KESC cuts the chord(s) with rental power plant

KARACHI – The Karachi Electric Supply Company (KESC),under fire from various quarters for purchasing extremely expensive electricity from rental plants, has decided to stop purchasing electricity from a Dubai-based power company from next month, Pakistan Today has learnt.
Sources told Pakistan Today that KESC officials, during the recently-held public hearing organised by National Electric Power Regulatory Authority (NEPRA), confirmed that supply from rental generators will be discontinued from March 13, with the power utility claiming that their contract with the Dubai-based company set to expire soon. But in truth, the KESC has been forced to act due to pressure from various quarters.
According to an agreement inked in January 2009 between the KESC and a Dubai-based company, Egrico, the latter was to supply at least 50MW to the privately run public utility from its rental power generators installed at the Site Gas Turbine Station in return for a monthly charge of $2.8 million.
“The KESC was procuring 50MW of power from Egrico at a rate of 5.08 cents per KW. A local power generating company, Progas, was offering a rate of , while ignoring a cheaper offer of Progas a local power generating company, at a rate of 3.80 cents per KW,” sources said.
As per the terms of agreement with Egrico, the KESC had paid transportation charges and custom duties of all 58 generators that the foreign firm was to import as well as depositing $1.2 million in advance to Egrico. “The agreement stipulated that the public utility was to pay Rs 4.00/KW per hour or Rs 2.0 million per hour,” sources said.
Not only were gas and water supply all arranged for the RPP, the KESC also stopped running seven of its gas-based turbines of over 130 megawatts to facilitate the rental one, sources explained. “The Abraaj management of the KESC had signed the agreement despite knowing fully well of the technical difficulties involved in installing Egrico’s generators.
“The Abraaj management did not give much attention to the only one new 60MW power turbine at the time. Similarly, had the company reached an agreement with Progas, a lot of money could have been saved,” sources said. “Abraaj’s agreement with Egrico was in part because both companies are Dubai-based, but also because Abraaj had shares in Egrico.”