Karachi: In a notification sent to the bourse on Thursday, K-Electric (KEL) announced that in a board meeting held on August 9th, its Board of Directors had given the approval for development of 900MW (450MW x 2) Regasified Liquefied Natural Gas based Combined Cycle power plant at Bin Qasim Power Station Complex (BQPS-III).
The notification from KEL said this power project stays subject to completion of all statutory and regulatory requirements. The BOD of the company also shared their concern that a favorable result of their review petition lying pending in regard to Multi-Year Tariff determination with National Electric Power Regulatory Authority (NEPRA) was key to this mega-projects financing and development.
The plan for the development of BQPS-III, including simultaneous upgrades to associated transmission infrastructure with an estimated cost of USD 1 billion, was unveiled by the power utility last month and the notification sent to PSX was issued today, after the approval of the same by the board of directors of K-Electric in a meeting held on Wednesday at KE head office.
The board noted with concern that the favourable result of the company’s review petition on Multi Year Tariff (MYT) determination 2017, pending NEPRA, is critical for financing and development of this mega project.
As per the latest KE’s Multi Year Tariff (MYT) determination issued by NEPRA, the investment plan has been fixed and it does not include the investment for proposed BQPS-III plant. KE has already filed a tariff review motion with NEPRA and requested for a flexible performance based tariff where additional investments are possible including 900 MW BQPS-III plant.
The power demand of Karachi is increasing exponentially with growing economic, industrial and residential infrastructure. In consideration of the demand supply gap of the mega city, it is direly needed to upgrade the power infrastructure with added investment and the same is not financially sustainable unless the review petition on MYT pending with NEPRA is decided with a view to undertaking the sustainability of KE’s future cash flows in a realistic manner.
The Bin Qasim Power Station-III comprises two power units of 450 MW each. The first unit is targeted to start production by summer 2018 whereas the second unit is expected to be commissioned by end of 2019. The overall project, including a state-of-the-art power plant and simultaneous transmission upgrades, will enhance the reliability of power supply across K-Electric’s network. Once completed, BQPS-III will represent one of the largest private sector investments of its kind in the country’s power sector.
According to KE spokesperson, “This is indeed a milestone which also reflects KE’s commitment to significantly increase the generation capacity and is poised to play a critical role in further supporting the energy needs of Karachi. While completion of the project is subject to all statutory and regulatory requirements and corporate as well as commercial actions, we aim to commission the project in the fastest possible time and are confident that with the right facilitation from all quarters, partial power from the plant may be added to our supply as soon as summer of 2018.”