K-Electric investment plans to rid city of load-shedding

KARACHI: The management of K-Electric has assured to bring down transmission and distribution losses to 12.8 percent and make Karachi city free of electricity load shedding by investing Rs 484 billion for improvement in its network during the next seven years.

The K-Electric’s management gave this assurance during a hearing held on Wednesday by the National Electric Power Regulatory Authority (NEPRA) regarding KE’s investment plan in transmission and distribution for a 7-year period starting from the year 2024 to 2030.

The hearing was attended by a wide range of stakeholders representing industries and community leaders alike. Key themes discussed were the projects being undertaken to drive growth and reliability in KE’s transmission and distribution network.

Additionally the projected growth in demand within the utility’s operational territory, and planned technological interventions to further improve the quality and reliability of the service.

The KE management also informed NEPRA that since privatization, KE has brought its T&D losses down from 34.2% to 15.3% in 2022 which beat NEPRA’s benchmark for the year. 

And, by 2030, KE aims to reduce the load-shedding in the city from 75% as of 2022 to 95% at the end of the seven year period.

Moonis Alvi the CEO of K-electric (KE) said during the hearing that this plan was being conceived cognizant of the imminent changes in the power sector such as the liberalisation of the market. 

Further adding that KE is embracing competition and has filed for a non-exclusive distribution licence. Adding that the investment plan is being conceived to maintain a balance between affordability, availability and sustainability of power supply which is considered today’s trilemma.

NEPRA inquired about the future plans to address challenges such as load shedding and theft.

KE shared details of investment and projects being undertaken to reduce losses in the system and provide stable power supply to a growing number of customers.

Implementation of “Aerial Bundled Cables” and “Advanced Distribution Management System” were cited as measures that would further reduce transmission and distribution losses.

Responding to a question, Alvi stated that the T&D losses have been reduced from approximately 38% to 15%.

Several intervenors inquired about KE’s plan to add generation to meet Karachi’s future demand.

While NEPRA chairman clarified that the hearing was on transmission and distribution specifically, documents on KE’s website show salient features of their combined investment plan which included an additional 1182 MW through renewable energy.

The presentation also revealed KE intends to reduce its reliance on thermal power plants from approximately 90% of the total energy requirements to a staggering 50%.

Reasoning for separate tariff petitions had also been presented to include greater transparency. Compared to previously applied tariff, the current petition has provision of review mechanism every two years.

KE management explained that this is to allow flexibility in the scope of investment to align it with the macroeconomic situation at the time. Industrial representatives also lauded KE’s operational performance.

Moin Fudda, Chairman of Board of Directors CDC stated that it is important to bring KE’s legacy challenges to closure such as the issue of its receivables which have accumulated to about Rs 400 billion. 

Fudda also requested the planning commission and the PM taskforce on energy to pay attention to the matter. According to him, filing for a non-exclusive licence is a positive step and should be acknowledged.

Out of the total Rs 484 billion earmarked for the company’s investment plans, 177.85 billion is to be invested on company growth and expansion of services. While Rs 99.41 billion will be invested for interconnection and N-1 contingency.

An amount of around Rs 67.83 billion will be invested for loss reduction, Rs 64 billion to be invested for maintenance and a further Rs 29 billion for safety.

KE has also pledged Rs 26.21 billion to spur technological advancements and Rs 18.51 billion to be invested on account of IT & Cybersecurity.

Public accident prevention program is a key feature to ensure continued safety through this plan. As of FY22, KE’s recovery ratio stood at 96.7%. KE also plans to increase recovery of bills under this investment plan. 

During the hearing, Chairman NEPRA said that he wanted distribution companies to provide affordable, reliable and sustainable electricity to the consumers.

On the flip side NEPRA officials also raised questions over the investment made in the past. 

Company officials informed the officials that the regulator had given a target of Rs 200 billion investment on transmission whereas the utility had invested Rs 225 billion that was more than the investment target given by the power regulator.

The company also added that they were requesting actual indexation of dollars rather than based on assumption. Therefore, they said that consumers would benefit from the tariff set by the power regulator even if KE is unable to achieve the targets.

Present on the occasion, participants also shared their comments on KE’s performance since privatisation. Queries included the utility’s future investments including making power affordable for all, incentivizing foreign and local stakeholders to further invest in the power sector. 

While others shared that the company’s services have improved since the company’s privatisation. Participants also suggested keeping ground realities in mind when setting the future T&D losses and recovery targets to ensure a sustainable power supply to the city.

While expressing gratitude to the NEPRA Authority and the participants for sharing their valued thoughts, K-Electric spokesperson stated, “Our investment plan has been developed to meet the future needs of our growing customer base”. 

“We anticipate that in 2030, our customer base will grow from 3.4 million people today to approximately 5 million, and the consumption forecast will be around 5000 MW of electricity. This requires meticulous planning and targeted investment. Based on its 110 year experience of serving the city, K-Electric remains committed to providing reliable and affordable electricity to its customers.”