NEPRA issued a show-cause notice to K-Electric (KE) for breaching its contract and ignoring its responsibilities that resulted in excessive power cuts this summer. The notice stated that since 2015, the KE imposed excessive load-shedding, made no attempt towards increase in power generation, underutilized the existing facilities and failed to upgrade distribution and transmission systems.
KE is asked to respond to the notice within 15 days otherwise ex parte proceedings would be originated assuming that the respondent had nothing to express in its defense. KE spokesperson told that they had received the show-cause notice and it was being reviewed. He further added that as per previous practice, the company would answer each and every point in detail.
The electric company violated a dozen of clauses of license agreement, blamed NEPRA
NEPRA said it received a report from an investigation team which revealed that KE had committed a dozen of violations in connection with its contract. The report found that KE was required to have storage capacity of six storage tanks to maintain the inventory of approximately 120,000 tonnes of furnace oil but no such inventory was found on the spot.
Secondly, the investigation also noted that the net capacity of BPQS-I was 1,104 MW whereas it could only produce 916 MW. The underutilization of the plant, prima facie, breaks the explicit terms and conditions of the generation license.
Thirdly, the machines at KE’s own power plant (BPQS-I) are on outages as funds were not spent on the proper maintenance due to which it produced less electricity than agreed which added to the causes of prolonged power outages in Karachi. This is important to know that NEPRA had allowed Rs. 25 billion for routine maintenance expenses under the multi-year tariff (MYT). Therefore KE failed to discharge its responsibilities for providing the utility to the consumers. Had the company properly maintained the machines, the unit could have generated about 250 MW additional electricity.
KE is reviewing the show cause notice and will answer every point in detail, Company’s spokesperson claimed
Fourth, the KE did not fulfill its commitment of multi-year tariff (MYT) of operationalizing 900mw BPQS-III by December 2019 so that Karachi’s electricity demand could be accomplished.
Fifth, the KE did not finalize the Gas Supply Agreement (GSA) with the Sui Southern Gas Company Limited so that reliable supply of gas could be ensured to enhance its generating facilities.
Sixth, the KE did not place fuel supply orders to PSO that was required under the timelines specified in the Fuel Supply Agreement (FSA) with the PSO and therefore did not observe its obligation under the FSA to execute secured supply of electricity to its consumers that led to electricity shortfall and prolonged load-shedding.
Seventh, the KE also failed to exercise and implement the Energy Purchase Agreement (EPA) with the independent power producers Tapal and Gul Ahmed to ensure secured and reliable supply of electricity without any discrimination.
Finally, despite the fact that the KCCPP and BQPS-II power plants had the facility of dual fuels under generation license for natural gas, diesel or RLNG, KE did not shift both power plants on alternate fuel (HSD).