The privatization process of Karachi Electric
Supply Corporation (KESC) is now close to be accomplished soon after
the payment of the agreed price (Rs20 billion) probably on March 20 by
the successful bidders, the Qanooz al-Watan group of Saudi Arabia.
They will be free to take over the charge of the
company after making the payment. The word about privatization of the
KESC, which is an organization of the masses, had naturally generated
a wave of questions and apprehensions regarding job security in the
minds of around 20,000 people associated with the corporation besides
perturbing minds of 1.9 million consumers due to their concerns for
electricity charges which are already on the higher side.
There were several protest statements and
demonstrations staged by the KESC employees to express their
apprehensions regarding job security in the wake of privatization.
They had also formed an action committee to press the government for
Similarly, the industrial, commercial and domestic
consumers were also opposing the privatization of the KESC through
various platforms to show their concerns for possible hike in
electricity prices by the private owners in future.
In the backdrop of the situation, it was probably
the most appropriate time to have a chat with Brig. Tariq Sadduzai,
the outgoing Managing Director who stayed for about 4 years in KESC,
to discuss the much talked about post privatization issues pertaining
to the apprehensions of the consumers and the employees of the
Brig. Tariq Sadduzai, an aeronautical engineer by
profession and his team of other army professionals was assigned the
job in 1999 to put the administrative, financial and operational
system in order which was in a complete mess. The Transmission and
Distribution losses had jumped to an alarming level of 42 percent
mainly on account of power theft. It was the time when the government
to inject a huge amount of Rs17 billion a year to make up the
financial losses incurring every year into KESC system.
Though the human memory is short, but not too short
to recall the days when the consumers had to run from pillar to post
in a bid to obtain two-three installments of their inflated
electricity bills. So much so the consumers had to offer bribe to the
concerned officials to get installments of the bills or to restore
power supply disconnected on non-payment or due to other reasons. The
rampant corruption had consequently eroded the entire organizational
structure of the utility. Due to financial constraints, the company
was unable to provide meters to a large number of housing and
commercial projects hence creating a situation which created a large
crop of illegal consumers by making payments privately to the corrupt.
Despite several attempts made by the governments in the past no
private sector party was willing to buy such an organization full of
all sorts of ills.
Today, the situation is altogether different from
what it was four years back. The financial losses brown down from Rs17
billion to Rs6 billion this year and will further go down to a level
of Rs3 billion next year paving the way to be a growing concern for
the KESC in the days to come. No doubt it all happened due to
concerted efforts of the present managerial team led by Brig. Sadduzai
making KESC a classical case study in the corporate sector of the
country. This tribute was paid by Akhtar Hayat, the Chief Instructor,
Administrative Staff College Lahore when he, accompanied by a
50-member team of senior civil and army officials during a recent
visit to KESC.
Coming back to the concerns of the KESC employees,
Brig. Sadduzai observed that in effect the privatization has placed
the workforce in a much better position as far as the job security or
fringe benefits of the workers are concerned. The agreement with the
private sector ensures that all contract employees would be entitled a
20 percent raise in their salaries. The new management has agreed to
offer 10 percent shares to the employees while there is no question of
retrenchment because they have to run the organization with these
people. Actually, the present workforce was yet another assets for the
new management especially in view of the administrative cost which
merely 5 percent of the total revenues of the company, hence they are
not a burden rather an assets of the company, instead of retrenchment
they would go to reinforce the existing workforce, said MD KESC. Above
all these incentives offered by the private management it has agreed
to restore the Trade Union rights from the first day of taking over
the charge that was a long standing demand of the KESC workers. It may
be recalled that the government had put a ban on trade union
activities through presidential orders in 1999.
As far as the apprehension for increase in tariff
was concerned, the agreement between the Privatization Commission and
the private management envisages a 7-year multi-year tariff formula
with a clear condition that the new management will not increase the
tariff except fuel prices. However, they will be free to import
cheaper fuel through their own resources instead of buying fuel from
PSO. Having their roots in the oil rich Saudi Arabia, the fuel price
may not hit the tariffs of the KESC, Brig. Sadduzai expressed the
confidence. It has also been agreed by the new management that it will
pass on the benefits to the consumers as soon as the company becomes a
profit making entity, hence there are strong indications that the
tariff will come down because all bottlenecks have been removed and
the company is well poised to be a growing concern, said KESC chief.
Elaborating the current status of stable power
supply, better customer services and profitability, he said that these
were three indicators which are strongly pointing towards the
revitalization of city power utility.
Recalling early days when he had joined KESC four
years back, he said KESC had to resort to load shedding to the tune of
1.3% to overcome the power demand of 1200MW in the power starved city
of Karachi. Today, the demand for electricity has increased to 2173MW
yet the management has succeeded to reduce level of load shedding
merely to 0.4% despite the fact that no major investment was made in
power generation of KESC.
He said the first task given to the army management
was to keep it a float, still we reduced the losses from 17 billion
rupees to 6 billion rupees with a downward tend towards Rs3 billion
next year. By the year 2006-7, the organization will be making a
profit of Rs1.6 billion.
The HUBCO-KESC link is being established to provide
an additional 1000MW into the KESC system. That additional supply from
HUBCO will certainly provide a cushion to the power supplies for a
certain period. However, the new management would have to set up new
power generating units to match the demand growth in this largest
industrial hub of the country.
Regarding rehabilitation and up-gradation of the
transmission and distribution network, MD-KESC said government has
provided a fund of Rs6 billion for upgrading the Transmission System.
So far 10 power transformers have been installed while 12 more Grid
Stations are in the pipeline. As far as Transmission &
Distribution losses were concerned they have been reduced from 41% to
33% by February 2005.. One percent reduction amounted to Rs500 million
savings per year.
In order to provide better customer services, KESC
has restructured its entire distribution and billing structure and
instead of 20 zones, a network of more than 110 sub-divisions have
been established where one window service being offered to the
consumers. The consumers have not forced to seek Sifarish or pleasing
the corrupt to get installments or get resolved their billing
problems. A system has been developed for an easy access of the
consumers to the concerned authorities. Besides the relief packages
for payment of outstanding dues were introduced, the consumers are
entitled to get 30 installments that also at the consumer door-step,
rebate of 70 to 20 percent on full payment of outstanding amount etc.
All these forms have helped developing a culture focused at helping
out attitude towards the consumers. Though these over 100 zones
developed to facilitate may not be coming up to the expectations of
the customers, yet the foundations of a culture aimed at honoring the
inner respect of the consumers have been laid, these values are
expected to go stronger in the days to come. It is now the
responsibility of the society to make the system a success.
I personally believe that people of Karachi, a city
which is generally known as a hostile city, should duly acknowledge
the efforts of Brig. Sadduzai for his bold decisions for breaking the
bureaucratic hurdles he took during his 4-year tenure to facilitate
the people of Karachi if they believe that the virtue really deserves
to be rewarded.
Brig. Tariq Sadduzai was assigned the task to make
the KESC financially viable so that the government could get rid of
its liabilities in the form of huge budgetary allocations every year.
The task is done. Brig. Sadduzai either may go back to the barracks or
may be placed in some other government organizations suffering
financial ills or bad management.
Being an aeronautical engineer, he can produce much
better results in aviation sector organizations like PIA which had
thoroughly disappointed the small investors who had purchased its
shares in the hope of getting profits.