Rs780m a month gift to power company


Khalid Mustafa

ISLAMABAD: In a criminal case of official apathy, the cash strapped Pakistan government is paying $9 million per month (or as capacity charges) to Turkish Karkey power rental ship but not making any efforts to ensure fuel supply to make the unit fully operational, The News has learnt.

The deal to pay capacity charges of $9 million (approximately Rs 780 million) was struck between influentials of the government and Turkish company in 2009 when the dollar parity stood at $1: Rs 82 which has now swelled to $1: Rs 86.

The deal was concluded when former minister of water and power Pervez Ashraf was ruling the roost. In what may be a very ‘interesting’ coincidence, it is relevant to mention that Raja Babar Ali Zulqarnain (NIC *61101-7142854-9), son of AJK President Raja Zulqarnain Khan is the country representative for the company Karkey Karadeniz Elektrik Uretim AS in Pakistan.

According to a senior functionary of Nepra, “Owing to this very reason, Pakistan’s poor consumer is left with no option but to pay a heavy cost of Rs 41 per unit for electricity being generated by the Karkey plant. In the wake of failure, Karkey is being paid Rs26.37 per unit as capacity charges while Rs15.48 per unit is paid under the head of fuel cost.”

This multi-million dollar loss to the national economy came to the surface during the hearing of the petition of eight power distribution companies including KESC by Nepra seeking the upward raise in power tariff under the head of fuel cost adjustment used in the month of May. The power regulator has reserved its judgment over increase of electricity tariff by 61 paisas per unit under fuel adjustment.

Nepra authorities took notice of huge capacity charges during the hearing and sought explanation from Ministry of Water and Power and Central Power Purchase Agency (CPPA). Nepra also observed that if the Ministry or it departments are responsible for such deals why must power consumers pay a huge tariff that includes capacity charges.

Nepra was told that the government failed to open the letter of credit (L/C) to provide oil supply to the power plant apparently because of fiscal constraints that have worsened in the wake of the appalling circular debt issue. The power regulator was also told that commercial banks have refused to extend credit supply to government in the power sector.

According to sources, under the agreement, the government is bound to provide fuel supply to Karkey power rental plant; otherwise it would pay capacity charges. Currently Karkey is generating only 30MW of electricity against an installed capacity to generate 231 MW as agreed under the deal.

However, when contacted, Safeer Hussain, registrar at Nepra said that the electric power regulator has not allowed seeking capacity charges or rental charges of Karkey plant from consumers. He said Nepra had asked the Ministry of Water and Power and CPPA to ensure fuel supply to avoid the huge capacity charges of $9 million per month.

Sources said the barge-mounted rental power plant of a Turkish company, Karkey Karadeniz Elektrik Uretim AS completed its CoD (commercial operational date) on April 30, 2011 while its original target of CoD was October 2009. Its target was revised to December 2009, then May 2010. Even after its failure to complete the CoD, the new target was fixed at March 2011, which was also missed.

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