SHAMSUL GHANI (shams_ghani@hotmail.com)
Nov 02 - 08, 2009

It is almost two years or so I opened one of my pieces with the following paragraph.

"With the advent of summer, the power crisis throughout the country has assumed horrific proportions. Our lives are so dependent on electricity that prolonged outages literally damage the very fiber of our living. Besides being in chronic short supply, water availability is linked to power supply. The frequent and prolonged breakdowns render the suction pumps and overhead machines inoperative making the lives of housewives miserable. The tanker mafia is there to lessen this misery to a manageable limit albeit at a highly unmanageable cost. The scorching summer heat takes its toll on the body and mind of every individual, be it a student, an ailing elder or a babbling infant. The small-scale manufacturers with no stand-bye arrangement for power are hard hit by the frequent breakdown of manufacturing operations making their business an unviable proposition in an already recessionary market. The labor working in such enterprises is kept on tenterhooks as the outages make heavy dents on their daily earnings based on job completion. The students in the face of fast approaching examinations are found struggling for a will to keep focus. The overall economic impact of the prevailing power crisis should not be difficult to measure for someone having a little knowledge of arithmetic."

The overall scenario has hardly changed - the only exception being that it is winter not summer that is around the corner. The nerve soothing wintry season has its own implications for the power deficit nation. The low river water levels drastically reduce WAPDA's hydel power generating capacity putting a drag on its distributional role for the country's dependent units - KESC being the main sufferer. PEPCO's supply to KESC ranges from 600 MW to 700 MW during non-winter seasons.

This supply level may go as low as 300MW during the winter season. So, there is no good news for those drawing relief from the approaching winter. The only positive is that perhaps the frequent power cuts during winter do not disturb one's equanimity as seriously as they do during summer power cuts.

We were in surplus on power till 2005 but the absence of a proper advance planning proved our undoing. The late rearguard action energy projects are expected to go into production in a reasonably distant future. The growing population and the resultant growing power demand, particularly during the consumption-led growth era (2004-08), created a huge demand and supply gap. During a recent KESC shareholders' meeting, it was revealed that KESC's power generation touched a peak point of 1,804MW as against the peak demand of 1,955MW. If these figures are correct then the gap would not seem as horrific as the lamenting - and sometimes the rage- of Karachites would make it appear. But the gap is definitely much higher - almost 400MW to 500MW.

Some serious issues during the shareholders' meeting were brought to the notice of the general public. KESC suffered a pre-tax loss of Ra.15.5 billion during the financial year 2009. How once a prolific profit yielding monopoly could become a huge loss making entity over a period of 15 years or so is flabbergasting. During early nineties, KESC had huge revenue surpluses and its Rs.10/- share was being quoted on KSE at Rs.60/- plus. Being a monopoly, it had no competitors and its product demand graph used to go zooming up with the passage of time. Analysis of its last 20 years' financials will not only make an interesting study but will also bring some queer things to limelight. KESC's power generation during FY-09 decreased by 4.62 per cent due mainly to the capacity under-utilization. KESC's installed capacity is 1,890MW distributed among the main generating units namely Bin Qasim Power Station; Korangi Thermal Power Station; Korangi / SITE Gas Turbines and the new Korangi Combined Cycle Power Plant. The six generating units at Bin Qasim seldom operate in unison; some of them usually remain inoperative either on some technical grounds or for the sake of fuel cost saving. According to the daily DAWN, Bin Qasim units 1, 2, 5 & 6 are said to be producing around 475 MW while units 5 & 6 lay inoperative due to the high cost of furnace oil. In addition to its own generation, KESC receives a major chunk of supply from PEPCO besides supplies from KANUPP, IPPs and rental power companies.

Existing Capacity in MW 6,400 5,940 160 6,460 400 180 19,540

By going through these facts, it can be easily inferred that the question of low generating capacity in case of KESC (and also PEPCO) is not as big as it is being shown to be. There are a number of WAPDA and other projects in pipeline that will gradually add to the country's generating capacity. It is the question of generating cost that plagues the power producers. We are presently dependent on power generation based on oil, gas and water. While hydel power costs least, oil-based power generation always costs comparatively more as it is linked to international furnace oil prices. Our depreciating rupee also adds significant burden to the imported rupee cost of furnace oil. This sufficiently explains the power producers' reluctance to go full capacity. Gas-based power generation is also becoming an expensive proposition in the face of depleting gas reserves and lack of focus and investment on new reserves exploration projects.

While focus on alternate energy sources can considerably contribute to our power generating basket, we can not put our reliance on such measures. What we need is a swift switch over from oil and gas-based generation to hydel and coal-based generation as nature has endowed us with ample water and coal resources. Nuclear energy production too has cost-based as well as political implications. China and Canada, despite being nuclear powers, have put their reliance on coal-based and hydel power generation. The solution is simple and straight: make optimal use of your natural resources.