K-Electric cites gas supply constraints for higher fuel costs

KARACHI: Karachi’s primary electricity provider, K-Electric, could have significantly reduced fuel costs had it received its committed quota of natural gas, according to the company's spokesperson.

Fuel costs for December 2024 could have dropped to PKR 8 per kilowatt-hour, just 40% of what they were during the same period.

The spokesperson highlighted that, during December 2024, 21% of the electricity supplied by the Central Power Purchasing Agency-Guarantee (CPPA-G) — amounting to 2,171 MW — was generated by RLNG (Re-gasified Liquefied Natural Gas) plants, compared to 19% (252 MW) from KE’s RLNG plants. Both operated with comparable fuel costs.

“Due to the low demand during the winter season, KE effectively balanced its supply with reduced procurement from the National Transmission and Dispatch Company (NTDC) network, while prioritizing cost-efficient operations,” the spokesperson said.

“A comprehensive analysis, including capacity payments, reveals that the total power purchase cost from the national grid is approximately PKR 27 per kWh, similar to KE’s costs,” they added.

KE’s challenges, they claimed, stemmed from the absence of access to nuclear- and hydro-based power plants, as well as insufficient supplies of indigenous or low-Btu gas.

Despite this, the cost of electricity sourced from RLNG plants by KE remains aligned with national grid operations.

The spokesperson also reiterated KE's commitment to cost-effective energy solutions, pointing to the recent completion of the KKI and Dhabeji grids, which would enable additional drawdowns of up to 2,000 MW from the NTDC network, pending confirmation.

Furthermore, KE is engaging with NTDC for collaborative efforts to improve power supply stability and reliability