CHALLENGES FOR THE NEW KESC'S MANAGEMENT

By AZAM ALI
Mar 07 - 13, 2005

The change of management in the recently privatized Karachi Electric Supply Corporation (KESC) is scheduled to take place by the end of this month or in early April, 2005.

The deal may not be the 'bed of roses' as the new management has to confront big challenges in order to bring back valuable clients into its consumers list, said Dr. Mirza Ikhtiar Baig, Chairman SITE Association of Industry in an interview with Pakistan and Gulf Economist.

He was of the view that "handing over of KESC to the Army was a big mistake, despite the fact that Managing Director Brig. Tariq Saddozai being really capable of handling the organization professionally."

As a rule, every organization needs its own experts of the respective fields. However Brig. Tariq Saddozai steered the KESC to the stage where it could be smoothly privatized.

During last few years, KESC lost a large segment of its valuable consumers i.e. industrial consumers which really generate revenue for the utility company. For example one industrial consumer was equal to thousands of domestic consumers in general terms. A list of the industrial units which preferred to go into self-power generation shows that more than 500MW of power is being generated in the captive power plants while almost equal demand for self-generation is pending with the SSGC seeking gas connection for power generation.

If industrialists were provided quality services by the utility why they should have taken pains to go into self-power generation. Actually the government has sold 1.8 million consumers to the private sector in the shape of privatization of the KESC as the immovable and operational assets were still held by the government under the cover of 25 percent shares retained by the government. It is the consumer base which is now important for the new comers. The first priority for the new management will have to provide quality services at an affordable rate to expand its consumer base.

Industrial and commercial consumers spent billions of rupees for self-generation facility to avoid unannounced load shedding, abrupt power breakdowns and persistent power fluctuation which causes production equipment losses besides a real hurdle in honoring the export commitments.

Just have a look at the main commercial important areas of Clifton, I. I. Chundrigar Road and other commercial centers where billions of rupees have been spend on installation of power generators by the commercial organizations, banks and petrol pumps as the nature of their business can not afford a 10-minute power failure.

Thousands of domestic consumers have also gone into self-generation to cope with load shedding and power failures. It has been estimated that over 80 percent of consumers can not afford power outage or power failure. Since last few years, Pakistan especially Karachi, has become a good market of power generators of various capacities. At the one hand, government is loosing huge amount in shape of losses and power theft and on the other citizens are spending huge foreign exchange in need of power generators.

Looking at the current economic situation, we have to confront with aggressive regional competitors, we have to establish our credibility in the export world. While on the home front, we have to generate employment in national interest. We have to compete with latest technologies. The question arises how we can address all these issues in the face of poor state of infrastructure especially, the power sector? As a matter of fact, nation needs cheap and uninterrupted power supply for a real take off in the manufacturing sector which produces export surplus.

Regarding huge budgetary allocations and subsidy provided by the Federal Government to run the KESC, Ikhtiar Baig was of the opinion that money alone cannot do magic in any organization unless professional and dynamic planning and strong follow up of the decisions are ensured. The most terrible challenge for the experts is that they have to plug the holes which are allowing 38 to 40 percent losses mainly on account of power theft, this will make KESC really a profit-making concern. .

Replying to a much talked about unemployment fear in the KESC, Dr. Baig said that this is just politically motivated issue. How can any utility are run without employees or workers, if some people are given golden handshake they would be replaced with competent people. Now I don't want to go into the detail of previous attitude of the labor unions, but the fact can not be ignored that in the past certain elements destroyed the utility only for the sake of their leadership and personal interests.

However, we should not go into the detail and stories of the past that would be just waste of time for everyone but we need a power company which could give us smooth power supply on affordable prices so that industrialists burden of power should come to an end. He further said: "now the recent agreement with the employees and union gives a guarantee of their rights but everything can not be done just for the sake of union and employees rights. The employees and union only exist when KESC is there and is being run in profit only by the true professionals and experts."