Not only the stake holders but over 15 million people
of Karachi, the largest industrial and commercial hub of the country,
are sitting with their fingers crossed to see the outcome of the final
bidding of the Karachi Electric Supply Corporation (KESC) as the bidding
is to take place on December 6.
The 1.8 million registered consumers of the KESC have
a mix feeling about the privatization of the utility especially with a
concern about the price of electricity which is already on the higher
side for the domestic consumers.
Besides the genuine concerns of the consumers over
the ever increase tariffs of the utility companies, there another
segment of the society i.e. illegal users of power through Kunda system.
These illegal electricity consumers are responsible for a theft of over
38 percent out of the distribution network of the KESC causing huge
losses running in billions of rupee every year. According to an
estimate, the loss was estimated to over Rs10 billion per annum on
account of power theft in the KESC system. Obviously, the private
management would not tolerate such a huge loss and would take all
possible stringent measures to prevent leakage from the system.
It is learnt that the private management is intended
to make heavy investment to improve the existing distribution and
transmission network under rehabilitation of entire infrastructure of
the KESC. Once the distribution network was concealed through
underground cables, the new system would leave no chance for nuisance of
power theft to exist any more.
The regulating authority being set up by the
government besides the monopoly control authority will have to protect
the interest of the genuine consumers paying their electricity charges
accordingly and the huge money saved as a result of plugging the power
theft, would be passed on to the consumers in the form of reduction in
price of electricity.
It is also learnt that the improved infrastructure
would also help to reduce the strength of a large number of staff
currently associated with the KESC. The new management, however, would
be paying handsome salaries to the staff to create a culture of
efficient and willing workers which would also help to weed out the
culture of corruption within the organization.
Meanwhile, the experts and engineers of the three
intended buyers of the KESC have already gone through the entire working
of the KESC including administrative set up, financial and billing
operations, and besides technical sides of transmission, distribution
and power generation of the KESC. It was a pre-inspection of the KESC
network by the Siemens team of foreign engineers from Germany, UK and
Poland here on Saturday.
These experts also held a detailed meeting with Brig.
Tariq Sadduzai, the Managing Director and senior officials of the KESC.
It may be mentioned here that out of the short listed
buyers besides Kanooz Group, another is National Power of UK and another
group from Malaysia.
Since the government is determined to its decision to
privatize KESC, there are strong indications that the transaction might
take place in December this year.
The Ministry of Water and Power is actively working
to set up two power generating plants 300MW each to overcome the
increasing gap in supply and demand which is a serious irritant to
industrial investment in Karachi.
Karachi which is currently faced a short supply of
over 1000mw is likely to be self-sufficient in electricity by 2006
especially after completion of the direct link between KESC and HUBCO.
Informed sources say that the federal government has
already granted licenses for two more power plants in Karachi, however,
these plants are facing problem to go into an agreement for sustainable
supply of gas on long term basis.
As a result of tight financial management by the
present management, KESC has succeeded in reducing financial losses by
almost 50 percent bringing it down to Rs.9 billion from huge amount of
Rs17 million outstanding with the industrial, commercial, government and
The transmission and distribution losses were also
reduced by 2 per cent bringing it down to 37.8 percent from 41 percent
and the KESC was confident that if the workers continued working with
the same spirit current year's target will be met by further reducing
the deficit to Rs 6 billion to attain profitability in the year 2006-07.
The present management has also dispelled the
concerns of the employees about repercussions of the forthcoming
privatization of the KESC. The employees would remain secure even after
the corporation is privatized at least for a period of two years under
The privatization of KESC is going to be a turning
point in the power sector of Pakistan. If the experiment of privatizing
the power sector produced positive results especially improvement in the
quality of service, rationalization of the electricity charges proved a
success for more utility companies under the umbrella of WAPDA which are
likely to be privatized in near future.