation would naturally come down with the switching over from oil to gas. He however declined to comment whether the benefit of cost reduction would be passed on to the consumers by the power distributing companies or not. As an individual consumer, he however agreed that the benefit of cost reduction should also go to the consumers.

The fate of the oil pipeline currently being used for supply of oil from Port Qasim to Hubco will also be decided by the technical team, Khurshid said.

Hubco's total turnover during the current year is also likely to register a quantum jump.

Khurshid said that it is for the first time that Hubco power generators are running to their capacity for the last three months. During July-December 2000, the power plant was run at a load factor of 51 per cent generating 2,693 GWh of electricity while during the calendar year ending December 31, 2000 the company generated 6,829 GWh of electricity. The turnover for the period was Rs14,188 million and operating costs were Rs8, 347 million resulting in a gross profit of Rs5,841 million. After taking into account other expenses and costs the net profit for the period was Rs4,325 million which equates to an earnings per share of Rs3.74.

On the question about declaration of the interim dividend, Khurshid said that the board would announce the dividend after withdrawal of all the cases against the company. Though most of the cases have already been withdrawn yet some of the early cases are in the process of withdrawal which include embargo on dividends to the share holders and restriction on payments through court orders. He said that the board of directors will be meeting next month, hopefully the process of withdrawal of cases is likely to be completed by that time then the board would be able to declare the dividend, he observed.

Regarding payment of Rs5.7 billion outstanding dues against WAPDA, Khurshid said that one third of the amount has been paid, the remaining amount of the dues will be paid within stipulated time hopefully, he remarked.

On December 17, 2000, it may be recalled, a settlement agreement was signed between the Hubco, WAPDA and government of Pakistan to resolve the tariff dispute. The Federal Cabinet, WAPDA, and Hubco's Board of Directors have approved the tariff agreement. The Hubco lenders have also ratified the agreement.