Karachi needs more IPPs on war footings

Aug 08 - 14, 2005

In the face of upcoming industrial and residential projects including Tuawarqi Steel Mill being set up by a Saudi group, Textile City, SITE-II, and an endless chain of new housing projects, more Independent Power Plants (IPPs) are required in Karachi to avoid acute power crisis which are sure to hit the city if timely action was not taken on war footings.

This note of warning was sounded by Brig. Tariq Sadduzai, Managing Director KESC, while outlining the overall power supply situation steeply tapering off due to sharp increase in power demand.

Currently, the KESC system is facing a shortfall of around 500mw despite an additional supply of 550 mw by Wapda and this gap is about to widen especially after the construction of Tuawarqi Steel Mill requiring around 200mw to put this forthcoming project into operation, the upcoming Textile City requiring another 200mw, forthcoming industrial estate SITE-II, besides an infinite number new housing projects demanding another 1000mw of power to make things sail smoothly.

When his attention was drawn towards the forthcoming direct link between HUBCO and KESC which will add at least 1000mw into the KESC network, the KESC chief said with a meaningful smile even the additional supply of around 1000mw from HUBCO would evaporate soon due to robust demand growth which, however, indicates rapid economic growth in the country.

Commenting on the current state of affairs especially in respect of robust growth in power demand of the city, Brig. Sadduzai - the man who bailed out the utility from a complete financial mess into a profit-making organization - said that power supply to the city is feared to go into a total disorder in the days to come if the supply line was not reinforced by allowing new IPPs at least with a capacity of 1000mw on war footings.


What is happening on the privatization front of the KESC has become a talking point especially after the failure of Qanooz Al-Watan, the successful bidder of Karachi Electric Supply Corporation (KESC) in furnishing the final payment of the sale price.

There is a general feeling that the issue of privatization of the KESC seems to have fizzled out as the second best bidder i.e. Hasan Associates was also tight lipped over the government's offer to match the bidding price offered by Qanooz group. The situation has naturally created inquisitiveness among the people to know what is the current status whether or not the second bidder was still willing to buy KESC?

Clarifying the situation, the KESC MD observed that though he was not the competent authority to speak on the subject as it's a baby of the Privatization Commission, he, however, indicated that the interest of the second bidder was still intact and most probably the deal will strike sometimes in October this year. Actually, after the withdrawal of AKD from the run who was one of the members of the consortium formed by the second bidder, another Saudi group known as Al-Gimo has joined the new consortium of the potential buyers who have given a nod to match the highest bid of the utility.

All said and done, the campaign for privatization has given a new look to the utility especially in terms of financial health of the company. KESC, which was suffering huge financial losses running around Rs15 billion, is now at the threshold to get rid off its entire financial liabilities. It was the financial discipline and professional management which helped KESC come out of the financial mess. Brig. Sadduzai sounded confident that the utility has achieved a complete turnaround and at the end of the current financial year, it will be a profit-making organization.

He recalled that when he took over the charge, the transmission and distribution losses were as much as 41 percent. However, restructuring of the transmission and distribution network helped reduce T&D losses from 41 to 34 percent and by next year it will come down to 30 percent, he said with great confidence.

"We are working in a hostile city like Karachi where the political forces do not allow development if it is not serving their party interest," he said an cited the example of an MPA in Landhi area who did not allow installation of a PMT only because the credit for this work was being claimed by his opponents. These unfortunate irritants also hamper growth and development of the city, he regretted.


Meanwhile, Liaquat Jatoi, Federal Minister for Water and Power said last week that three new power plants with a capacity of 730mw will be set up in Karachi in the next couple of years. Formal agreements and permission by the government has already been granted to the parties concerned .

Outlining the details at his camp office about the forthcoming power plants to bridge the ever growing gap between demand and supply, the federal minister said that a foreign company Western Electric will set up a 148mw power plant at Karachi which will go into operation within next 15 months.

The gas turbines of 240mw gifted by the UAE government will also be installed at Karachi in the Korangi area while KESC has also been allowed to set up a power plant of 350mw capacity of which PC-1 has already been approved.

He said that the direct transmission line between KESC and HUBCO will start operation next March which means that Karachi will be free of the load shedding nuisance from next year.