Industries assured of power supply

K-Electric has affirmed its readiness to provide uninterrupted power supply to the industrial consumers abandoning their captive power plants in line with a recent decision of the government.

At a public hearing held by the National Electric Power Regulatory Authority (Nepra) on K-Electric's request for a provisional fuel charges adjustment (FCA) of Rs0.51 per kilowatt-hour (kWh) for August 2024, K-Electric Chief Financial Officer Aamir Ghaziani highlighted that the company had sufficient supply in its system to facilitate the industries.

He reiterated K-Electric's commitment to supporting the industrial consumers in the transition from captive power plants to the electricity grid either through third-party arrangements or directly.

During the hearing, it was claimed that K-Electric could save the government at least Rs80 billion in tariff subsidies if the company was provided natural gas instead of the more expensive re-gasified liquefied natural gas (RLNG).

This saving could reduce the overall electricity cost for consumers by up to Rs10-15 per unit, the hearing was told.

K-Electric noted that it had seen around 1% year-on-year growth in demand between August 2023 and August 2024 while other power distribution companies reported a decline in consumption.

Rehan Jawed, representing the Korangi Association of Trade and Industry, raised concerns about delay in determining the K-Electric's power generation price under the new Multi-Year Tariff.

He argued that while natural gas was being provided to the captive power plants, it was benefiting only a few business groups, placing other industries and consumers at a disadvantage.

Jawed added that the supply of just 100 million cubic feet of natural gas per day (mmcfd) to K-Electric could save Rs80 billion in subsidies for Karachi's power consumers.

He revealed that the capacity cost borne by grid customers would be around Rs132 million due to the use of grid by the captive plants as a backup source.

In response to a comment from Karachi Chamber of Commerce and Industry Vice President Tanveer Bari, K-Electric's Ghaziani clarified that the elevated cost was primarily due to the expensive fuel being supplied to K-Electric rather than the inefficiency.

He emphasised that a steady supply of natural gas could significantly lower costs for consumers. Nepra Member Technical from Sindh Rafique Ahmed Sheikh praised K-Electric for attracting the lowest bids while inviting the Request for Proposals for its renewable energy projects.

He acknowledged the confidence investors showed in the private sector, as reflected in the bid of Rs8.9 per unit which K-Electric received for its 220-megawatt hybrid wind-solar project in Dhabeji, Sindh.

Ghaziani explained that K-Electric was currently piloting the shift from load-shedding at the feeder level to the pole-mounted transformer (PMT) level, with a detailed report already submitted to Nepra for review.

In response to the criticism from Jamaat-e-Islami Karachi's energy expert Imran Shahid, K-Electric CEO stressed that consumers could now apply for new meter connections online or at the company's customer care centres.

Nepra asked as to why Jamaat-e-Islami was not happy with the digitisation of new connection system. Responding to that, Imran Shahid mentioned that the manual system for applying for new connections, which had previously been targeted by Jamaat-e-Islami, should continue on the sidelines.

Nepra reserved its judgement on K-Electric's provisional FCA request and would announce its final decision in the coming days, including the duration over which the FCA would be charged from consumers.

About a week ago, a news report said that the textile industry was in hot waters due to the government's decision to cut off gas supply to captive power plants and push them to connect to the power grid.

In a recent meeting of the Economic Coordination Committee (ECC), the Petroleum Division reported that the government had been gradually discouraging the use of natural gas for captive power generation. The division suggested revising the gas supply priority order to minimise gas consumption by captive power plants.

The minister of state for finance and revenue agreed with the suggestion, proposing that gas tariffs for captive power be raised to match the higher RLNG tariffs, thereby disincentivising their operation.

The power minister, however, insisted that connectivity to the national power grid must be ensured for these units before cutting off gas supply. He also endorsed the proposal to raise gas tariffs for captive power plants.