Can resolve Karachi's electricity problem

02 - 08, 2003

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 Act 1910.

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 Pakistan.

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 funds.

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.