RS 13 BILLION FUNDING FOR KESC

Plan aimed at improving transmission and distribution system

By SHABBIR H. KAZMI
Jan 06 - 12, 2003

The government has agreed to finance over Rs 13 billion plan of the Karachi Electric Supply Corporation (KESC) aimed at improving electricity supply to its consumers. Most of the previous funding addressed financial health. The latest plan, after along time, aims at improving operational efficiency. The GoP has been providing funds to the problem ridden KESC to keep it operational. This time the focus is to make the utility a self-sustaining entity. The goal can only be achieved if the required funds are made available in time.

The KESC has prepared a comprehensive plan envisaging an outlay of Rs 13.349 billion for improvement of the T&D system and to minimize power theft. An amount of Rs 750 million will be spent of restoration of generation capacity. Rs 2,400 million will be spent on the establishment of SCADA system. The highest amount of Rs 10,199 million will be spent on revamping the T&D system to minimize technical, losses and power theft. The plan covers:

1) Removal of Kundas
2) Shifting of meters outside the premise,
3) Installation of ATBs on the meters of industrial consumers,
4) Bus Bar arrangement in multi-storied buildings
5) Reinforcement of under-size conductor for improvement of voltage and reduction of losses,
6) Improvement of protection system (insulation of Breakers on distribution transformers),
7) Installation of energy meters on transformers and PMT's,
8) Improvement of 11Kv Feeders (protection system),
9) Induction of Aerial Bundled Cable in Kunda concentration areas,
10) Restructuring of billing zone.

After a long-time the signs of substantial improvement in operations seems to have started appearing. PAGE has been pleading that no financial restructuring can improve the financial condition of the utility without addressing the root cause. The utility has been incurring huge losses due to colossal transmission and distribution (T&D) losses - at present exceeding 40 per cent. The revenue generated is not enough to cover the fuel cost and electricity purchases. It is encouraging to note that despite the availability of limited resources KESC's management has succeeded in bringing operational improvement. This includes improved efficiency of power generation plants and reduced T&D losses.

The emphasis in this plan, once again, is on removal of Kundas. PAGE would like to reiterate its point that the menace of power theft through Kunda is more acute in posh localities. It may be true that hundred and thousands of Kundas are working in localities where low-income people live and it may take long to remove them. The latest exercise undertaken by the KESC, in one particular posh area, has proved the point that the largest percentage of electricity theft pertains to posh area. During this exercise it was found that the T&D loses, mostly comprising of theft, in the locality ranged from 40 to 80 per cent on different PMTs. The efforts paid off and KESC succeeded in bring the average T&D losses to about 22 per cent in the area.

The Chairman's Review in annual report for the year ending June 30, 2002 says, "In the under report, all available resources were fully utilized for financial improvement of KESC, but insufficient tariff, exorbitant increase in the price of furnace oil, heavy burden of financial charges and increasing trend of T&D losses continued to affect liquidity position of the Corporation. The revenue from the existing tariff is insufficient even to cover the cost of fuel and power purchases."

However, one tends to hold the management responsible for the deteriorating financial health of the Corporation, the single biggest reason being the increasing T&D losses. During the year 2002 the KESC had 11.547 Gegawatts available for distribution. Out of this only 6.7 Gegawatts were billed and the balances was lost due to T&D losses, including theft. According to sector experts, the KESC produced 8.7 Gegawatts that were sufficient to take care of the billed units as well as technical losses. Keeping in view the results of KESC's exercise in the posh locality, one tends to believe that the theft has been done in connivance with the KESC employees. Therefore, the Chairman's stance that tariff is insufficient to cover the cost of fuel and electricity purchase is not correct. Revenue is low only because T&D losses are out of proportion.

One of the reasons for higher fuel cost was that KESC was mostly using furnace oil. However, this problem has been resolved with the conversion of all the power generation units of Bin Qasim, the main source of supply, to gas. However, it is necessary to point out that WAPDA is selling electricity at inflated price and not passing any advantage of its low cost hydel generation to KESC. Is this not arbitrary and discriminatory act against the consumers located in KESC's franchised area? They must also benefit from the low cost hydel electricity at WAPDA's disposal.