Minister for Energy Hammad Azhar has disclosed that the National Transmission and Despatch Company (NTDC) recently severed additional supply of electricity to Karachi Electric (KE) due to non-payment.
He shared this information at a recent meeting presided over by Prime Minister Imran Khan when issues related to KE came under discussion.
Well-informed sources told Business Recorder that supply to KE was restored after payment of about Rs3 billion to the government and now both the government and the KE are negotiating on various clauses of the new Power Purchase Agreement (PPA).
Governor Sindh Imran Ismail arranged a meeting between the Minister for Energy and the Chief Executive Officer (CEO) KE, Moonis Alvi, at Islamabad to sort out issues that led to disconnection of additional supply to the KE. The meeting also decided to increase supply by 200MW to meet the requirements of peak hours. Presently, the KE is getting over 1,100MW from the national grid to bridge its demand-supply gap. The KE’s own RLNG-fired power plant’s one unit is also expected to start generation soon.
On May 21, 2021, the Economic Coordination Committee (ECC) of the Cabinet had approved settlement of issue of the KE out of past transactions through arbitration, and directed authorities concerned to expedite the signing of new PPA for smooth payment mechanism and uninterrupted power supply to Karachi and approved.
K-Electric was a corporate entity registered with the Securities and Exchange Commission of Pakistan (SECP) with its independent Board of Directors.
The Government of Pakistan is a shareholder in pursuance of Share Purchase Agreement and now holds 24.34 percent shares.
Initially, the Board of Directors’ composition of K-Electric was as follows; (i) KESC nominated directors 10, GoP nominated directors three.
Under Section 6 of the Code of Corporate Governance, 2017 (which mandated that the independent directors of each listed company shall not be less than 1/3rd of the total number of directors on BoD), K-Electric proposed 13 directors, with following composition: (i) KE nominated directors seven; (ii) GoP nominated directors two and; (iii) Independent directors four.
The Power Division did not agree with the proposal of KE at that time, since this was a special dispensation to the government because of privatisation of KE in 2005.
Hence, K-Electric was informed to keep the number of GoP nominated directors at three, without any reduction.
The independent directors in the K-Electric Board are nominated as per Section 166 of the Companies Act at BoD K-Electric level.
The composition of KE BoD was as follows; (i) KE-nominated directors nine; (ii) GoP-nominated directors three and; (iii) Independent director one.
The sources said, since privatisation, one of the three GoP-nominated directors had been the additional secretary/joint secretary from the Ministry of Finance and other two, one additional secretary and one, joint secretary were nominated from the Water and Power Division (now the Power Division).
In 2019, the nomination of the joint secretary, Power Division was replaced with Zubair Motiwala from private sector to represent Government of Pakistan.
His nomination was later replaced with Muhammad Abid Lakhani, a builder/developer from the private sector.
Abid Lakhani had not attended any Board meeting since his nomination from June 17, 2019.
The sources said, in view of this, it had become necessary to replace him on the Board of Directors of KE with a nominee who actually represents the federal government on the KE Board.
Naveed Ismail, who had been removed from the position of CEO Genco Holding Company Limited (GHCL) on account of poor performance in 2013 by the then government, has recently been appointed by the federal government as the chairperson of NTDC.
The concerned section of Power Division purportedly did not share this information with the high-ups at the time of finalising summary for his appointment as chairperson NTDC Board. According to sources, the Power Division proposed that Naveed Ismail may be nominated as the third representative of the Government of Pakistan on the Board of K-Electric. The other two government nominees on the Board may continue to be an officer each, not below BS-21 from the Power and Finance divisions.
In terms of Cabinet Division’s UO of March16, 2018 an approval of the prime minister was solicited for the placement of the nomination of Naveed Ismail as member on K-Electric Board to represent the Government of Pakistan.
During a discussion, one of the members highlighted that KE’s failures were persisting and recently there was a “blackout” in various areas of Karachi.
Minister for Power explained that due to refusal of the KE to make payment for the additional electricity provided to them, the electricity supply by the NTDC was suspended.
The matter had now been resolved and a new PPA was being signed.
The notification of Naveed Ismail as GoP’s third representative on the KE Board is likely to be issued in a day or two.
