Holding back the money: ‘Only investment can fix Karachi’s power crisis’

K-Electric only generating 350MW from own plants, still relies on govt for 650MW, says former chief engineer.

KARACHI:

If K-Electric invested some money into expanding its own power-generating capacity, the city will not have to witness massive breakdowns like the one on Friday.

These views were shared by the former chief engineer of the electricity utility, GR Bhatti, as he told The Express Tribune that a large chunk of the electricity that K-Electric supplies comes from the government. The company is only generating 350MW from its own plants and it is relying on the government to provide the remaining 650MW, said Bhatti.

Since the power utility was privatised, it has not invested any money into improving its own generation capacity and is still relying on the government to get electricity at subsidised rates, he said. "Basically, the existing management of the utility is not capable of handling the situation," said Bhatti. "They are just here to earn money."

According to Bhatti, K-Electric manages the entire city's load with the electricity it gets from the Water and Power Development Authority (Wapda) and not from its own resources. "So when the national grid station is rendered ineffective, they [K-Electric] are exposed," he said.

Bhatti explained that the utility is only generating 350MW from gas. They do not use furnace oil because the profit margins from furnace oil are less than gas, he claimed.

'Capacity enhanced by 1,000MW'

For its part, the K-Electric insisted that they have enhanced the utility's power-generation capacity by 1,000MW since it was privatised. "When we took over, the demand was 2,100MW and the current demand of Karachi has risen to 2,950MW," said the utility's spokesperson. "K-Electric is now generating almost 52% of its electricity through its own system."

The utility's generation units, with an installed capacity of 2,341MW, are providing power to the city and there is only a 450MW gap between supply and demand, he explained. Friday's blackout took place due to the unexpected interruption of 650MW from the national grid and the subsequent tripping of KE's own transmission line, he added.

"When 650MW suddenly went missing from the system, it could not bear the overload, which resulted in a massive breakdown," he said, adding that all their systems are interconnected.

Investment needed

The former chief engineer, Bhatti, recalled that when the government planned to privatise the company in the 1990s, it did not invest in upgrading the grid stations. The power utility worsened during that time and no private buyer was willing to take over, he said. "Following this crises, the armed forces took over the charge at that time," he added.

Later, the government granted a subsidy of Rs19 billion and the power utility was gradually able to upgrade its infrastructure. Power losses went down from 41% to 31% after an investment of over Rs2 billion, he pointed out. Soon after, the company was privatised.

"After the privatisation, the government granted them [K-Electric management] Rs11 billion to re-structure the utility's infrastructure," said Bhatti. "Someone should ask them now how much money, apart from these Rs11 billion, were invested into improving the infrastructure?"

According to Bhatti, if the K-Electric management runs away, there is no agreement that allows the government to demand why they failed to develop the infrastructure. "On the other hand, the government is responsible of paying the dues the company took from international investors," he said.

Unhappy customers

Karachi administrator Rauf Akhtar Farooqui also lashed out at the 'ill-performance' of K-Electric.

"When the service was a national entity, the situation was much better as they used to cooperate with other government institutions," he said. "Now, they are using our land and other city resources but they cut down power supply after minor delays in payments."

Farooqui clarified that he was not against privatisation. The government should, at least, keep some checks and balance over their performance, he suggested.

Karachi Chamber of Commerce and Industry acting president Muffasar Atta Malik also endorsed that the power utility needs to improve its infrastructure. "They are taking electricity from Wapda, why can't they increase their own generation capacity," he asked. "Friday's power shutdown made Karachi lose nearly Rs3 billion."

Published in The Express Tribune, July 27^th, 2014.