ISLAMABAD: Government of Pakistan (GoP) and K-Electric (KE) on Friday reached a significant milestone by signing various “long-awaited” agreements, one of the key demands of Saudi Arabia since long, which will underpin Karachi’s energy security.
The signing ceremony took place at the Energy Division and resolved long-standing disputes between the Government and KE, with the foremost among these being formalising and securing a firm supply of power from the national grid to Karachi up to the interconnection capacity.
The agreements were signed by Government of Pakistan through its representative bodies in the presence of caretaker Muhammad Ali, Minister for Power and Petroleum, and caretaker Finance Minister Dr Shamshad Akhtar, while KE was represented by CEO, Moonis Alvi and CFO, Muhammad Aamir Ghaziani.
MoF says PD may ink TDS deal with KE
K-Electric Limited has entered into Power Purchase Agency Agreement (PPAA) and Tariff Differential Subsidy Agreement (TDSA) with the Government of Pakistan, through its representative bodies. These agreements, along with Interconnection Agreement (ICA), have been approved by Economic Coordination Committee and ratified by the Federal Cabinet. The ICA will be signed once approval is received from National Electric Power Regulatory Authority (Nepra).
The PAA has been executed for a term of one year. This agreement will regularise the existing arrangement for the supply of power of KE from the national grid.
Further, with the signing of ICA for the same term, and in the backdrop of planned investments of KE in network interconnection capacity, KE will be able to off-take supply up to the interconnection capacity from the national grid, including 1,000 MW of power supply on firm basis.
The TDSA has been executed for a term of 10 years which shall help streamline the process of filing, verification and release of KE’ s TDS claims from the government of Pakistan.
In addition to these agreements, a Mediation Agreement has also been executed between KE and the government parties for settlement of disputes around historic receivables and payables.
According to official statement, these agreements pertain to legacy matters, resolution of which was critical for Karachi and also for KE’s sustainability as a company. The utility, government of Pakistan and various critical power sector stakeholders had been engaged in talks for a significant period of time.
The meeting saw resolution and signing of the Tariff Differential Subsidy Agreement (TDA), and Power Purchase Agency Agreement (PPAA), thereby marking a significant milestone for the power sector at large.
The Interconnection Agreement (ICA) is also expected to be signed after approval from Nepra. Firm supply of energy from the national grid will facilitate access to affordable power for KE customers. The signing of a Mediation Agreement (MA) is also crucial for the reconciliation of legacy contentions on payables and receivables between KE and Government entities.
Expressing his gratitude at the occasion, CEO KE Moonis Alvi said “today is a momentous occasion for us, representing a paradigm shift in the energy landscape, as well.
We have been working on these issues since as long as I can remember, and today I am deeply grateful for the endeavours of the caretaker Prime Minister, Anwaar-ul-Haq Kakar, caretaker Minister for Power and Petroleum Muhammad, and caretaker Finance Minister Dr Shamshad Akhtar, the SIFC, and also the task force under Shahid Khaqan Abbasi along with the innumerable other stakeholders who demonstrated resolve and pragmatism in bringing these legacy matters to a close.
We have invested thousands if not millions of man-hours to arrive at this point. Firm supply for Karachi addresses the energy dilemma for the customers of Karachi while also alleviating the subsidy burden on the Government of Pakistan in the long run.
We believe, the resolution of these matters will also enhance our journey towards sustainability as a company.”
Caretaker Minister, Power and Petroleum stated: “W are tackling a Gordian knot in the power sector with a vision to bring efficiency and long-term stability. Today’s signing is one facet of this, where we have addressed legacy bottlenecks. It demonstrates the willpower and commitment of our institutions towards Pakistan.
The Ministry is working hard to provide an enabling environment for the power sector to thrive because the ultimate beneficiary of our interventions is the customer. Special thanks to the Finance Minister Dr Shamshad Akhtar for her personal involvement and support.
This is the best news to the Karachi consumers as power issues will be much more stabilised now. KE has always been treated by the government as a partner. My special thanks to Prime Minister as throughout the process he was invested personally and kept on taking feedback. I thank my colleagues and all teams for their invaluable contribution.”
Dr Shamshad Akhtar stated: “Energy underpins progress on a national level. Streamlining issues and resolving legacy matters therefore is of utmost importance. We believe that today’s achievement will also send a strong positive signal to investors across the globe, eyeing Pakistan as a potential market. The energy sector is undergoing a revolution and we are committed to support it.”
Following recent approval by the Economic Coordination Committee (ECC) chaired by caretaker Finance Minister, the summary had been ratified by the Cabinet and was developed on the recommendations put forward by the Prime Minister’s taskforce on Energy chaired by Shahid Khaqan Abbasi.
In December 2023, Caretaker Prime Minister Anwaar-ul-Haq Kakar met with representatives of Saudi Group Al Jomaih, KE’s oldest and one of the largest shareholders since privatisation and assured them of support from government of Pakistan.
Copyright Business Recorder, 2024
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