KESC GETS ONE BILLION FOR IMPROVEMENT

One of the major problems faced by the KESC was default in payment of electricity bills

By AMANULLAH BASHAR
May 05 - 18, 2003

Karachi Electric Supply Corporation (KESC) is struggling to meet the huge demand of power by its large consumer base -1.7 million plus in the face of heavily over-loaded distribution, transmission and generation systems.

This uphill task, especially in the face of acute financial constraints, has become even more difficult for discharging its primary responsibilities of uninterrupted power supplies.

Currently, the KESC management is endeavoring to overcome huge line losses, recovering outstanding dues, and rehabilitation of its transmission and distribution systems for which it has taken various measures.

One of the major problems faced by the KESC was default in payment of electricity bills by Karachi Water and Sewerage Board (KWSB) which hardly pays 50 per cent of the total bill. Since water supply is important from human point of view, KESC despite a strong view is unable to disconnect power supply to KWSB which may create uncalled for hardships for the citizens. Another problem face by the KESC is the recovery of electricity charges from the City Government. The City Government in order to please the citizens has installed streetlights through the city, which consumed a great amount of electricity; however, KESC was not being paid the bill on account of streetlights.

Illegal consumers are another problem not only for the KESC but the genuine consumers who suffer power breakdowns and power fluctuations due to Kunda system. It is strange that KESC staff under a provision also provides official Kunda to the consumers of their choice. These official Kunda consumers pay the fixed amount of Rs300 500 per month, but how much power they use no body is there to take notice. This official kunda has opened the door for corruption within the KESC fold. These official kundas are also provided in well established areas where all sorts of facilities for providing legal connection through meter is available hence there is no point in allowing official Kunda.

GENERATION

In the peak summer times, the total city demand from industrial, commercial and domestic consumers has reached at 2000 Megawatt. The demand for power is gradually increasing at the rate of 4.5 per cent which means that if the current strength of power generation was not increased by KESC the shortfall will continue to add to the problem of load shedding and breakdowns. The gap of 1000 MW is currently met through purchase of power from two of its IPPs and the remaining gap is bridged by WAPDA.

Since most of the power generating units has completed their age they are running at high cost as compared to new units installed by the IPPs. A comparative study reveals that while the old generating unit of KESC costs Rs2.11 for one unit the same amount of power is generating even at Rs1.22 by the private sector. This situation calls either for setting up of new power generating units within KESC or new IPPs may be allowed in Karachi to meet the growing demand of power.

DISTRIBUTION

Besides dilapidating generating units, the distribution network of the KESC has also gone under heavy load causing frequent breakdowns. Similarly, feeders as well as the transmission network also needs to be rehabilitated. The earliest to ensure uninterrupted power supply.

In order to address all these issues, KESC had demanded of the government for a package of Rs13 billion some time back.

KESC had submitted a Rs13 billion rehabilitation plan to the government seeking financial support to overcome the formidable task and to satisfy its consumers who always make hue and cry due to frequent break downs, load shedding in the scorching summer heat. Responding to the genuine demand of the KESC, the government has released the first installment of Rupees One billion out of the total package.

FINANCIAL RESULTS

KESC has narrowed down its losses during the current financial year with the conversion of government's debt into equity resulting cut in financial cost.

The KESC in its 9 months financial results of the current financial year has narrowed down its losses to Rs 9.864 billion as compared with Rs11.963 billion of the same periods a year ago.

The fundamental factor, which helped KESC to cut down its losses, was the government which last year increased its equity in the company by converting Rs 65.3 billion of debt owed by public sector. This helped the company to reduce its financial charges during the period to Rs 1.571 billion as compared with Rs 6.435 billion.

Fuel and oil consumed by KESC in three months ended March 31, 2003 rose by 58.8 per cent to Rs 5.302 billion, while in the same period last year it rose to Rs 15.6 billion from 13.3 billion.

Although the authorities have chalked out a program to convert the generating system in KESC from oil to natural gas fired system, yet the supply of gas has not become a reliable source for running the system. However, a large portion of the generating system has been shifted from oil to gas. Once the entire system gets the sufficient gas supply the cost of power generation in KESC is likely to come down at by 30 per cent. The consumers hit by exorbitant power charges are attaching hopes that the electricity prices would be made affordable for the common man.