Karachi’s artificial power crisis

Updated April 19, 2018

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THE prolonged bouts of load-shedding in the country’s largest city and beating heart of its industrial and commercial life has now assumed crisis-like proportions.

It all started suddenly towards the end of March when a routine request from K-Electric to its fuel supplier, Sui Southern Gas Company (SSGC), for the enhancement of gas supplies with the onset of summer temperatures was abruptly denied. As a result, KE has been unable to fire up some of its turbines, creating a shortage of power with the ensuing load-shedding across Karachi that has crippled industry and caused a renewed spike in generator sales.

What made the whole affair quite suspicious were the shifting reasons given by SSGC for denying the request for enhanced gas supplies.

First, it argued that it was receiving curtailed supplies from the fields. When the petroleum ministry said that all the fields were functioning normally, SSGC invoked outstanding payments — for which there is already a repayment agreement in force — followed by the absence of a gas sale agreement between KE and SSGC (which has been the case for almost 40 years).

Curiously, although the city has been suffering for more than a fortnight now, there was near total silence from Islamabad, despite two protestations from the Sindh chief minister and sustained coverage of the crisis in the media. Eventually, the power sector regulator, Nepra, sent a team to Karachi to inquire into the matter.

Read: Load-shedding ignites generator sales in Karachi

Based on this inquiry, Nepra has agreed that refusal by SSGC to honour the request for enhancement of gas supplies has played a role in the current stand-off. Unfortunately though, Nepra’s role in the supply of fuel is limited since the oil and gas sector does not come under its ambit, so it can do little more than issue an ‘advisory’ to the federal government to enhance gas supply.

But the Nepra team went further by faulting KE for not activating its power plants on alternative fuel instead.

This sounds a little unfair on the surface though we will know more should the regulator follow through on its stated intention to file a legal case against KE. It is unreasonable because common sense tells us that arranging alternative fuel, especially at a time when furnace oil imports are being discouraged, takes time.

Then there is also the matter of large outstanding liabilities on tariff differential payments owed by the federal government to KE whenever plants are run on the more expensive alternative fuels.

It is high time that the federal government broke its silence on the matter. Gas allocations are a policy matter, and the prime minister now has an obligation to say something. He can start by telling us whether or not he owns the decision to refuse the routine request for the enhancement of supplies.

Published in Dawn, April 19th, 2018