So far, the Independent Power Producers (IPPs),
engaged in power generation in Pakistan, were operating with the
permission of their respective provincial governments under Electricity
According to informed sources, the National Electric
Power Regulatory Authority (NEPRA) incorporated in 1997 asked the IPPs
to get generation licence from NEPRA and accordingly, the IPPs had
applied for the same in 2000. In this connection, NEPRA has also
circulated a draft generation licence among the power producers.
Recently, NEPRA heard the views, comments of the IPPs
over the draft generation licence.
The Hub Power Company has also made representations
before the National Electric Power Regulatory Authority (NEPRA) seeking
grant of a generation licence in respect of its 1292 megawatt power
generation facility located in Balochistan.
The company's project, which was initiated by Exenel
of Saudi Arabia in 1985, following Government of Pakistan policies
designed to address the acute shortfall in electric power supply in the
country, commenced operations in 1996 and is the largest private sector
power producer in the country with an investment of over $1.5 billion
from Saudi Arabia, United Kingdom, United States, Japan, Singapore and
supported by the World Bank, export credit agencies of various countries
and a consortia of international and domestic lenders.
While representing its case to NEPRA for grant of
generation licence, HUBCO has urged to expedite the licensing process in
order to bring certainty in the power industry in Pakistan. HUBCO's
Chief Executive Officer Vince Harris stressed that NEPRA must make the
draft generation licence circulated by it compliant with not only the
NEPRA Act and the rules made under it, but also with the existing
documents and agreements forming part of the company's Security Package
under the company's implementation agreement with the Government of
Oversight of this important concern could give rise
to grace consequences under the Security Package and adversely impact
the general investment outlook. Lenders to the company share these
concerns. The company believes other private sector power producers also
share these concerns.
HUBCO has also expressed its concern on the draft
generation licence circulated by NEPRA and has urged the authority to
amend the draft so that it is consistent with not only the law but also
with the company Security Package and suggested appropriate amendments.
This is an important exercise to regulate the power
producing system so far working under the 1910 Act which should have
been replaced in accordance with the current need of the sector.
HUBCO Power Plant, though exist in territory of the
province of Balochistan but very to close to the Karachi and could be a
natural power supplier to Karachi, the largest city of Pakistan in terms
of population, industrial and commercial activity. However, the city is
confronted with acute shortage of power causing great hardships due to
fluctuations, breakdowns and load shedding.
The power generation, distribution and transmission
capacity of the Karachi Electric Supply Corporation (KESC) does not
match to the huge electricity demand in Karachi which is growing at the
rate of around 4-5 per cent a year. KESC has to strengthen its
generation capacity in bits and pieces by collecting some 50 megawatts
from Pakistan Steel, similar quantity of KANUPP which remain under
service for most of the year, 125 and 126 megawatts from small IPPs like
Gul Ahmed and Tapal Energy to consolidate its resources. Despite
purchasing electricity from these sources, the gap between demand and
supply remains un-bridged hence; the KESC has to import 400-500 megawatt
from WAPDA which is already facing shortage problem.
That means that supply from WAPDA remains vulnerable
as WAPDA has to look after its own consumers first, that means KESC or
Karachi comes on the second priority.
This sort of power supply arrangement to the
commercial hub of Pakistan sounds amazing, especially when the country
is badly looking investment in the manufacturing sector.
In order to address the problem of power shortage,
there was a plan to develop a direct transmission link between HUBCO and
KESC so that the problem of power shortage could be resolved.
This link requires a small transmission line and a
grid station to connect the two companies together at a cost of Rs3
billion. It is unfortunate that this important project which, could
bring an overnight change in the entire complexion of the city, is not
an exception to lethargic attitude of the public sector.
HUBCO claims its contributions to the Pakistan and
local economy and its role in the support and development of local and
national up-lift programs in education, health and social welfare.
In the light of this claim, people of Karachi would
right expect from HUBCO to take interest in expediting the project of
direct link between HUBCO-KESC which is pending obviously for want of
The federal government has reportedly actively
considering to allocate a fund of over Rs55 billion for rehabilitation
of WAPDA and KESC, one hopes that the project of direct link between
HUBCO and KESC would also find its place in these allocations.