KE to invest Rs496bln in power generation, distribution network over 10 years

KARACHI: Karachi-based utility K-Electric plans to invest Rs496 billion in developing its power generation and distribution network over the next 10 years as part of efforts to meet growing energy demand that is expected to increase by 72 percent to over 5,200 MW by year 2026.

A substantial investment is required in generation - including contracting through IPPs - to meet the forecast demand growth and to maintain the existing generation infrastructure,” said the company’s documents, presented to watch-dog National Electric Power Regulatory  Authority (NEPRA).

It added that the KE plans an investment of Rs203 billion to increase generation capacity from equity participation with IPPs and addition to KE’s fleet. “Moreover, 2,300 MW will be secured from new external power producers through offering a bankable security without sovereign guarantee.”

There are constraints on the capacity of the large and ageing transmission network. The power utility plans investment of over Rs287 billion in transmissions and distribution network enhancement. Transmission capacity is expected to increase by more than 3,370 MVA, while distribution network is planned to be strengthened by adding 1,000 new feeders and 4,500 km of 11 kV underground and overhead circuits.

Karachi’s peak demand is expected to reach over 5.2 GW by 2026. “KE has clear visibility on expected demand in Karachi, as applications for 2.5GW in new connections by 2020 have already been received including 600MW for Bahria Town Development; 100MW for DHA City and 50MW for Textile City,” the document said.

There is also an aggregate demand of over 1.0GW of additional capacity required in existing areas.  It said the KE’s business plan has been built around new investments in generation, transmission and distribution to accommodate growing demand and to improve availability and reliability of electricity.

Pakistan’s real GDP is expected to grow by 5.0 percent over the period 2017-2026 and a large component of this growth will come from Karachi which currently contributes 20 percent to Pakistan’s GDP; has 30 percent of national manufacturing; 95 percent of foreign trade runs through the city; and has population growth of 5.0 percent compared to 1.6 percent for Pakistan.

“Karachi will remain the economic hub of Pakistan and the KE plans to stimulate the economic growth further by providing reliable and affordable supply of electricity,” it added.

It may be mentioned here that Abraaj Group having 66 percent stakes in the power utility has already put its holding for sale and China state-backed Shanghai Electric is reported to be the leading bidder.

However, KE is committed to its expansion plans, which are linked with the continuation of its existing multi-year tariff for another 10 years.