ISLAMABAD: In a rare public spat, K-Electric on Sunday challenged the National Electric Power Regulatory Authority (Nepra) over allegations that its fuel costs were significantly higher than electricity imports from the national grid.
The disagreement follows a special note issued last week by Nepra’s technical member from Sindh, Rafique A. Shaikh, who pointed out that K-Electric’s own power plants contributed 19 per cent to its energy mix in December 2024, while purchases from other independent power producers (IPPs) and captive power plants (CPPs) accounted for 7pc, and National Transmission and Despatch Company (NTDC) supplied 74pc of KE’s total electricity.
“Notably, the cost of generation within the NTDC system is significantly lower at Rs9.60 per kWh (kilowatt-hour), compared to KE’s own generation cost of Rs18.63 per kWh,” Mr Shaikh said.
Says Karachi’s power costs could drop if gas quota is restored
With NTDC possessing surplus generation capacity and its facilities situated close to K-Electric, Mr Shaikh emphasised it was crucial for both KE and the transmission company to prioritise and accelerate the interconnection works and studies between their systems to optimise cost-efficiency and improve overall performance.
KE defends cost structure
In a rejoinder released to the media, K-Electric refuted Nepra’s analysis, stating that it does not present a complete picture of power costs.
The Karachi-based private utility clarified that during December 2024, the Central Power Purchasing Agency-Guarantee (CPPA-G) sourced 21pc of electricity (2,171 MW) from RLNG-based plants, compared to KE’s 19pc (252 MW) from RLNG-based sources, with fuel costs comparable to those power plants operated by KE during the same period.
A KE spokesperson added that demand during the month had become low due to the winter, and the utility managed its supply from the NTDC appropriately. K-Electric matched the low demand with a balanced supply from the NTDC network, using plants where the cost was comparable to other plants run by the NTDC network.
“It is pertinent to highlight that if KE could have received its quota of natural gas as was committed, the cost of fuel could have fallen to Rs8 per kWh, a mere 40pc of what it was during December 2024,” the KE claimed.
Questioning the Nepra’s member, K-Electric said that delving into details, at this instant, it is pertinent to highlight that comparing only fuel costs — as done in the report — might not provide a holistic view.
“A comprehensive analysis, including capacity payments, shows that the total power purchase cost of the national grid is approximately Rs27 per kWh. In comparison, the power purchase cost of KE would be similar,” it claimed.
K-Electric said that in terms of fuel cost of electricity, the KE system, when compared with CPPA-G, was higher because, unlike CPPA-G, K-Electric did not have the availability of nuclear- or hydro-based power plants in its fleet, nor is KE provided sufficient supply of indigenous or low-Btu gas to operate its own plants. When it comes to operating RLNG plants, KE’s procurement of electricity is similar to that of the national grid, it said.
K-Electric reiterated its commitment to procuring cheaper electricity from NTDC, citing the completion of the KKI and Dhabeji grids, which will allow increased power draw from the NTDC, up to 2,000 MW. However, confirmation from NTDC on this capacity increase is still awaited.
Published in Dawn, March 10th, 2025
