August 5, 2021: Highlighting the need for investment in Karachi's power sector for the continued growth of the city, K-Electric (KE) shared that the utility had submitted a revised investment plan of around Rs440billion for the tariff control period of 2017- 2023.
Per the Multi Year Tariff 2017 – 2023 (notified in May 2019) determined by NERPRA for KE, the utility was allowed an investment plan of PKR 299 billion. Subject to regulatory approvals, KE has submitted plans to make additional investments to the tune of around Rs140bn beyond the NEPRA allowed.
The revised investment plan was developed keeping in mind the dynamic and challenging environment we operate in. This plan aims to ensure Karachi’s power infrastructure can cater to the rapidly growing energy needs of the city and its adjoining areas, invest in network reliability and safety initiatives, while also driving fleet efficiency.
Commenting on the plans, Moonis Alvi CEO K-Electric shared, “The additional investment is critical to meet the requirements of Karachi which continues to expand rapidly compared to other urban centers. This additional investment is also required to improve the resilience of KE’s system against inclement weather and the impact of climate change, and is therefore critical to ensure continued supply of safe and reliable power to our 3.2 million customers.”
It is pertinent to note that KE has already invested over PKR 255bn as of 2021 since the start of the tariff control period. KE’s 900 MW RLNG-based power plant at a cost of around $650 million is expected to complete by the end of the calendar year 2021. This project is pivotal in meeting the city’s future demand growth. Since privatization, KE has also doubled its transmission and distribution capacity and achieved significant reduction in T&D losses through effective loss reduction strategies.
Going forward, KE is working with the Federal Government to build a 500 kV and 220 kV interconnections at key locations where KE’s network connects with the National Grid enabling the utility to offtake up to 2,050MW additional power from the National Grid which currently has an excess of generation capacity. With support from Ministry of Energy, NTDC and CPPA, and under guidance from NEPRA, KE managed to off-take additional power from National Grid which enabled KE to ensure smooth operations during summer of 2021.
Further, coupled with rapid installation of Aerial Bundled Cables that have resulted good results in curtailing theft, KE also plans to expand deployment of Automated Meter Readers on its network which improves visibility of the network and provides greater transparency. The combined impact of these potential investments in generation, transmission and distribution are expected to enable exemption of load-shed from around 78% of the city today to more than 90% by 2023.
Since the tariff determined by NEPRA is a cost-plus tariff, KE’s investment plans are limited to those costs allowed as recoverable in the tariff. Allowance of these plans have no direct impact on the customer end tariff. On the other hand, if excluded, this could impact KE’s ability to seek funding for these projects thereby adversely affecting the customers, particularly new connections as well as affect safety and reliability upgradation projects.
Alvi further shared that, “We understand that Karachi is a complex and unique city and its transformation requires an aggressive and targeted capital expenditure strategy. We envision that our plan will spur progress in the city and enable us to continue the upward momentum we have developed since privatization. Our investment plan has also been revisited and enhanced in line with the evolving global economy, which has been affected by several factors including a global pandemic.”
CEO K-Electric Moonis Alvi concluded, “KE is committed to the future of Karachi and our customer experience is at the core of our business decisions. This is why we have not shied away from injecting money to add more grids and transformers, and also incorporating a 900 MW highly efficient generation plant in our fleet. I’d like to thank the Board of Directors for their support which enable us to be at the forefront of serving the city. These investments are becoming absolutely essential in today’s world, where the impact of climate change can no longer be ignored. Making our systems robust, safe, and reliable are among our top priorities. We are working with all stakeholders and sincerely hope to be able to deliver on our vision for Karachi.”
Since privatization, KE has been demonstrating its motivation and commitment to drive socio-economic progress by going above and beyond for the residents of Karachi and its adjoining areas. Aggressive investments of over $3.8bn since privatization have enabled a drastic reduction in transmission and distribution losses, making KE the most improved distribution company in the country.
Exempting industries from load-shed since 2010 has directly contributed to Pakistan’s GDP growth while also increasing employment opportunities. The percentage of the city exempt from load-shed has also risen to almost 78% on the back of additions in KE’s generation capacity, doubling of KE’s transmission and distribution network and significant reduction in losses.