Islamabad-National Electric Power Regulatory Authority (NEPRA) noted that delay in commissioning of K-Electric’s (KE) Bin-Qasim Power Station-III has caused loss of billions of rupees, making the power sector of Pakistan and electricity consumers to suffer badly. 

Most of the power plants of KE have completed their life and need to be replaced with efficient and cost-effective plants as the existing generation fleet of K-Electric (self-owned, IPPs and CPPs) comprises of costlier thermal power generation plants, said NEPRA State of the Industry Report 2021-22. 

The report further said that the percentage of total over-loaded distribution transformers of KE has increased in FY 2021-22 to 14.18 percent as compared to 8.64 percent recorded during FY2020-21.

The KE’s 900MW BQPS-III power plant was supposed to commission during the FY2018-19, and was likely to replace the BQPS-I, which still could not achieve commercial operations till FY2021-22, said the report. KE, instead of operating its expensive plants, could have procured electricity from the under-utilised power plants of the CPPA-G system, which would have improved their utilisation, but this could not be ensured due to various reasons most important of which was that both CPPA-G and KE could not agree and finalise the agreement to this effect. This issue, due to which all stakeholders are suffering, requires urgent decisions and quick actions to utilise available resources efficiently.

The KE was allowed to construct 900MW RLNG based power plant Bin Qasim Power Station-III (BQPS-III) at efficiency of 59.23 percent with the timelines for commissioning of 2018-19.Unfortunately, this plant has not yet achieved COD. Had this plant achieved the COD, it would have replaced the generation from costliest RFO based BQPS-I, Tapal Energy, Gul Ahmed and other costlier power plants in the KE system. Due to delay in COD of BQPS-III, the power sector of Pakistan and electric consumers are suffering badly. The estimated financial loss due to delayed commissioning is estimated in billions of rupees.

At the time of privatisation, it was considered that NTDC (the then power purchaser on behalf of DISCOs) will supply electricity to KE (then KESC) to meet the shortfall and charge it not at par with DISCOs but on marginal cost plus use of system charges and KE shall maintain its generation basket separately. Later on, the ECC of the cabinet vide its decision dated August 26, 2008, decided to treat KE at par with DISCOs for tariff purposes. On one hand, KE is maintaining its own power generation basket with an independent power dispatch control centre, while on the other hand, CPPA-G is supplying electricity to KE to the tune of 1,100MW not on the basis of marginal cost but at par with the DISCOs rate. Thus due to several reasons including but not limited to two separate generation baskets and two independent power dispatch centres, on occasions, it was noted that KE was operating its costliest plants, while cheaper power plants available in CPPA-G System were un-utilised or under-utilised. Similarly, in past years, the cheaper pipeline quality gas was being used in KE’s inefficient power plants while more efficient power plants in CPPA-G System were either un-utilised/under-utilised or were being operated on costlier fuels like RLNG and HSD. 

The costlier generation from KE plants leaving the cheaper power available in CPPA-G System, while CPPA-G is supplying electricity to KE at par with DISCO rate is burdening the power sector of Pakistan including the consumers of CPPA-G as well as KE systems. It is, therefore, high time to decide on a clear long-term relationship between CPPA-G and KE regarding power supply quantum and rate/tariff so the transmission and distribution network in the backdrop of single generation basket shall be developed accordingly and thus all available generation capacity in the country shall be utilised optimally.

The report further said that the record indicates that KE has drawn up to a maximum of 1,100MW from the national grid at Jamshoro and NTDC-KE Interconnection (NKI). It may be noted that K-2, K-3, Port Qasim, HUBCO, China Hub Power and Lucky Electric Power are located nearby to the service area of KE. These plants in the vicinity of KE are not only cheaper than plants operating in the KE system but are also under-utilised. In order to optimise the operations, better utilisation of the available resources, and supply electricity to KE with minimal cost and transmission losses, it would be more prudent that the interconnection capacity of grid systems adjacent to the aforementioned power plants should be enhanced, the report proposed.

The given data shows that till year ending in 2022, despite purchase of power from external sources, KE was not able to meet the demand at peak times. Total receivables of KE stood at Rs195 billion, whereas, the receivables were Rs198 billion as on 30-06-2021 showing a decrease of Rs3 billion during the reporting year FY2021-22, the report said.