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Government’s Flawed Gas Allocation Policy

Karachi: Karachi Electric Supply Company has been forced to carry out increased load shedding in Karachi due to unjust and inadequate allocation of low cost generation fuel, that is natural gas. This is a painful situation for KESC, as KESC has always tried to provide the best possible service to its valued customers despite all the odds.

The current crisis was triggered due to unilateral reduction in gas supply to KESC by SSGC. At the time of management take over by the present group, KESC committed an investment of USD 361 Million and Government of Pakistan committed supply of 276 MMCFD gas for our existing power plants and another 130 MMCFD for the under construction USD 450 million, 560 MW capacity power plant.

The fact is that Government never delivered on these commitments and KESC has been suffering on account of insufficient gas supply. This has caused heavy reliance on three times more expensive furnace oil that resulted in sharp rise in consumer tariff. KESC has been fighting for its approved quota of 276 MMCFD of gas because it understands the impact of less gas supply on generation cost that in turn increases burden on our consumers.

Even today, KESC is getting only 160 MMCFD of gas that is not at all sufficient to meet the power needs of the city, which hover around 2500MW daily. Earlier the gas supply was around 200 MMCFD and constant requests were made to SSGC to increase it to the required and approved level of 276 MMCFD.

However, instead of increasing the supply, a reduction of 40 MMCFD was unilaterally imposed on KESC. The reduction was attributed to issues in some gas fields. Now there are a few fundamental questions that need to be asked:

Whenever there is any issue with gas fields, why is that KESC’s supply is cut first of all.

KESC understands It’s public service role, why does SSGC ignore that and not treat KESC as a preferred customer, considering that over 20 million people rely on KESC for electricity supply? Why is KESC at the bottom of SSGC’s priority list even when KESC pays the highest price for the gas supplied?

While SSGC imposes supply cuts on KESC, why does SSGC continue to supply gas to a handful of industries and CNG stations? Even now, industries get a supply of around 300 MMCFD of gas of which around 175 MMCFD is used to generate power for their own use.

Is this policy justifiable while KESC, that serves over 20 million people, is getting only 160 MMCFD? Why is SSGC not forcibly reducing supply to industries just as it does in case of KESC? Why are industries asked to voluntarily reduce consumption, whereas KESC is not given that flexibility?

Why is that SSGC considers commercial interest of a handful of industrial units supreme over the basic needs of 20 million people of Karachi?

Economic coordination committee decided on June 30, 2011 to implement uniform gas load management policy and observe two days per week gas holiday in industries and CNG stations and supply the saved gas to KESC. Why has that decision not been implemented by the Government and SSGC despite multiple requests by KESC?

Why is SSGC not obeying the orders of the Honourable Sindh High Court to supply the approved 276 MMCFD of gas to KESC?

Why is the Government not honouring its commitment to supply approved volume of gas to KESC?

It is ironic that KESC’s flagship 560 MW new power plant is suffering and its testing phase is being compromised due to insufficient gas supply while industries and CNG stations are enjoying uninterrupted supply of gas.

Because of inconsiderate policies, KESC is subjected to aphorism and unstable gas supply that is detrimental not only to KESC but also 20 million consumers of KESC who suffer because of this indifferent attitude of the government and its institution.

While KESC will continue its struggle for the committed gas supply, it regrets the recent increase in load shedding and apologizes to its customers for the inconvenience caused due to factors beyond its control. KESC also assures the fact that the situation will normalize as soon as the government and SSGC supply the adequate volume of gas.

It is hoped that SSGC will realize its obligation towards common people and reconsider its fundamentally flawed gas allocation policy. By supporting commercial interest of a handful of industrialists who have been taking advantage of regular gas supply and running their own captive power plants, SSGC is only adding to the misery of millions of ordinary people of Karachi.

We once again appeal to the government to take immediate corrective measures. All we want is the implementation of Government’s own decisions in the larger interests of common people of Karachi.

For more information, contact:
Adil Murtaza
Assistant Manager, Media and PR
Karachi Electric Supply Company Limited (KESC)
2nd Floor, State Life Building No 11, Abdullah Haroon Road, Saddar, Karachi
Tel: +9221 9920 7163
Cell: +92346 822 3641
Email: adil.murtaza@kesc.com.pk

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