KESC gets relief of Rs26bn

[LRE]

KESC gets relief of Rs26bn



Thursday, October 09, 2008
By Khalid Mustafa

ISLAMABAD: The Federal government has formally notified Karachi Electric Supply Company’s (KESC) status as ex-WAPDA power distribution company which will provide a relief of Rs26 billion to the utility, a senior government official told The News.

Under the new scenario, Pakistan Electric Power Company (PEPCO) will charge KESC the same rates for electricity supply as it is charging eight power distribution companies. PEPCO will treat KESC as a power distribution company as off July 1, 2008.

Liquidity-starved KESC will get relief worth Rs26 billion, as the rates at which electricity is supplied to the distribution companies are much lower than the rates at which power was supplied to KESC prior to the notification.

The official said that KESC is required to pay arrears amounting to Rs56.163 billion to PEPCO against electricity supply. After the notification, its arrears would come down to Rs30 billion.

“This will be a substantial relief to KESC and in turn, its new management needs to come up with an investment programme to cater to the existing and future energy needs of Karachi, the business centre of Pakistan.”

Karachi Electric Supply Company has also increased its tariff by 118.42 paisa per unit on account of removal of four per cent price cap. The financial health of KESC has also strengthened after a $400 million investment in thermal and rental power projects.

Here the question arises as to why the decision to erase 4 per cent cap for increasing tariff and giving power distribution company status to KESC was taken before. It should have been taken at least two years ago. Had it been taken then, the new management would have not taken over KESC, because the previous management had preferred to stay on.

To a question, the official said that the arrears of PEPCO have surged to Rs139.653 billion, out of which KESC has to pay Rs56.163 billion, FATA Rs74 billion, Sindh government Rs7.620 billion and Azad Jammu and Kashmir Rs1.870 billion.

Out of the Rs139.653 billion dues, the official said it seems impossible to recover dues from the federally administered tribal areas because of political compulsions. He also hinted that it was quite difficult for PEPCO to get its dues from KESC as the Pakistan Peoples’ Party government is in full command.

Earlier PEPCO had not only threatened to switch off electricity supply to KESC, but it in fact did switch off the supply when Munnawar Basir was Managing Director PEPCO.

However, he hoped that PEPCO, with intervention from the center, would be able to collect its arrears from AJK and the government of Sindh.


http://www.thenews.com.pk/daily_detail.asp?id=139968