Power cuts may reach 13 hours

KESC official warns of tariff hike due to increased furnace oil dependency.

Irfan Aligi April 07, 2011


Sui Southern Gas Company’s (SSGC) failure to meet Karachi Electric Supply Company’s (KESC) gas demand of 276 million cubic feet per day (mmcfd) may cause up to 13 hours of power cuts, according to KESC Chief Financial Officer Tayyab Tareen.

Addressing a press conference at KESC’s headquarters in Gizri on Thursday, Tareen said, “If SSGC commits to supplying the required level of gas, KESC will be ready to reach an accord with SSGC.”

He claimed that gas supply to the power sector had been cut from 44 per cent in 2005 to 29 per cent in 2010. He said that the average gas shortfall  in January to December 2010 was 109 mmcfd, due to which the cash flows fell by Rs22.9 billion. As a result, dependency on furnace oil has increased by 3.7 per cent.

Increased reliance on furnace oil for generation of electricity has led to higher costs, and subsequently, a wider demand-supply gap, he said.

In 2009, KESC used 56 per cent furnace oil, which cost the utility Rs18.16 billion, while in 2010 the utility spent Rs34.03 billion. However, the cost has not yet been transferred to consumers, claimed Tareen.

The determined tariff in September 2010 was Rs13.09 per kilowatt-hour (KWH), while average consumer-end tariff in March 2011 stood at Rs8.60 – excluding taxes. Thus the difference in tariff stood at Rs4.49/kwh, which he urged the government to subsidise, or allow passing on to the consumers. He added that gas reduction would lead to final consumers bearing the increment, as the total difference had reached Rs16 billion.

He explained that the current average tariff for residential consumers was Rs7.39 per unit, but could reach Rs8.27 if gas supply was 250 mmcfd, Rs10.35 at supply of 150 mmcfd, and Rs11.43 at a supply of 100 mmcfd.

Published in The Express Tribune, April 8th,  2011.


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