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ISLAMABAD: The base tariff of Karachi Electric (KE) has soared to Rs 31/kWh due to less supply of gas and pressure issues resulting in increase of Tariff Differential Subsidy (TDS) by around Rs 46 billion for the next three months.

This was revealed by Chief Executive Officer (CEO) KE, Syed Moonis Abdullah Alvi, in a letter to Secretary Petroleum, Ali Raza Bhutta.

He said that the rising power demand in Karachi and adjoining areas during the ongoing summer season requires all KE’s generating sources to operate at full load.

However, the power utility is not able to fully utilize its gas-based plants of KCCP, KGTPS and SGTPS due to low gas pressure and gas allocation because of which significant capacity of these plants remains idle and causes a generation loss of 200 to 250 MW, hampering KE’s ability to maintain the high-power demand; and it is also causing KE to generate power on costlier sources. Thus, KE’s power generation ability is not only compromised but it also results in higher cost to its consumers.

In addition to this KE stated that no indigenous gas is being supplied to KE since the last week of November 2021 and the total supply to KE is curtailed to around 86 MMCFD in March 2022 and 100 MMCFD in April 2022, as compared to 152 MMCFD and 257 MMMCFD supplied to KE in the month of March and April last year, respectively.

Fuel shortage causing power outages

This significantly curtailed gas supply has resulted in twofold increase in tariff - by replacing costlier RLNG with indigenous gas and short supply forcing KE to operate alternatively on expensive fuels including FO and HSD.

Considering available facts, FCA (Fuel Cost Adjustment) for month of March 2022 soared to Rs. 5.27 per unit, which would have been negative Rs. 2.2 per unit if KE was supplied with 130 MMCFD indigenous gas and 60 MMCFD RLNG, in line with CCoE decision and with adequate gas pressure.

“The base tariff of March 2022 would have been Rs 22/ kWh if gas quantity was supplied in line with CCoE decision and with adequate pressure; however, considering the existing gas quantity and pressure issues, base tariff has increased to Rs 31/ kWh, resulting in an increase in TDS by around Rs 46 billion for next three months,” Alvi added.

The CEO has also highlighted that the reduction in KE’s indigenous gas supply is not only divergence from Gas Load Management Policy under which the power sector is second priority, but also contravenes decisions of the CCoE and Sindh High Court of April 23, 2018 and June 2018, respectively, which bind SSGC to supply 190 MMCFD of gas with 130 MMCFD originating from local /indigenous sources.

He maintained that SSGC’s action is also unjustified in the context of Article 158 of the Constitution which accords priority to the province where the wellhead is situated; the province of Sindh is the source of 70% of the natural gas, but the citizens of Karachi and adjoining areas are being deprived of this right. Terming the situation alarming, CEO KE has sought Secretary Petroleum’s urgent intervention to get SSGC to restore total gas supply to 190 MMCFD in line with the CCoE decision, i.e., 130 MMCFD local gas and 60 MMCFD RLNG, so that KE is able to manage the high power demand during the ongoing summer season, which will also lead to reduced financial burden on KE’s consumers, as well as, the government of Pakistan (GoP).

Copyright Business Recorder, 2022

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