In a significant development, the Government of Pakistan (GoP) and K-Electric (KE) have formally signed crucial agreements aimed at securing the energy needs of Karachi, Pakistan’s largest city. The agreements solidify the provision of power from the National Grid to Karachi, ensuring a reliable energy supply up to the interconnection capacity.
The signing ceremony, held at the Power Division office, was attended by Muhammad Ali, Minister of Energy, Power, and Petroleum, and Dr Shamshad Akhtar, Minister of Finance. Representing K-Electric were CEO Moonis Alvi and CFO Muhammad Aamir Ghaziani.
These agreements, subject to extensive deliberations among various stakeholders, address legacy issues that are pivotal for Karachi’s long-term energy sustainability. Among the key agreements signed are the Tariff Differential Subsidy Agreement for a decade, establishing a framework for government subsidies to make electricity more affordable for consumers in specific areas. The Power Purchase Agency Agreement, also valid for ten years, regularises the existing power supply arrangement from the National Grid to KE, ensuring transparent transactions and timely payments.
Additionally, the signing of the Interconnection Agreement is anticipated after approval from the National Electric Power Regulatory Authority. This agreement ensures a secure energy supply from the National Grid, enhancing access to affordable power for KE customers. The Mediation Agreement is another crucial aspect, facilitating the reconciliation of legacy disputes on payables and receivables between KE and government entities, including Sui Southern Gas Company.
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The recent approval of these agreements by the Economic Coordination Committee and subsequent Cabinet ratification, based on recommendations from the prime minister’s taskforce on energy, marked a significant step toward resolving complex issues. The Caretaker Prime Minister, Anwaarul Haq Kakar, assured support from the GoP during a meeting with representatives of Saudi Group Al Jomaih, KE’s oldest and one of the largest shareholders since privatisation.
The agreements, announced by the Special Investment Facilitation Council, signal a positive trajectory for sustainable resolutions in the power sector. The signing not only provides a roadmap for mediation on other pending matters but also promotes stability for both KE and government entities.
Expressing gratitude, KE CEO, Moonis Alvi, expressed the significance of these agreements, considering them a paradigm shift in the energy landscape. He acknowledged the collaborative efforts of various stakeholders, including the prime minister, ministers of energy and finance, the SIFC, and the task force under Shahid Khaqan Abbasi. Alvi highlighted the potential of firm power supply for Karachi in addressing energy challenges and reducing the subsidy burden on the government.
Minister of Energy, Muhammad Ali, described the signing as a step toward bringing efficiency and long-term stability to the power sector. He highlighted the collective commitment of institutions toward enhancing the power sector’s enabling environment for the benefit of customers.
Finance Minister, Shamshad Akhtar, underscored the importance of streamlining issues and resolving legacy matters in the energy sector.
Published in The Express Tribune, January 6th, 2024.
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