ISLAMABAD: In a landmark moment for the power sector, the government and K-Electric (KE) on Friday reached a significant milestone by signing various agreements underpinning Karachi’s energy security.
The signing ceremony took place at the Energy Division on Friday and resolved long-standing disputes between the Government and KE, with foremost among these being regarding formalizing and securing a firm supply of power from the national grid to Karachi up to the interconnection capacity. The agreements were signed by Government of Pakistan (GoP) through its representative bodies in the presence of Muhammad Ali, Minister of Energy, Power and Petroleum, and Dr. Shamshad Akhtar, Minister of Finance while KE was represented by CEO, Moonis Alvi and CFO, Muhammad Aamir Ghaziani.
These agreements pertain to legacy matters, resolution of which was critical for Karachi and also for KE’s sustainability as a company. The utility, government and various critical power sector stakeholders had been engaged in talks for a significant period of time. The meeting saw resolution and signing of the Tariff Differential Subsidy Agreement (TDA), and Power Purchase Agency Agreement (PPAA), thereby marking a significant milestone for the power sector at large. The Interconnection Agreement (ICA) is also expected to be signed after approval from NEPRA. Firm supply of energy from the national grid will facilitate access to affordable power for KE customers. The signing of a Mediation Agreement (MA) is also crucial for the reconciliation of legacy contentions on payables and receivables between KE and government entities.
Expressing his gratitude at the occasion, CEO KE Moonis Alvi said: “Today is a momentous occasion for us, representing a paradigm shift in the energy landscape as well. We have been working on these issues since as long as I can remember, and today I am deeply grateful for the endeavors of the honourable Prime Minister, Mr. Anwaar ul Haq Kakar, Minister for Energy Mr. Muhammad , Finance Minister Dr. Shamshad Akhtar , the SIFC, and also the task force under Mr. Shahid Khaqan Abbasi along with the innumerable other stakeholders who demonstrated resolve and pragmatism in bringing these legacy matters to a close. We have invested thousands if not millions of man-hours to arrive at this point. Firm supply for Karachi addresses the energy trilemma for the customers of Karachi while also alleviating the subsidy burden on the government in the long run. We believe, the resolution of these matters will also enhance our journey towards sustainability as a company.”
Muhammad Ali, Minister of Energy, Power and Petroleum stated, “We are tackling a gordian knot in the power sector with a vision to bring efficiency and long-term stability. Today’s signing is one facet of this, where we have addressed legacy bottlenecks. It demonstrates the willpower and commitment of our institutions towards Pakistan. The Ministry is working hard to provide an enabling environment for the power sector to thrive because the ultimate beneficiary of our interventions is the customer. Special thanks to the Finance Minister Dr. Shamshad Akhtar for her personal involvement and support. This is the best news to the Karachi consumers as power issues will be much more stabilised now. KE has always been treated by the government as a partner. My special thanks to Prime Minister as throughout the process he was invested personally and kept on taking feedback. I thank my colleagues and all teams for their invaluable contribution.”
Dr. Shamshad Akhtar, Minister of Finance stated: “Energy underpins progress on a national level. Streamlining issues and resolving legacy matters therefore is of utmost importance. We believe that today’s achievement will also send a strong positive signal to investors across the globe who are eyeing Pakistan as a potential market. The energy sector is undergoing a revolution and we are committed to support it.”
Following recent approval by the Economic Coordination Committee (ECC) chaired by Dr. Shamshad Akhtar, the summary had been ratified by the Cabinet also and was developed on the recommendations put forward by the Prime Minister’s Taskforce on Energy that was chaired by Shahid Khaqan Abbasi. In December 2023, caretaker Prime Minister, Anwaar ul Haq Kakar met with representatives of Saudi Group Al Jomaih, KE’s oldest and one of the largest shareholders since privatisation and assured them of support from Government of Pakistan.
K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005, KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 square kilometers territory including Karachi and its adjoining areas. The majority shares (66.4%) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan is also a minority shareholder (24.36%) in the company.
