Power supply to Karachi may be cut off

Centre failed to pay Rs150b to KE as tariff differential

Amna R Ali May 18, 2023

A man sits outside his shop during a country-wide power breakdown in Karachi, Pakistan January 23, 2023. PHOTO: REUTERS

ISLAMABAD:

An official told a parliamentary panel on Wednesday that electric supply to Karachi might be shut down if the federal government did not pay subsidy to K-Electric (KE), a private company that supplies power to Pakistan’s economic hub.

“The federal government provides a subsidy of Rs10 to Rs20 per unit to K-Electric to maintain the tariff differential,” the power secretary during a meeting of the review and implementation committee of the Public Accounts Committee (PAC).

He said the K-Electric would have to be paid off its tariff difference subsidy immediately. The official said the National Transmission and Despatch Company (NTDC) had to pay Rs20 billion as markup to K-Electric. He said this amount had now swelled to Rs150 billion.

The secretary told the committee that the federal government provided a subsidy of Rs10 to Rs20 per unit to K-Electric to maintain the tariff differential. “The federal government had not paid an amount of Rs150 billion to K-Electric,” he said.

He said a committee headed by Pakistan Muslim League-Nawaz (PML-N) leader Shahid Khaqan Abbasi is trying to sort out the issue and hopefully will resolve it by the end of June. The official said lack of payment to K-Electric might lead to a disruption in the power transmission system.

To an inquiry of committee member Senator Mushahid Hussain Sayed, the secretary said people may have to face an additional power outage of up to two hours during the upcoming heatwave. “Power outages will increase by two hours in view of the country-wide heatwave that is expected to intensify.”

During the meeting, the Central Power Purchasing Agency (CPPA) officials informed the committee that they had to pay Rs16 billion to the independent power producers (IPPs). They said as they were unable to recover their dues from distribution companies, they were unable to pay the IPPs.

The CPPA officials told the committee that the markup of the IPPs had increased immensely because of the lack of payment. In 10 years, they added that the amount of the markup had increased from Rs20 billion to Rs216 billion. The convener of the committee, Syed Hussain Tariq, chaired the meeting.