KESC NEEDS RESTRUCTURING
Division of KESC in 4 companies would help in many ways
By AMANULLAH BASHAR
Oct 14 - 20, 2002
Karachi Electric Supply Corporation (KESC) having an installed capacity of 1756MW has to meet demand for over 1860mw of Karachi, which is the commercial and industrial capital of the country.
Against its installed capacity, the KESC has an actual production of over 14 MW while the shortfall is met through purchasing 2.5 MW from two IPPs and some 300 MW from WAPDA. However, demand for another 500 MW is pending due to shortfall in power generation.
In the backdrop of huge generation, transmission and distribution system, KESC has to feed its over 1.7 million consumers under its franchise area. When established, KESC had to feed the power needs of a handful of population in the early days of Pakistan.
However, during the course of time, the influx of population from all corners of the country has made it one of the largest cities of this region. Gradually, sailing on a smooth keel is becoming very difficult for KESC as a result of growing number of consumers, long transmission lines and dilapidated distribution system, which has come to the age. The huge line losses, which are stated to be in the region of 40 per cent, are mainly due to unmanageable size of the consumers. The magnitude of the system also causes interruption in power supply, billing management and proper and timely attention on the fault complaints by the consumer.
Now the government is aiming to sell out this corporation to the private sector. Although it may be a great temptation for the new buyers to have a monopoly over such a large size of the power market, yet it may add to the problems of the consumers due to monopoly of one party.
Before privatization of the KESC, it is suggested that the Corporation should be divided into four or five companies in each district of the city. The division into 4 proposed companies would not only make it easy to manage the affairs of the company but the nuisance of power theft in the name of line losses would also be reduced to zero level. The exorbitant power rates charged by KESC is again a major cause of concern for the consumers who feel that the power charges are not affordable for the majority of population falling in average income group. The division of the corporation into four companies would also lead to a healthy competition among the 4 companies, which would also help bringing down the power rates.
Although it seems to be a complicated proposal in the face of integrated transmission, distribution and generation system of the KESC, however it is workable suggestion and if adopted would greatly help improving the power supply system in Karachi.
According to KESC, the transmission and distribution losses which were 40.23 per in 1999-2000 have been decreased to 36.81 per cent, however insiders feel that the figures of losses vary frequently and the percentage of losses generally remain on the higher side.
It has almost completed a period of three years when Army personnel were inducted into KESC. Although the presence of army into KESC has made improvement in the recovery, distribution and transmission system, yet the root cause of the problem i.e. power theft still exist in the KESC system with its entire intensity. Consequently, the genuine consumers have to suffer and pay the price of the power stolen by the power thieves. If the leakage in the KESC system in the form of power theft were plugged, the cost of power would be reduced proportionately. The menace of power theft, it seems, could only be removed when the area of operation of the utility company is reduced to a manageable proportion.
KESC however claims to have succeeded in its efforts towards the prime objective of providing maximum facilities to the customers through regular supply of power, proper billing of the highest number of consumer on actual meter reading and operation of round the clock service centers. The improvement in the performance of the KESC has significantly benefited the largest industrial and commercial capital of the country.
There has been improvement in the overall performance of the KESC, since the takeover of management of Army in May 1999 and induction of Army Monitoring Team (AMT) on August 15, 2000. The achievements in last two years indicate that the generation capacity enhanced from 1,214 MW to 1,426 MW. All the generating units of Bin Qasim have been converted to use of natural gas as a substitute to reduce the input cost. As the furnace oil price is much higher than the prices of natural gas, the previous gas quota of 40 MMCFD for Bin Qasim units has now increased and around 80 per cent of thermal power generation has been converted over to natural gas.
The previous gas quota of 40 MMCFD has been increased by and by coming January it would be 176 MMCFD which would certainly be a cost effective measure on the part of the KESC but how it would be useful for the consumers has yet to be seen.
The revenue recovery position of the KESC has also been improved. Total collection of the KESC, which was estimated Rs20.8 billion in the financial year 1998-99 jumped on to over Rs30 billion.