Stake holders sitting with their fingers crossed

Dec 06 - 12, 2004

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 domestic consumers.

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 rules.

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.