With a Focus to Reduce Surcharge on Electricity - Improve Quality of Service

Nov 28 - Dec 04, 2005

Aljomaih Group of Saudi Arabia is scheduled to take over the management control of Karachi Electric Supply Corporation (KESC) in December at a ceremonial send-off, which is likely to be presided over by President Pervaiz Musharraf on December 1 in Karachi.

Besides contributing to the flow of foreign investment in Pakistan, Aljomaih Group desires to reduce the burden of excessive surcharge on the electricity consumers and to improve the basic infrastructure of power generation, transmission and distribution system to ensure uninterrupted supply of quality power to this huge market currently estimated at 1.9 million consumers, said Shan Ashary, the head of Aljomaih Group and Akhtar M. Zaidi, who led the KASB Investment Banking group transaction team as the Group CEO.

Actually, the consumers in the largest industrial city had a mixed feeling about the change of hands in KESC. They had fears that the new management might increase the electricity tariff, which is already on the higher side, but on the other hand they were fed up with abrupt power breakdowns, fluctuations and load-shedding, especially in the hot and humid summer days.

Hopefully, the change of management in KESC will prove a pleasant surprise for the electricity-starved Karachi as the Siemens Engineers who will be the next operational managers are intending to make Karachi free from all power generation, transmission and distribution problems.

Following is the question answer session with AlJomaih Group to draw a clear picture of the forthcoming event for the benefit of over 15 million people who somehow have the relationship with the KESC as power consumers.

QUESTION: When was the Aljomaih Group formed and how has it progressed in the following years?

ANSWER: Inception of the Aljomaih Group took place in 1936 as a small establishment near Riyadh with about fifty people. Within four years of operations, the company evolved to the level that it was able to move its head office to the capital city of Riyadh. Further expansion led to the opening of an office in Jeddah in 1948 and one in Dammam in 1950. Aljomaih today has developed into a major enterprise. It carries with it a diverse portfolio of investments, ranging from General Motors in the automotive division to Pepsi Cola International in the beverages division.

QUESTION: What are the key areas of operations of the Aljomaih Group in Saudi Arabia?

ANSWER: The Aljomaih Group has diversified interests and investments depicting its comprehensive scope. Aljomaih is the founder of the First Islamic Investment Bank in Bahrain, called the Arcapita; which is the largest Islamic bank in the world with over US$ 9 billion in investment. It is also the founding member of the consortium that won the first private GSM licence in Saudi Arabia. The new Company, called Etihad Etisalat is due to start operations shortly under the brand name Mobily. One of Aljomaih Funds owned a water utility company and all the windmills in the UK. In partnership with HSBC, they own landmark real estate such as AT&T Building in New York and New Jersey. Aljomaih is also the founder sponsor of Dana Gas; the largest oversubscribed IPO in UAE.

Among its varied segregate entities, the Automotive Division is one of the corner stones of Aljomaih's activity, turnover and growth. Aljomaih is the largest General Motors dealer in the Middle East and is also considered the largest dealer in the world. The Group has vast facilities in Riyadh, Jeddah and Dammam with a continuum of automotive facilities available under one roof.

The group also has a dynamic business relationship with Shell International Petroleum Company, which has grown steadily since it began operations in 1956. In recognition of becoming the largest distributor of Shell lubricants in the world and the ability to visualize the tremendous growth potential, Aljomaih and Shell formed a joint venture in 1985, to establish a lubricating oil blending plant in Riyadh, which operates with state-of-the-art technology.

The bottling and canning division of Aljomaih Group, the Aljomaih Bottling Plants (ABP), has been a manufacturer and distributor of Pepsi Cola beverages in Saudi Arabia since 1958. The ABP facilities are considered to be the largest and most state-of-the-art in the Middle East. The plant maintains premier standards of hygiene, raw material requirements and continuous reinvestment in modern equipment.

QUESTION: Who are the key people responsible for bringing the Aljomaih Group to Pakistan?

ANSWER: KASB Investment Banking Group (IBG) Transaction Team, led by Akhtar M. Zaidi, Group CEO, was instrumental in bringing this opportunity to Aljomaih in Saudi Arabia headed by Shan Ashary. The team worked diligently to structure the transaction and manage processes from the initial stage to closure.

QUSESTION: Siemens has been the technical and operational advisor of KESC since the inception of the utility. Will Aljomaih continue with this partnership?

ANSWER: Siemens will not only be the technical and operational partner, as earlier, but will also be handling the responsibility of maintenance of KESC transmission lines.

QUESTION: What were the factors that led to Aljomaih's trust in the capabilities of Siemens as operational partner?

ANSWER: Being the German hi-tech infrastructure provider, operating in Pakistan for a number of years, with presence in more than 190 countries, Siemens is a name synonymous with reliability, high repute and excellent quality standards. Siemens Pakistan designs, develops, manufactures, markets and provides services of a wide range of technologically advanced electrical and electronic products and systems, including construction projects and software which benefit business, industry and society. This quality policy is in consonance with Siemens corporate principles, which envisage customer orientation, innovation, business success, leadership, learning, cooperation and global commitment towards corporate citizenship. As a result of its high performance Siemens Pakistan has been awarded EN Awards for Sales Performance - Direct Channel by Siemens AG in 2005, Top 25 Companies Award from 2001 to 2004 and Environment Excellence Award in 2004. Major contributions of the company include projects for building grid stations in Dubai, supply of power & distribution transformers and switchgears as well as projects in telecommunication sector mainly mobile phone networks. Blending of Aljomaih's expertise and Siemens' technological superiority with KESC's operations gives much reason to the corporate sector, industrialist and domestic users of Karachi to look forward to an era of improved service quality with global standards being made practical locally.

QUESTION: On which areas will the key focus of the new KESC management be concentrated?

ANSWER: Key focus in the future is needed on creating additional generation capacity, strengthening the existing network, investment in the building of human resource, thus resulting in an efficient, effective and self-sustaining organization.

Among the key objectives of the new management of KESC would be improvement of the management effectiveness and financial performance of the corporation to develop an entity with a corporate culture that emphasizes creativity and high performance.

In order to provide customer satisfaction, there will be improved service quality and reliability, removal of excess burden of surcharges currently borne by customers, uninterrupted power supply, relief to users through subsidies on case to case basis and improved, real-time and courteous customer service.

QUESTION: How do you foresee the future of KESC?

ANS: With an ever-growing market, having huge potential for profitable operations, the corporation has a bright future to look up to. By participating in global alliances and using state-of-the-art technologies, the corporation will become more "empowered" in its operations. Taking its 1.8 million customers along , KESC is moving towards self-reliance. Demand and need are constantly increasing, and coupled with well-managed and transparent operations, it will translate into profitability for the corporation and improved and reliable service to consumers. By bringing light to the life of common man and fueling economic growth, KESC is about to enter an era that makes it an affordable and reliable source of electricity.

QUESTION: What is the future of current KESC employees under the new management?

ANS: The Aljomaih Group believes that employees are the best asset of any organization and the cornerstone of its growth. In Saudi Arabia, we have more than 12,000 employees and virtually zero turnover.

As the new management of KESC, Aljomaih is bringing with it the objective to enhance management effectiveness of its current employees and develop a corporate culture that can be translated into a well-trained workforce; that progresses as the organization grows.

A firm believer in human expertise and its effect on the productivity of an organization, the new KESC management has established a budget for capacity building of its employees, that is aimed at bringing their capabilities above par, creating an increase in their productivity and consequently resulting in a workforce that is proud of being part of a company that is responsible for bringing light to the life of millions.

Aljomaih has faith in the verity that as new management enters an organization, its biggest and strongest asset is the existing workforce. They have the training, experience and knowledge that continue to add value to daily operations. In the case of KESC, the workforce can now look forward to a set of improved human resource systems that will lead to continuous training and development; henceforth make them capable of serving millions of customers better by bringing more light to their lives.