K-Electric unveils $1bln plan to add 900MW into system

KARACHI: K-Electric, the country’s only integrated power company on Monday unveiled a biggest private sector investment plan of $1 billion to set up 900 megawatts dual-fired power plant in order to overcome energy crisis in the port city. 

“The 900MW Bin Qasim Power Station-III will be built at K-Electric’s Bin Qasim site at an estimated cost of $1 billion and includes simultaneous upgrades to associated transmission infrastructure,” the company’s chief executive officer Tayyab Tareen said in a statement. 

“We aim to commission the project in the fastest possible time and are confident that with the right facilitation from all quarters, power from the plant may be added to our supply as soon as summer of 2018.”  The company said the new power plant is expected to use re-gasified liquid natural gas as primary fuel and will represent one of the largest private sector investments of its kind in the country’s power sector.

People in the country’s trading and financial hub are accustomed with a certain period of power outage in a day as the demand is estimated to hover around 2,900MW, while supply is somewhere around 2,300MW. The electricity load shedding is ubiquitous across the country with shortfall reaching over 5,000MW in summers.

K-Electric claimed that it has made 61 percent of Karachi, including all industrial customers, load-shedding free as compared to 23 percent eight years back and reduced the duration and frequency of outages by 45 percent and 41 percent, respectively since 2011. It said it brought down transformer trips by 58 percent and line losses to 22 percent from 36 percent.

K-Electric, which is in talks with a Chinese company to sell its major stake, has already invested $1.4 billion in power infrastructure since 2009 when Dubai-based fund Abraaj Group bought the power utility. Since then, the company added 1,057MW to its power generation. Currently, it is also running $450 million transmission enhancement plan (TP-1000) to enhance transformation capacity and improve the reliability of power supply. 

“We believe the company is ideally poised to continue its investment in generation, transmission and distribution projects within an investment friendly environment,” said Waqar Siddique, chairman of K-Electric. “An investment of the size and magnitude of BQPS-III once again reinforces Abraaj’s commitment to improving the lives of K-Electric’s customers.”  

Siddique, who is also managing partner at Abraaj Group, said Chinese company Shanghai Electric Power has expressed complete confidence in this project and fully endorses K-Electric’s vision for Karachi’s transformation. “This 900MW project marks the beginning of a multi-billion dollar investment plan which is set to accelerate Karachi’s economic potential.”

Wang Yundan, chairman of Shanghai Electric Power said the company issued a fresh public announcement of its intention to acquire up to 66.4 percent shares of K-Electric. 

“While the transaction is yet to be completed, we are actively following K-Electric’s plans which have been comprehensively outlined in their multiyear tariff review petition,” Yundan said. “This is indeed an exciting milestone and we fully endorse their vision for Karachi. SEP looks forward to leveraging its strengths as a strategic investor to further realize K-Electric’s potential in providing better services to the people of Karachi.”

In August last year, the Chinese company expressed interest in buying 66.4 percent majority stake in K-Electric from KES Power, which is a consortium of three firms, namely Abraaj Group, Al-Jomaih Group of Saudi Arabia and National Industries Group of Kuwait. 

However, the company withdrew the buyout offer later due to discord over price issue. The previous offer was $1.7 billion.   K-Electric also created 29 integrated business centers to improve and enhance customer engagement. It is replacing old-wires with aerial bundled cables to avert power theft.