THE POWER CRISIS

Economic revolution under candle light!

By AMANULLAH BASHAR
Apr 30 - May 06, 2001

As usual, the economic managers of Pakistan are displaying their wisdom and knowledge to bring prosperity to the country through economic reforms and other structural changes, which the people are hearing for over last 50 years. Since these rosy slogans and the ground realities are contradictory in terms, these policies do not generate any enthusiasm or spirit among them as they are now used to listening of such claims for over the years.

Some times the economic champions duped them by floating the idea of nationalization of large private sector entities on the promise that the masses will be the shareholders of these assets. They took over the entire efforts of the private sector into their control on the pretext that the entire national wealth belonged to people. The cronies were however the only beneficiaries of this policy while the masses were again empty handed. Instead of producing the good results, the national economy was converted into a stinking mess. This situation forced the people at the helm of affairs to reverse the policy of nationalization. To regain the confidence of the private sector to play their due role in the restructuring of the economy, the taken over assets were again put on sale through the process of privatization. It was the time when another slogan was raised that Pakistan is going to be the "Asian Tiger" soon. Unfortunately, this promise of making Pakistan an Asian Tiger remains as the promise.

According to an UNCTAD report, Pakistani growth rate during 2000 accelerated in comparison to previous years but still lags behind other countries in the region. The report says that the external factors in Pakistan had remained fragile while the reserves continued to decline from already low levels bringing the currency under pressure. Report further comments that adverse movements in prices of the primary commodities may require further structural reforms in agriculture and industry to strengthen competitiveness. Low investment rate that will continue to constrain the growth, the report said. In the light of this report, the people responsible for economic survival of this country are required to give serious thinking over the elements impeding the national growth rate.

HOPE

The wind has started blowing in the different way now. A new wave of hopes has overwhelmingly taken over the people to make Pakistan an information technology (IT) power.

The present government has come out with policies to exploit the opportunities available in the IT sector around the world. Infinite number of IT schools, colleges and universities have emerged on the ground and the majority of the young generation has changed the direction of their future towards IT. The government has also chalked out policies to attract international players in the IT sector to bring foreign investment in this sector. No doubt that this cutting edge technology promises a bright future for the talents and the rich human resource this country possesses.

As a result of combined efforts of the government and the private sector, all is set to bring an IT revolution in this country. But can we bring an IT revolution under the candle-light.

Despite all the tall claims, power sector, which is of course the engine for economic growth, has, miserably failed to deliver the goods. Although a good number of private sector power producing companies are providing support to the public sector power utilities companies, the industrial, commercial and social sectors are subjected to the rationing of the power. Is it an ideal condition to attract the foreign investment, achieve economic and social targets? We certainly can have a sumptuous candle-light dinner but not the economic revolution or industrial revolution.

Although the management of WAPDA and KESC, the two public sector entities, is currently being manned by the strong hands of senior army officers, yet the strong Mafia of the corrupt elements is so deeply rooted in these two organizations that the best decisions to streamline the systems have not produced the desired results so far. The transmission and distribution losses are constantly oscillating between 37-40 per cent mostly on account of power theft strongly indicates the existence of corrupt who are involved in this multi-million racket. Without connivance of the staff of the utility organization power theft cannot take place. The KESC chief was however critical about the people who have not the moral courage to point out the officials involved in power theft of corruption. He said that people avoid to complaint in writing against the corrupt on the reasons that army is here for the temporary period while the consumers have to deal with these corrupts after the army management leaves the organization. If every body sticks to such types of arguments than they should also be prepared to face the music. People would have to muster courage to complaint or witness against such corrupt people to weed them out of their place, he urged.

He recalled that the past management used to send inflated or fictitious bills through average billing to hide the losses on account of power thefts or line losses. The present management has reduced the average billing system to the minimum and whatever the losses are being shown are the genuine ones. As a result of these efforts, we have improved our recoveries. The revenue target for the current year is fixed at Rs32 billion and we have already achieved Rs 22 billion of that target in March last. The revenue collection during past three years was Rs29 billion during 1997-98, Rs27 billion in 1998-99 and Rs26 billion in 1999-2000, the target for the current fiscal is Rs32 billion which is well within reach. When asked how the KESC managed to reach this level of recovery, he said that besides improving billing system, thousands of Kundas were removed with the support of local population. Citing the example of Orangi township scheme, he said that when the KESC team took them into confidence and assured them that Kunda system is not in their own interest, they were convinced and helped KESC teams to remove Kundas. He said that such teams have also been planned to visit in other targeted areas to remove illegal connections.

Situation demands for drastic steps to weed out the corrupt still busy in eroding the foundations of the national organizations. The private sector again needs a greater role to streamline the power sector to the level of satisfaction of the consumers of all segments.

More IPPs

Brig. Syed Shahid Mukhtar, Managing Director of Karachi Electric Supply Corporation (KESC) has recommended to the Ministry of Water and Power for establishment of two more Independent Power Producing (IPP) units to meet the future demand of in Karachi.

This recommendation of the KESC for setting up of two more IPP units, in a way, is a compliment to the significant role being played by the private sector for power generation in Pakistan.

Currently, two IPPs i.e. Gul Ahmed and Tapal are reinforcing the KESC's power generating system with an installed capacity of about 125 and 135mw respectively.

As far as the thermal power generation is concerned, the private sector is providing a great support to the public sector power utilities by generating more than WAPDA's current thermal power generation capacity. The estimated thermal power capacity of WAPDA is about 5131mw while the capacity of different IPPs comes to the total of 5549mw.

Following is the detail of various IPP units located in WAPDA's franchised area:

Kot Addu Power Company

1,621mw

Hub Power Company

1,292mw

Kohinoor Energy

131mw

AES Lalpir

362mw

AES Pak Gen

365mw

Southern Electric

115mw

Habibullah Energy

140mw

Rousch Power

412mw

Saba Power

114mw

Japan

120mw

IPP units located in KESC's franchised Area

Tapal Energy

125mw

Gul Ahmed Energy

127mw

The total installed capacity of the private power producing units thus comes to 5549mw which proved to be a valuable rather face saving support for WAPDA which was in deep crisis due to drastic cut in water level at Tarbela and Mangla and other Dams, the fundamental source for WAPDA for generating around 4,825mw of Hydel power.

As a result of sharp decline of water level, the WAPDA's capacity for hydel power generation

Tarbela

3,478mw

Mangla

1000mw

Warsak

240mw

Others

107mw

Actually, the proposal for setting up two more units in the private sector is in line with the future course of action to meet out the demand for power, which is increasing at the rate of 8 per cent annually. A major step towards achieving this target is the current efforts of establishing a direct link between KESC and HUBCO. At present, KESC has to rely on the single link of Jamshoro national grid of WAPDA to import power from WAPDA system. Whenever this system goes out of order due to tripping of the system, it renders the KESC totally in isolation from the national grid of WAPDA. In order to overcome this problem, collective efforts are being made by WAPDA, KESC and HUBCO to lay 8-km transmission line from HUBCO to Baldia Town grid station of the KESC. By virtue of the second link, the KESC will have direct access to 1200mw of power being produced by HUBCO.

Yet another project, which the KESC is negotiating with a private sector company, is the wind-pushed power generating units to be established in the coastal areas of Karachi, Pasni and Guwadur. Two of these wind-power producing units of 20 megawatt each would probably be installed near the Hawks Bay Shore. The KESC management is pinning hopes to successfully meet the future demand for power as soon as these pipeline projects come on the ground with full participation of the private sector.

Load shedding

As usual, the summer in Karachi is not different from what the people are experiencing for over a decade. Load shedding or power breakdowns have become a regular summer feature of the so-called metropolis where the industrial, commercial and general consumers raise hue and cry over huge industrial and business losses.

The current spell of load shedding has become more painful in view of the on-going exams of Secondary and Higher Secondary Boards in Karachi. The students appearing in the exams are groping in the dark to secure their future.

In order to explain reasons behind the on-going power crisis which has gripped the city since last month, Brig. Shahid Mukhtar has said that like consumers, KESC considers the load shedding or breakdowns as the most undesirable thing, it is not the consumer which suffers but KESC also suffers due to load shedding. Hence KESC never did the load shedding intentionally. He said that last year KESC had to resort to load shedding due to financial constraints as it has no money to buy furnace oil from PSO hence it was forced to shut down two of its power generating units. The situation is however different from last year. The financial health is much better as compared to last year while its entire generators are running to the capacity. Currently, the KESC system is producing around 1150 mw out of its installed capacity of 1750mw. The two IPPs supply about 250 mw in the KESC system. However, the power demand during peak hours is estimated at 1800mw. The gap between demand and supply was met through WAPDA resources till March 21. Replying to a question, he said that variation in the schedule of load shedding is due to uncertain availability of power from different sources such as WAPDA which is already struggling to overcome its own problems, while the KANUPP also was not in operation on account of routine maintenance.

The current power crisis started when the lightening damaging the two costly transformers heavily licked the two WAPDA's Jamshoro.

To give an idea about the damaged transformers, the KESC chief said that these transformers were not of the ordinary nature. Each of them having a capacity of 350mw is as heavy as of 400 tonne. One of them was put on the line by using the undamaged parts of the other units for temporary use, while a Japanese expert has been specially called for restoration of the other one. He expressed the hope that current crisis are likely to be over in a week's time. He also said that he was in constant touch with WAPDA authorities on day-to-day basis to personally know about the on-going restoration process. WAPDA is however taking care of the situation and hopefully the situation would be normalizing soon, he expressed the hope.

The KESC chief also floated an innovative idea to over come the current spell of power shortage. He has suggested to the industrial areas to work 7-days a week by observing holidays in rotation instead closing down the units on Sundays. Observance of holidays on different days instead of collective holiday on Sunday would certainly reduce the consumption of power in peak hours. He also suggested that the commercial areas be allowed to open on Sundays and close their shops early in the evening instead of doing business in the late hours. Doing business on Sundays would allow a large number of people to do their purchasing on their holidays.

He however expressed the hope that the power supply would be further strengthened with the arrival of a Korangi Thermal Unit sometimes next week which will add about 90mw into the KESC system beside addition of another 60mw from Karachi Nuclear Power Plant (KANUPP) which is also about to come on line. The KESC chief appreciated the efforts of Pakistani engineers who have kept the power plant, which has already come to age. Its official age was 30 years, which has been already, expired a couple of years back. KANUPP was shut down after remaining closed for routine maintenance.

When asked whether the impact of reduction in oil prices in the international market will be passed on to the consumers, he quickly remarked that the heaviest expenditure the KESC has to suffer is the cost of furnace oil. Over the years, the oil prices have jumped from Rs550 per ton to over Rs1350 causing a loss of Rs11 billion on account of price differential.

Regarding the policy of shifting from oil to gas fired system for power generation, the KESC chief disclosed that the Korangi power generating units have already been shifted on gas while remaining power generating units of Bin Qasim would also be totally shifted in next two years.

Shifting on gas may not result in a substantial decline in power generation cost as under the policy the gas price will also be increased by that time. The maximum difference may be around 30-35 per cent as compared to oil consumption, he said.

WAPDA and KESC owe around Rs15 billion to Pakistan State Oil on account of fuel supplies and financial charges claimed by PSO.

Of the total outstanding dues, WAPDA owes about Rs4 billion to PSO, which include Rs1 billion as financial charges. The PSO claims that the outstanding amount against KESC is Rs8 billion for fuel and Rs3 billion for financial charges.

The KESC chief however did not agree to that amount claimed by the PSO and when asked to comment said that KESC paying the current bill almost in advance for purchases of fuel from PSO.

He said that he did not agree with the claims of PSO for payment financial charges as the government has already taken up and discussed this issue with the relevant parties. The KESC chief however said that KESC owes Rs4 billion to National Refinery. Similarly KESC is in good terms with Sui Southern Gas Company which supplying gas to our satisfaction.

Employment

Regarding the reports of possible layoff in KESC, which has strength of 12000 workers, Brig. Shahid Mukhtar strongly denied the reports and said there is no such intention of the management to layoff its staff.

Actually the reports appeared in a section of the press regarding layoffs in KESC were due to some misreporting or misunderstanding of the survey being carried out about the staff members who have completed their 25-year in service. In effect, the survey regarding 25-year of service is being carried out in all government organizations under the directives of the government however this survey was not carried unilaterally in the KESC. He said that honest and hardworking workers have nothing to worry as we are in need of competent and hardworking people. However, the dishonest, inefficient, unwilling and corrupt people are not accepted in any organization, it is not the question of the KESC alone, he remarked.

 

KESC T&D LOSSES

 

1998-99

99-2000

2000-01

JUL

37.8%

42.5%

44.5%

AUG

38.5%

39.1%

40.2%

SEP

34.7%

35.7%

36.2%

OCT

41.7%

43.4%

35.6%

NOV

31.1 %

34.0%

32.5%

DEC

34.1 %

33.0%

36.0%

JAN

28.6%

29.1 %

33.7%

FEB

29.7%

39.1 %

29.4%

MAR

41.8%

49.2%

40.2%

APR

43.4%

44.4%

MAY

45.2%

50.0%

JUN

48.0%

38.0%

AS AT

38.6%

40.2%

37.0%