KARACHI, June 2: The flawed energy policy of the government has restrained the Karachi Electric Supply Corporation from generating power on its own, leaving it with no alternative but to purchase power at exorbitant rates.

Well-placed sources told Dawn on Saturday that the KESC had suggested various self-generation projects to the government so that it could overcome the power demand-and-supply gap which often resulted in electricity cuts in the city.

“The basic flaw in the energy policy of the government is that it places undue emphasis on the purchase of electricity from the private sector. The KESC generates electricity at reasonable rates. It does not make economic sense to buy costlier electricity from independent power producers.”

Tapal Energy and Gul Ahmed Energy are the two independent power producers that sell electricity to the KESC.

The sources disclosed that these independent power producers sold electricity units at rates much higher than the rates at which the power utility generated electricity on its own at its power plants, such as the Bin Qasim power plant.

“The KESC generates electricity at its power plants at the cost of Rs3.2 per unit. The Karachi Nuclear Power Plant sells electricity to the KESC at Rs3.09 per unit. The Water and Power Development Authority sells electricity to the KESC at Rs3.64 per unit. The Tapal Energy sells electricity to the KESC at Rs4.81 per unit and the Gul Ahmed Energy sells electricity to the power utility at Rs4.82 per unit.”

The sources added that the electricity tariff at which the independent power producers sold electricity to the KESC was at least 1.6 times the cost at which the power utility generated electricity at its power plants at SITE, Korangi and Bin Qasim.

Insiders told Dawn that under an agreement signed with the independent power producers, even if the KESC did not purchase electricity from them it would be obligated to pay 60 per cent of the per unit cost as capacity charges to Tapal Energy and Gul Ahmed Energy.

“At the time of inviting the independent power producers to the country the government had given some sovereign guarantees to assure them that their profitability would not dwindle under any circumstances,” KESC officials explained, adding that if such attractive guarantees had not been made — even at the expense of consumers — the independent power producers might not have invested in the country.

They recalled that last year the KESC had purchased electricity worth Rs757,068 from the Karachi Nuclear Power Plant, Rs5.8 million from the Water and Power Development Authority, Rs255,338 from the Pakistan Steel Mills Corporation, Rs3.3 million from the Tapal Energy and Rs3.7 million from the Gul Ahmed Energy.

They explained that under an agreement signed with the independent power producers, the KESC purchased 125 megawatts each from the Tapal Energy and Gul Ahmed Energy every day.

“The installed capacity of the KESC power plants is 1,260 megawatts but the power actually generated by them ranges between 900 megawatts and 1,000 megawatts. The Karachi Nuclear Power Plant sends 60-70 megawatts to the KESC. The Pakistan Steel Mills Corporation comes up with only 10 megawatts. The gap between power supply and power demand in the city is usually plugged by the Water and Power Development Authority.”