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    KE consumers to pay additional Rs15bn under FCA from June onwards


    June 2, 2022 - MUHAMMAD SHAFA

     

      Inflation-hit consumers of K-Electric are likely to bear a whopping Rs15 billion additional economic burden under the Fuel Cost Adjustment (FCA) from June 2022 onward, if the power company continues to generate electricity on expensive re-gasified liquefied natural gas (RLNG) instead of the indigenous natural gas.

      KEs Chief Marketing Officer Sadia Dada said FCA has been calculated at Rs5 for the month of March this year which may go up to Rs12 in months to come. The cost of fuel for electricity generation has skyrocketed which will affect the capacity of KE to procure the required fuel, hence the duration of load shedding is extended further in different areas.

      Talking to reporters here she said if expensive electricity is produced, it will also increase the burden on the customers and the total financial impact on consumers will be roughly around Rs13 to 15 billion per month, who may not be able to pay their bills due to the eroding purchasing power.

      She hinted at carrying out load shed in industrial areas, if the company was left with no other option. She said industry has been exempted from load shed since 2011. Industry is the bread and butter, and it runs the economy. Currently, we have no such plan to conduct load shed in industrial areas. We will inform the industry in case, we have to go for the very option.

      To a query she said KEs current quarterly profit stands at Rs1.5 billion which is being invested in the company operations. On paper, the company is in profit, but the ability is not there. She went on to say that problem is not about profitability, but the cash in hand to pay. Our borrowing limits are at their peaks, almost all leading banks who are engaged in power sector financing are at their maxim lending limits, and they are not financing us, she said.

      The citys peak demand has touched 3600MW, the average is around 3200MW, and shortfall is around 400MW, she said and added that the first 450MW unit of the 900MW KEs flagship Bin Qaism Power Station-III (BQPS-III) is at its final testing phase. Though, it has been producing some 200MW to 350MW electricity, on and off. She said German engineers are engaged in tuning of the machine, and this process will take some time as per its protocols. Without sharing any expected date, she said: Soon this unit will come online.

      It is relevant to mention here that in the last one year, KE has given different dates for the plants commercial operations, but to no avail.

      Responding to a query about possible impact of 450MW on KEs load shed schedule, She said that the power utility is doing load shed is in line with the national power policy, and this additional power has nothing to do with ending load shed from the city. Currently 1000 out of some 2000 feeders are load shed free.

      She said the maximum capacity of national grid to transmit electricity to Karachi is around 1100MW. However, the Federal government and Sindh government have already reached an agreement to develop an inter-connection at KKI near Maripur. The provincial government has allotted land, and work on which is underway. Once the grid is completed, we would be able to draw around 1400MW from the national grid, she said.

      The power plants installed at Korangi and Site were provided gas only for a limited time during the night which barely produced electricity of 40MW per day. KE should be provided indigenous gas as per the decisions made at the relevant forums in order to reduce load-shedding while facilitating its customers with low charges in electricity bills.

      She mentioned that K-Electric raised the issues of the unavailability of gas and the high cost of fuels with the Sindh chief minister and other officials through letters to get some respite for the general public.

      Briefing about the gas supply situation, Sadia Dada said that KE was ensured the supply of 276 MMCFD gas initially but the gas supply was reduced gradually, impacting negatively on its power generation capacity.

      Later in the meeting of the cabinet committee on energy, SSGC agreed that KE will receive 130MMCFD indigenous gas while the additional gas will be provided at RLNG price. Unfortunately, the gas supply to KE is reduced continuously and brought down to nearly zero. Surprisingly, natural gas of 100MMCFD is supplied at RLNG rate.

      Due to the non-availability of indigenous gas, the production of electricity is getting expensive. She reiterated that KEs outstanding receivables surged to Rs25 billion on an account of tariff differential claim (TDC) which continued to exert pressure on the financial pipeline of the company.

      She said the electricity production from natural gas will ease a burden of a whopping amount of Rs13 billion on consumers.

      She advised consumers to go for energy conservation up to 20 percent, so that their monthly bills will be at a manageable condition, and the citys power demand will also reduce to a certain level.

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