'No loadshedding' in Ramazan: Billions to be paid to KESC

MUSHTAQ GHUMMAN

ISLAMABAD: The federal government is to extend billions of rupees to Karachi Electric Supply Company (KESC) as difference in furnace oil and gas prices to ensure power supply in Razaman, official sources told Business Recorder.

"The government has constituted a committee to finalise the mechanism to disburse the claim submitted by the Sui Southern Gas Company Limited (SSGC) and Pakistan State Oil (PSO)," sources said.  Official documents show that on the directives of President Asif Ali Zardari a meeting was convened at Governor House Karachi on July 29, 2011 to review the crisis created due to frequent power failure(s) and resultant law and order problems in the city.

It was decided that attempts should be made to reduce load shedding during Ramazan and Eid holidays and sufficient fuel should be supplied to KESC in the form of natural gas and furnace oil, through financial assistance, to maintain its operations at maximum capacity.

The meeting agreed that SSGC would supply 200 mmcfd natural gas whereas Pakistan State Oil (PSO) will supply 1700 tons per day additional furnace oil to KESC, for which the price would be at par with natural gas.

The documents further show that the fuel oil requirement under the load management during this period was calculated at 56,000 tons by PSO at total estimated cost of Rs 4 billion, and KESC would pay price equivalent to gas against the actual high sulphur furnace oil (HSFO) supplies plus applicable sales tax on HSFO to PSO, in advance, from its own sources.

The price differential approximately Rs 2.6 billion between the HSFO and gas would be directly paid by the Finance Division through Ministry of Water and Power within 30 days from the date of submission of claim.

Price differential claim will be submitted by PSO duly verified by SSGC and KESC to Ministry of Water and Power for reimbursement by Finance Division within one month.

The proposal in principle was with the direction that modalities for reimbursement of price differential claims would be decided by the Ministry of Petroleum and Natural Resources, in consultation with Ministry of Finance and Ministry of Water and Power.

Contrary to the decision, power distribution companies (discos) have charged additional Rs 3.04 per unit from consumers for enjoying electricity at Iftar and Sehri in Ramazan (August 2011) under monthly fuel adjustment formula.

Nepra officials confirmed that reduction in hydel generation and increase in power generation, based on furnace oil, diesel and gas besides inefficient public sector power plants are the main reasons for the massive increase in load shedding for one month.

Discos had requested a raise of Rs 3.04 per unit on the plea of making good the loss due to high cost of furnace oil used for generation of electricity