2 KESC Presentation
2 KESC Presentation
2 KESC Presentation
Business Overview
KESC is the only vertically integrated power utility in Pakistan with licensing rights for the city of Karachi
Value Chain Generation
FO or Gas
Transmission
Distribution
By Customer Type: B C t T 1%
Residential Commercial
22% 77%
Industrial
FO or Gas
c. 35% losses
By Revenue
Residential
Capacity: 8,025 distribution transformers 8 025 di t ib ti t f 1,107 11 KV feeders; 5,500 km of cable 11,013 km of overhead lines
50%
32% 18%
Commercial Industrial
59 grid stations id t ti 117 power transformers Network of 220, 132, and 66 KV circuits
Operations:
Fully integrated power utility involved in generation, transmission and distribution A public limited company listed on all three stock exchanges in Pakistan 17,567 Staff split into five active unions CBA in place unions. c. 2.1 million customers (77% residential customers, 22% commercial and 1% industrial customers)
This presentation addresses the four key questions that an average p person or stakeholder of KESC has regarding: g g
1.
2. 2
3.
4.
Scheduled LS Policy* 24/7 exemption to all six major industrial zones + strategic customers (KWSB, etc) For residential customers, no LS between 1:30am and 9:00am daily and during Friday prayers; otherwise: 3 x 1 hr fixed timings daily fixed-timings (normal loss feeders: 70%) and 3 x 1.5 hr fixed timings daily (high loss feeders: 30%)
but there are occasional Unscheduled Outages as well due to any of the following equipment failure across the network : network**: 1,200 feeders 18,000 km of overhead & underground wires/cables 2,500 substations , 15,000 PMTs 150 power units 60 grid stations
2. Fuel Constraints
Key Commercial Markets (78 y ( feeders) - as per the Energy Summit decision on energy conservation
* compared to an average 6-7 hours of unscheduled load shedding last summer ** nonetheless, 99% of Industrial Customers were provided uninterrupted power supply, and 97% of Residential & Commercial Customers were load shed as per above Policy August 2010 statistics
Average summer 2010 peak load of 2,500 MW (5% increase from last summer)
Demand
New Connections of 309 MW added since March 2009 Not-so-significant impact of recent energy conservation initiatives f f 450 MW added to the system since new management took over in Sept 2008, and ( g y another 560 MW under construction (3x GE/France gas turbines already at site; largest such project in Pakistan) i.e. in excess of 1000 MW of new capacity over 3 years
Gross Capacity Addition (MW)
215 345 85 45 450 1,010
Supply
30 150 90 50
Nov-08 Mar-09
Nov 2008
Mar 2009
Jul 2009
Aug 2009
Oct 2009
Dec 2009
Mar 2010
Jul 2011
Mar 2012
Various indigenous/imported coal based projects in feasibility stage (1000 MW) 5-year Power Purchase Agreement signed in Jan 10 with NTDC (WAPDA) for up to 650MW supply Up to 37MW of incremental supply secured from small captive power producers
Total Gas Requirement = 300 MMCFD* + 130 MMCFD for 560 MW BQPS II** BQPS-II**
* As per decision of the ECC meeting of June 2008 and Cabinet Committee on Energy Crisis meeting of July 2009 ** As assured by GOP under the Revised Implementation Agreement of April 2009 Article 158 of the Constitution also guarantees the required quantity of gas to KESC from SSGC
10-year landmark Fuel Supply Agreement signed with PSO in 2010 33,000 ton credit limit (equivalent to PKR 1.5 billion) barely covers 15 days of fuel requirement against our 45 day recovery cycle a serious strain on our working capital as were now compelled to make advance cash payment against daily fuel purchases We re Were actively pursuing other furnace oil procurement alternatives
Average Supply: 200 MMCFD this year versus 275 MMCFD last summer
No Gas Supply Agreement with SSGC yet, hence, ad hoc daily supply against our need to maintain consistent power supply to Karachi Gas quota & pricing allocation (amongst power, fertilizer, CNG. Industrial, power fertilizer CNG Industrial and domestic sectors) needs to be reviewed by GOP
Unable to U bl t run our gas-fired plants at f ll fi d l t t full capacity leading to load shed Every 25MMCFD reduction in gas supply increases consumer end tariff by 50 Paisas per Unit (because replacement furnace oil 2.5x more expensive than gas)
Jan 88 194
% -21
% 35
Historical lack of investment and master planning (haphazard growth) Main Causes System catering to unauthorized load (read: theft) as well Actual load greater than sanctioned load in most instances ( pp g and voltage fluctuation) g (tripping g ) Rights of Way issues with municipal authorities leading to delay in execution of projects Frequent theft of overhead conductors and bus bars at sub stations (copper) HT distribution network mostly underground
7 new grid stations energized (plus 3 under construction) Key initiatives (since Sept 08) 25 km new transmission lines laid & 76 km of existing lines rehabilitated p j y p Rs. 2.5 billion Model Towns project substantially completed 200 new Feeders laid 700 new PMTs installed Load Balancing across the T&D network
475
596
478
31
48
46 39 Apr 2009
58
70 54 51 25
Apr 2009
May
July
Mar
May
June 2010
July
Major Receivables
PKR billions Federal Government (MOF) Provincial Government (CDGK, KWSB etc) Public Receivables Grand Total 34.1 15.2 32.0 81.3 81 3
Payments Summary
PKR billions Total Paid to Suppliers since Sept 08 WAPDA SSGC PSO Gul Ahmed Tapal Kanupp Total 49.6 54.8 54 8 25.4 14.9 16.4 4.2 165.3 Last FY (2009-10) Payments Purchases 36.3 23.0 23 0 11.0 8.0 9.0 2.1 89.4 40.4 28.3 28 3 11.3 8.3 8.7 3.5 100.5
Collections Snapshot FY 10
Overview
Public Sector Consumers (primarily KWSB and CDGK) have the lowest collection rate
TipuSultan IBCDefence N.Nazimabad IBCGulshan F.B.Area Saddar IBCClifton Lyari Bahadurabad Garden SITE Johar Landhi Malir Nazimabad KIMZ BinQasim ShahFaisal Orangi Baldia Liaqatabad NKar/Surjani Gadap Korangi Uthal
92.84% 91.10% 90.88% 90.83% 90.52% 90.50% 90.41% 88.69% 88.06% 87.76% 87.21% 85.61% 82.64% 80.37% 80.19% 80.01% 79.04% 78.53% 78.43% 77.99% 77.43% 76.23% 74.79% 73.38% 54.39%
455,672 526,596 1,053,821 901,998 508,509 1,255,402 708,828 2,176,367 1,457,871 855,324 159,037 1,100,435 413,690 1,261,593 1,287,721 367,934 719,289 595,087 2,123,922 740,236 1,620,207 , , 2,525,438 887,977 1,240,928 529,964 25,473,842
1% T&D Loss
Area
Orangi Korangi Landhi Baldia Liaqatabad Malir Nazimabad N Karachi / Surjani Gadap Lyari N. Nazimabad Shah Faisal F. B. Area Garden Johar Bahadurabad Gulshan Iqbal Tipu Sultan Clifton KIMZ Saddar Uthal Defence Bin Qasim SITE
KESC Initiatives I iti ti 1. 2. 3. 4. 5. FIRs + Name & Shame public awareness campaign through media 8,000 complaints received from public under our Speak Up Program 5,000 attended to date Fatwa from religious scholars against electricity theft f f Kunda removal drive and village electrification schemes Various technical initiatives such as laying Aerial Bundled Cables, installing Automatic Meter Readers, Readers increasing HT/LT ratio, installing capacitor banks (for power factor) setting up new grid ratio factor), stations and transformers, doing load balancing, etc Internal accountability campaign against corruption and non performance Differentiation between high loss and low loss feeders in term of scheduled load shedding
6. 7.
Initial Results
There has been a decreasing trend in T&D losses over the past three quarters The IBC results are particularly encouraging, as shown below:
Distribution (LT)* Loss Profile of Current IBCs
Needed
Amendment to Electricity Act to make electricity theft a non-bailable non bailable offence (as in India) Full support from the government, political parties, media, law enforcement agencies, judiciary, and civil society in eliminating electricity theft by a significant minority h ti th vast majority of h i ifi t i it hurting the t j it f honest customers. It h t t t has to be a JOINT effort
2. Electricity Tariff
KESC Tariff Myths M h vs. Reality R li
Myth
1. 1 KESC determines the consumer tariff unilaterally, at its discretion
1. 1
Reality
NEPRA (Regulator) determines our tariff under a fixed formula agreed at privatization in Nov 2005
GOP decides what % of NEPRA determined tariff is passed onto consumers as Consumer Tariff. The remainder is paid to KESC by GOP as Consumer Subsidy. As the S b id A th GOP progressively reduces th i l d the Consumer Subsidy, the Consumer Tariff goes up accordingly NEPRA / GOP determines the different tariff rates & slabs for various categories of consumers residential (lowest), industrial, commercial (highest), etc.
2.
KESC tariff is high because of T&D losseswe recover the cost of theft from honest customers...
2.
Our actual T&D losses are at least 10% higher than the notional losses assumed/built into our fixed tariff formula(and d li i each year regardless of actual f l ( d declining h dl f t l results)
2. Electricity Tariff
KESC Tariff Myths M h vs. Reality R li
Myth
3. 3 We claim tariff increases on account of monthly Fuel Surcharge Adjustment (FSA) yet save on furnace oil by not dispatching our oil plants & IPPs at full capacity, get p y cheap electricity from WAPDA but dont pass on the benefit to consumers, etc
3. 3
Reality
Fuel & power purchase cost is a straight pass through item under our tariff formula. During the last fiscal year (July 09 June 10), there was an increase in the price of: Furnace Oil: Rs 28,000 to Rs 51,000 per ton Natural Gas: Rs 350 to Rs 394 per MMBTU IPP (Tapal): Rs 6.6 to Rs 11.8 per KWh WAPDA: Rs 6.2 to Rs 9 per KWh Directly/Indirectly burnt approx. 197,000 tons (35%) more furnace oil during the last fiscal year compared to the previous fiscal year (because of reduced gas supply) Furnace oil is 2.5 times more expensive than natural gas Every 25 MMCFD reduction in gas increases tariff by 50 paisa per unit on average Reduced gas supply not only increases consumer tariff (monthly price adjustment) but also de-rates our de rates available plant capacity and reliability
2. Electricity Tariff
KESC Tariff Myths M h vs. Reality R li
Myth
4. 4 We over charge our customers through average billing, fast meters, etc
4. 4
Reality
Average Billing (adjusted in subsequent months) is an administrative reality (but down from 10% to 8% overall) due to faulty meters, inaccessibility to meters inside premises and because of law & order situation, meter tampering, etc. Our meters are procured from third party manufacturers, manufacturers and actually slow down with age until replaced with more accurate devices. For billing complaints, customers have recourse to the Federal Ombudsman, Courts, NEPRA, etc in addition to the CEO Task Force. It is strictly against our Policy to over charge charge our customers in any manner
As a utility company, it is in KESCs own interest to keep the electricity tariff as affordable as possible. The SC ff ff reality, however, is that the current tariff formula does not compensate us for the actual cost of operating and maintaining the utility, nor does it incentivize the shareholders/lenders to inject more capital to finance new power plants, grid stations, etc to meet long term demand. These structural flaws in the tariff formula ought to be addressed now to take care y p ( ) of the future. In the meanwhile, and simultaneously, to keep the tariff affordable (and reduce load shed), we need 300 MMCFD of gas now (+ 130 MMCFD for the upcoming 560MW plant next year), or equivalent furnace oil @ gas price, or consumer tariff subsidy regime to continue. Long term solution lies in setting up coal plants (indigenous or imported).
Load-Shedding: Issues & Remedies Consumer Tariff Customer Service Foreign Investment
3. Customer Service
Historically, being a public sector monopoly, KESC never took Customer Service as a core valuetheres now a renewed focus on this but differentiating between the good and the bad customer
Public Communication
24/7 e emption to all six major ind strial zones + strategic customers (KWSB etc) exemption si industrial ones c stomers (KWSB, For residential customers, no load shed between 1:30am and 9:00am daily and during Friday prayers; otherwise:
Salient Features
3 x 1 hr fixed-timings daily (normal loss feeders: 70%) and 3 x 1.5 hr fixed timings daily (high loss feeders: 30%) Differentiation between normal-loss (good )and high-loss (bad) localities. All low-loss (excellent) areas to be load shed free in the near future Load shed relief if theres a prolonged unscheduled outage in an area for any reason Ad hoc load shed relief given daily (religious and political gatherings, law and order situation, etc) Key commercial markets (78 feeders) - as per the Energy Summit decision on energy conservation Shutdown ads given in 3 newspapers (in advance)
Overview
3 IBCs fully operational in Defence, North Nazimabad, and Gulshan Iqbal and recently Clifton 3 additional IBC in pipeline including 2 industrial centers expected to be fully operational by Oct10 Total of 25-27 such IBCs by the end of next year to cover the entire city
Existing3IBCs No.of Customers Dateof Launch L h Cumulative Billing Covered% 254,320 Clifton 64,000 Aug10 g Liaqatabad 89,500 Sep10 p KIMZ 20,000 Sep10 p SITE 36,125 Oct10 Johar 20,000 Dec10 Saddar 36,125 Dec10
13%
17%
19%
24%
36%
40%
45%
Key Initiatives
Newspaper ads on Safety, Theft, Energy Name & Shame Conservation, Monthly Scorecards, etc Campaign Press releases Media team beefed up Press conferences Info portal (www kescinfo com pk) (www.kescinfo.com.pk) Media Interviews Umeed newsletters
They Steal, We Pay Pay Campaign
Media Briefings
Safety Campaign
Energy Conservation
Khuli Kutcheries (Open Houses) on the spot resolution of customer complaints 17 across various towns of Karachi this year Baldia Town Elander Road Gulistan Johar (x2) Khalid Bin Waleed Town, Road, (x2), Road, Landhi, North Nazimabad (x2), Gulshan Iqbal, Defence, Lyari, Orangi, Gulzar Hijri, Gulberg, Manghopir, SITE, North Karachi/Surjani
3.4 Customer Service - CEO Task Forces & Customer Rewards Program
two dedicated Task Forces have been set up in the CEO Secretariat to monitor and address customer complaints regarding technical faults and billing
Technical Faults
CEO Task Forces
3 shifts working 24/7 across the city Billing issues Out of 334 cases 307 cases have been resolved and responded to the consumer since 1st June10; 92% resolution ratio.
Rewards Program
Monetary rebate being considered to be given to those customers who pay their bills on time for 12 consecutive months and have no other billing related anomalies Work in Progress
New Ne Connections
New Connections team is working diligently towards i i the t to bl revising th current processes so as t enable: Maximum automation Process simplification Increasing customer convenience g 309 MW added since March 2009
Load-Shedding: Issues & Remedies Consumer Tariff Customer Service Foreign Investment
Other Shareholders
(Al Jomaih / Saudi Arabia) + NIG / Kuwait)
50%
50%
KES Power
1.90% 72.45%
25.66%
Investment Timeline
Year 1 ending April 2010 Agreement with GOP Actual Investment: Abraaj GOP Total Equity Funding Foreign Debt IFC / ADB / OeKB Local Debt NBP / HBL / SCB etc. Total Debt Funding Total Financing Commitments (Equity + Debt) US$ 100 million US$ 100 million US$ 200 million US$ 520 million US$ 1 021 million 1,021 US$ 210 million US$ 110 million US$ 320 million US$ 208 million US$ 71 million US$ 153 million US$ 70 million US$ 361 million US$ 140 million US$ 501 million US$ 150 million Year 2 ending April 2011 US$ 150 million Year 3 ending April 2012 US$ 61 million US$ 361 million Total
Annexure
Other Matters