The Karachi Electric Supply
Corporation (KESC) received higher subsidy than other power Distributions
Companies in FY 2010-11, and received approximately Rs 6 per unit (kilowatt
hour KWh) as fuel adjustment compared with the national average of PKR.1.5 per
unit. The total subsidy amount paid to the company was Rs 47.317 billion (USD
551 million).
These appalling figures have been quoted in
the study report “Pakistan Power Sector Outlook: Appraisal of KESC in Post
Privatization Period,” which was released last week. Conducted by Sustainable
Development Policy Institute (SDPI) Advisor and energy sector expert Arshad
Abbasi, the study highlights the fact that there is an abnormally high consumption
of fuel to generate one unit of electricity and the demand is being met by
using furnace oil for electricity generation.
Based on the case study of one
organization, the study is reflective of the whole energy sector of the country
where efficiency and productivity have never been the priorities of those who
matter. Unfortunately, it reveals, the efficiency of a particular plant is not
taken into account by National Electric Power Regulatory Authority (NEPRA)
while receiving tariff petitions. The rates are decided on the basis of cost of
production which disastrous.
Explaining his point, the author states
KESC takes 11 to 18 cubic feet of gas to generate one KWh of electricity
whereas plants of other companies such as Uch Power, Saif Power and Orient
Power take only 7.37, 7.47 and 7.56 cubic feet of gas respectively for
generating the same quantity of power.
TNS talked to Abbasi who shared that as per
global standards, 10 kg to 12 kg of furnace oil is required to produce 100
units of electricity. In Pakistan, the figure even gets around 30 kg per
hundred units. Instead of asking the producers to improve efficiency the
differential is paid by the government in the form of subsidy and the cost
passed on to consumers in the form of fuel adjustment charges.
To sensitise the masses and policy makers
on the issue, Abbasi presents tables which show the total budget for Science
& Technology Research Division, Environment Protection, Housing and
Community Amenities, Health Affairs & Services, Education Affairs and
Services and Social Protection was Rs 46.649 billion for the fiscal year, which
is less the subsidy paid to KESC. Nationwide, the amount paid to power
producers under subsidy stands around Rs 1600 billion.
He simply challenges the total subsidy paid
to KESC which according to his findings is less than 338 percent of allocation
to Higher Education Commission (HEC) and 169 percent less than the fund
allocated to Special Areas (Azad Jammu & Kashmir, Gilgit-Baltistan and
FATA) declared as least-developed areas Pakistan in federal budget 2011-12.
His point is that the purpose behind
privatizing KESC is not fulfilled and the company is permanently on crutches.
The company’s claims that it has improved its generation efficiency from 33.07
per cent to 33.5 per cent over the over by replacing old Korangi and site gas
turbines by new gas engines is also challenged in the study.
The study mentions the newest arrival in
KESC’s generation units- Bin Qasim II Plant- is less efficient than the earlier
ones. It mentions the heat-rate of Bin Qasim II is 12,163 Btu/Kwh commissioned
in 2012 which is even higher than Korangi and SITE GTPS II having heat rate of
9500Btu/Kwh and commissioned in 2009. Ideally the figure should be 5800Btu/Kwh
and the larger it is the efficient is the plant.
The good thing about the study, as
highlighted by energy sector, experts is that the performance of KESC in
generation, transmission and distribution since 1947 to up to date has not only
been compared with PEPCO and IPPs but also benchmarked with international power
plants. “This benchmarking draws the attention of the policy makers to give
immediate attention to the fuel efficiency, minimizing auxiliary consumption
and reducing the transmission and distribution losses.”
The study also advises KESC to adopt
Advance Metering System but with a caution, to implement this project in
stages, starting from high loss areas, particularly where three-phase domestic
and commercial meters are installed and use of air conditioners is in
abundance. Other high loss areas may be those where small industrial units or
vendor units are located. Power supply through Kundi system may be a small
percentage of total theft in its poor people localities and may be dealt with
at later stage.
Last but not the least, the study suggests,
without saying anything, that heavy subsidy paid to IPPS and KESC may be the
most sophisticated and carefully designed case of unprecedented corruption in
the history of Pakistan. It’s quite likely that the fuel consumption figures in
some cases were inflated artificially to claim high amounts in subsidies.
No doubt, the study leads to some questions
which will have to be answered ultimately. A few of them follow:
Why was the performance standard for
electricity generation not incorporated in ‘power generation standard’?
Why was the technical Audit of IPPs and
KESC not conducted, causing provision of heavy subsidy and ruining the national
economy?
KESC is submitting regularly heat-rate of
all power plants, which are abnormally high. For example, new installed
Bin-Qasim-II is so-called state of the art plant but its heat-rate is 12,163
Btu/KWh as against 5800 Btu/KWh but ignored or unchecked by NEPRA officials.
Why?
NEPRA is continuously allowing KESC to
enhance tariff, without checking fuel consumption of power plants? Why is it
so?
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