K-Electric Inflicts Rs. 110 Billion Loss on Exchequer

Senate Standing Committee on Rules of Procedure and Privileges has expressed serious concern over a loss of Rs 110 billion to national exchequer by giving benefits to K-Electric by supplying 650 MW from national grid at Discos’ rate. The committee met with Senator Dr Jehanzeb Jamaldini in the chair at the Parliament Lodges on Friday. Senators Shahi Syed, Sardar Muhammad Yaqoob Shah, Osman Saifullah Khan, Zahida Khan and officials of Ministry of Water and Power and K-Electric participated in the meeting.

The committee also expressed serious concern over providing 650MW electricity to K-Electric at a low price while the agreement of the company with the government expired in January 2016. The committee members said K-Electric was producing 1200MW to 1400MW electricity when it started to get 650MW electricity from NTDC. The company has ability to generate 3007MW electricity but it is not doing so because it purchases electricity from NTDC at a “low” rate.

The committee said if KESC was supplied 650MW electricity on the marginal cost basis instead of Discos’ rate, the advantage to the national exchequer would have been to the tune of around Rs 110 billion. While raising the issue of K-Electric in the meeting, Shahi Syed told the committee that according to a report of Sub-Committee on Water and Power, it was unanimously recommended that the agreements with both private partners forthwith be cancelled and all payments, financial relief, incentive packages, tariff concessions and other benefits made by the government to the Company since 2005 till to date be recovered.

He said the Sub-Committee also recommended establishing a Judicial Commission to probe and make a detailed assessment of losses suffered by the national exchequer, Company and Consumers of KESC (K-Electric) owing to international failure by the private partners and initiate criminal cases against them. He said the proposed Judicial Commission should also examine the role of officials involved in granting illegal favour to the K-Electric at the cost of huge losses to the national exchequer.

He said the Sub-Committee also recommended that the government should take over the company and establish a body to evolve a proper mechanism for implementation and oversight on future privatization of companies for achieving the goals and objectives of the state-owned companies. Shahi Syed said that K-Electric has a capacity to generate 3007 MW but it is purchasing electricity at low price from the NTDC which is a violation of power purchase agreement. He said as per the 2005 agreement, KESC was given a Tariff Period Subsidy for seven years which ended since 2012. He said the Company is getting benefit of billions of rupees because according to the new agreement, Tariff Period Subsidy would end in 2016.

“Later on in 2012, the Ministry of Water and Power moved a summary about the illegal supply of 650 MW from national grid to the K-Electric to the Council of Common Interest only for ratification of its illegal decision. The CCI meeting curtailed the supply from 650 MW to 350 MW to KESC on strong objection raised by Chief Minister Punjab. After the CCI decision, the company got restraining orders from the Sindh High Court against the CCI curtailment till final disposition of the petition,” he added.

Shahi Syed claimed that K-Electric expelled 7604 employees and recruited children of politicians at high salaries. When the issue was raised in the meeting that high officials do not participate in the meetings of Standing Committees, Sajjad Asghar, Director K-Electric, said they tried to attend the meeting of Water and Power but Co-chairman does not allow them and asked to send K-Electric’s CEO Tayyab Tareen for responding to the queries of the committee.

He said that the Company had expelled only those employees who were not performing well. He said that more than 6000 employees were working in the Company before its privatization. The committee also proposed to take up the issue of K-Electric in the Standing Committee on Water and Power for further discussion in its next meeting.