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KE deny to make payment : Additional power supply

ISLAMABAD: Karachi Electric (KE) has refused to make any further payment to the Federal Government against electricity being supplied from the National Grid, saying the power utility has net receivables of over Rs 31 billion, well informed sources told Business Recorder.

This message was sent by Chief Executive Officer (CEO) K-Electric in a letter to Secretary Power Syed Asif Hyder Shah on March 7, 2022, in response to a letter of CPPA-G of March 29, 2022, titled “agenda for disconnection of additional supply to Cabinet Committee on Energy (CCoE).”

The power utility, in its response stated that due to continuous accumulation of tariff subsidy claims receivables, its net receivables after adjusting payables to CPPA-G/ NTDC have ballooned to unsustainable position.

According to CEO, KE, total Tariff Differential Subsidy (TDS) receivables stood at Rs 320.825 billion as of February 2022 whereas stock of its payables was Rs 289.098 billion, showing a net receivable amount of Rs 31.727 billion.

“As evident from figures, KE has a net receivable of Rs 31.73 billion and therefore, the power utility is not obligated to make any further payments,” CEO said, adding that KE despite being in net receivable position, was paying the amount for additional supply (over and above 650 MW) as a temporary arrangement with the understanding that the Power Purchase Agency Agreement (PPAA), Interconnection Agreement (ICA) and the TDS Agreement will be finalized and executed at the earliest in order to streamline the process for future.

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CEO argued that despite the lapse of almost 10-11 months, the three agreements are yet to be executed between the parties. As a result of pending issues and exorbitant increase in fuel prices, KE’s borrowing for working capital/ general loan has reached an alarming level of Rs 133.437 billion which is unsustainable.

Power utility has sought intervention of Secretary Power in the matter to expedite the process of approval and signing of Agreements.

“We also highlight that disconnection of additional supply will result in forced load shedding as KE will not be able to meet the demand and supply gap, in the absence of supply from national grid, which would impact the consumers of Karachi adversely and will also burden the national exchequer as KE would be operating comparatively expensive sources of generation to the extent possible which will result in additional tariff differential subsidy,” CEO KE added.

The power utility has requested Ministry of Energy to expedite the process of approval of the three agreements and also suggest a joint meeting with Ministry and CPPA-G to better explain its point of view.

On March 8, 2022 Power Division had warned KE to clear payment against additional supply from national grid or face severe action like reduction in quota or complete disconnection.

Presently, KE is being supplied 800-900 MW electricity due to revision in quotas of all the Discos despite the fact the power utility is not meeting its payment obligations.

“We have limited them to 800-900 MW but sometimes the company withdraws more than allocation unilaterally,” said an official. On March 29, 2022, Central Power Purchasing Agency –Guaranteed (CPPA-g) stated that K-Electric is not making any payment even against the additional supply from the National Grid since November 2021, despite its firm commitment. Now, the outstanding liabilities towards CPPA-G have soared to Rs. 48.358 billion till February 28, 2022 and continuously increasing day by day, the sources added.

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