It is time to decide either to allow direct supply from HUBCO to KESC, or install two more IPPs in Karachi so that KESC could operate independently?

Sep 23 - 29, 2002

Karachi Electricity Supply Corporation (KESC) responsible for supplying power to the largest industrial and commercial hub of Pakistan instead of being self sufficient in power generation has to rely on borrowed power from different sources.

The main source of meeting the power shortfall, which is estimated around 500 megawatt is Wapda, or from two small Independent Power Plants namely Gul Ahmed and Tapal. As far as the two IPPs are concerned they have contractual obligation to feed to the KESC as they are operating in the licensed area of the KESC hence they are the reliable source of power supply for KESC.


Currently, KESC's installed power generation capacity is 1756MW while the actual capability comes to 1426MW that is also not sustainable as most of the generating units have already come to their age hence one or two units are usually remain closed for overhauling purposes. Against this susceptible generating capacity, KESC has to meet the power demand estimated around 1900 MW while requests demanding yet another 500MW are pending which bring the total demand of the city to 2400mw which is increasing by 6 per cent every year.

Besides producing 1426MW from its own units, KESC has to purchase about 250MW from two IPPs i.e. Gul Ahmed and Tapal Energy and imports about 300MW from Wapda.

While this wide gap of almost 1000MW between demand and supply is viewed as a source of concern on one hand, this becomes a great source of attraction for the potential buyer of the KESC which is on the agenda of privatization of the government. The existence of a ready market at a massive scale of 2400 MW makes KESC as a gold mine for the interested parties. However, the nuisance of 41 per cent line losses mainly on account of power theft in the distribution network certainly poses a challenge to the potential buyers. If the would-be buyers managed to overcome the problem of line losses, KESC would certainly prove a gold mine.

Since the induction of army into KESC system, the management has however done a marvellous job of addressing the problem of average billing which was another source of corruption in the KESC network. Consequently, reduction of average billing from 60 per cent to merely 17 per cent and addition of 182689 new consumers has improved the cash flow to a large extent.

However dependence on others for meeting the electricity needs this industrial city having a population of 15 million plus still remains as a vulnerable area for the corporation.

Due embargo on putting in new generation units, KESC had moved a proposal seeking permission from ministry of power for at least two more IPPs in Karachi. PC-1 of the project of direct supply from HUBCO has already with the government. Installation of a transmission line and a grid station to receive power directly from Hubco would require at least a period of one year to be operational provided the government gives a go ahead signal to this project. It is however yet to be seen whether the government carries out this project on its own or leaves it to the new management of KESC after its privatization.

People at the helm of affairs have to take a decision either to allow direct supply from HUBCO to KESC or installation of two more IPPs so that KESC could operate independently.

Although Wapda provides a great support not only to meet the much needed electrical energy which obviously helps KESC to avoid load shedding, yet Wapda has to give priority to its own consumers. In the prevailing system, KESC consumers have to suffer from load-shedding or breakdowns whenever Wapda confronts with short supply because Wapda has to prefer its own consumers and provide electricity to KESC on its convenience.

Wapda has agreed to supply 300-megawatt (MW) to KESC for nine months i.e. from March to November on the basis of two-part. Under this arrangement Wapda would sell 300 MW of power on variable rates to KESC. The flat rate would be charged on power supply over and above the agreed 300MW from March to November.

In December, Wapda has committed to supply 200 MW but expressed inability to entertain KESC's request in January and February as the utility itself faces power shortage in these months due to high consumption and low level of water at its thermal power producing stations.

When asked how KESC would overcome the shortfall from the month of February onward, sources in KESC were of the view that January, February and March are not the months of peak demand. Most of the A/Cs are switched off in these months due to good weather conditions resulting in a considerable decline in the demand of power. This sounds a lame excuse for organization like KESC which depending on assumptions to meet the electricity demand and looking towards the weather conditions. Uninterrupted supply of power is of course a pre-requisite for sustainable economic growth. Hence, KESC has to be made self-sufficient in power generation either through more IPPs, installation of its own generating units or a direct supply line between KESC and HUBCO.

It is learnt that power purchase agreement between Wapda and KESC has been signed with a view to ensure power supply after privatization to attract prospective investors.