Apr 07 - 13, 2008

While privatization or private participation has a widespread impact on the restructuring and reorganizing of electricity sector of Pakistan the scope of application has confined to one side of the process and that is production. The other important side related to satisfactory consumption seems to have experienced a sheer neglect. In terms of size of the problem, the power distribution and transmission outweighs the power generation. Only KESC suffers 30 % power loss owing to distribution lines faults. It is fairly comprehensive that manual line fault detection mechanism is incapable to ensure sequential quality supply.

Generally across the nation, shortage of electricity was put on the agenda to attract syndicated or institutional investments inconsiderate of the fact that decades-old and dilapidated supply infrastructure had deserved a parallel attention and immediate overhauling or across the board replacement. Even as of now, transmission and distribution losses of electricity render a considerable revenue wipe-off of single public-owned generation, transmission and distribution authority-PEPCO and its branched nine distribution and one transmission companies nationwide in addition to financial contraction sustained by the consumers due to the subsequent high tariffs and power fluctuation damages to electronic gadgets.


Electricity is the main input of industrial and commercial activities and interrupted power supply certainly hampers the industrial growth. The circumstantial analysis substantiates the essentialities of private participation also in the transmission and distribution of electricity to consumers. In spite of the few legal impediments, privately-owned supply system can revolutionize the power consumption pattern of the society as a whole. Director General, KANUPP, Waqar Butt said there is no technical problem in supplying of electricity by the private power distributors. But electricity should be synchronized and centralized on single main grid station, he added. Again in this year, disturbance in the transmission line disconnected KANUUP-KESC power supply; it has been happened in the near past. Two new nuclear power generation plants will have arrangement with the PEPCO to supply electricity in Karachi, he informed.

The deregulation regime in the electricity sector was introduced in many countries world over to halve the control of the governments over generation and supply of the public utility to plug the leakage of subsidies that unproductively decreased revenue. The breeze of deregulation also touched the electricity sector of the nation after 1980s. Afterwards, privatization, private participation, and organizational restructuring multiplied the national electricity generation capacity undoubtedly, however, government kept electricity distribution and transmission system under its firm grasp and exercised unalloyed power regardless of the importance of the integrated investments that distribution infrastructure needed.

The privatization of KESC has created a ray of hope in its consumers about pleasing improvements in power supply but the aftermaths of restructuring of the ruling electricity distribution company have yet to reflect on the performance. Comprehensively somehow, government official associates the under performance with the transitory period of just-applied decentralization. Yet, the question is how long will this transitory period last as it's already been almost three years since privatization? KESC has a strong capital base and floating stocks equally in all three stock exchanges of Pakistan. It has been getting loans from international financial institutions like World Bank and ADB for upgrades. The unshared authority of KESC in revenue collection from around 2 million consumers' base in Karachi solidifies its foreign loans eligibility.


While talking to this scribe, Director Privatization, NEPRA, Hussain Babur said KESC is going through a transitory period after privatization. The performance will improve over a certain period of time. Enumerating the impediments in the private sector power distribution network, he underscored, like other distribution companies, KESC also gets loans sanctioned because of its predominate role in collecting revenue. To international financial institutions, this works as a protective shield against any financial risk. Furthermore, he said, privatization agreement was signed for five years and under this period progress would be measured. "Before the maturity of the agreement we would not re-examine the company's acquisitions and divestitures."

An official told this scribe that ADB has sanctioned US$525 million concessionary loan to KESC because of its authority on revenue collection. He said along with it Rs. 17 billion is a planned investment in the rehabilitation of KESC's infrastructure. Senior Spokesperson of the KESC, Sultan Ahmed denied of any such rehabilitation programme, however, he said 200 new transformers, each having capacity of 440 Watts, have been installed across the city. Despite having capacity of 440 Watts, this transformer can only reproduce 220 Watts for the end consumers. Sultan Ahmed told this scribe assessment of distribution network is neither possible nor overall retrofitting or overhauling is underway at present.

The lack in technological expertise and usage of manual assessment techniques make vigilance on distribution network impossible. "We react on complains only." The supplier has 94 complaints centres across the city. Responding to a question, he said, interested private distributors have to take prior permission from the government to supply electricity. According to the Pakistani law, PEPCO has an authority to transmit and distribute electricity across the national grids. Region wise, it allows different power distribution companies to undertake the responsibility of power distribution.


Public sector distribution network of KESC has a covered area of around 6,000 square kilometres and is supplying registered power to around 10% of the total city population of approximately 20 million. According to the data complied in 2007, over four independent power producers, a nuclear power plant, and KESC's own four thermal power plants including Korangi and Bin Qasim have capacity to generate more than 2200 MW that could adequately abridge the power demand-supply gap of the metropolis. Besides, additional 560 MW from Bin Qasim will soon be generated while Korangi thermal power plant will add another 220 MW in the total production by July 2009, an official revealed.

Generation may present an obstacle in future but statistically it is proven that despite under capacity utilization of power plants-again attributable to poor infrastructure development-produced quantity of power is not transferred to the final destination accurately. Had it been done the electricity crisis would have not been preposterous.

Factually, political influence has more powerful roots in the public sector entity such as in the KESC than in a private company effected in over staffing, nepotism in recruitments, and compromise on technical irregularities. Dr. Shahid Hasan Siddiqui, a renowned economist and staunch opponent of KESC's privatization, links electricity turmoil with the shortage in power generation. While talking to the scribe, he said power shortage instead of distribution is the major issue but added transmission losses must be compensated. He opined KESC was sold at a throwaway price. Even after privatization, the company could not get rid of poor technical staffs and management from top to bottom that causes ever-rising flaws in the entire power generation and distribution infrastructure.

Many countries prefers decentralization over centralization to improve the electricity sectors as only market driven power generation and distribution network can reduce the revenue and technical loss of power. Prudently, public money should not be spent on to pamper state-run companies. Therefore, Government of Pakistan should also ponder at the line of inviting private investment in the power distribution and transmission sectors as well.