EXCESSIVE LOAD SHEDDING IMPAIRS ECONOMIC ACTIVITIES
SHABBIR H. KAZMI
May 24 - 30, 2010
Lately, in one of his interviews Mustafa Kamal, ex-Nazim CDGK had said that Karachi was bigger than 65 countries of the world. Not only that over 10 per cent of the country's population live in this city; its contribution in country's economy is enormous. This mega city faces various threats from target killing to sectarian rifts, providing opportunities to the perpetrators to pursue their objectives. Though, both the federal and provincial governments are helping the KESC to overcome cash crunch, management of the KESC has to work even harder to overcome the technical issues. Lately, consumers of the KESC's franchised area had to endure extended hours of load shedding. Tall claims of the KESC management seem to be proving hollow and the threat of breaking out of power-related riots in the metropolis is on the rise.
Though, the company has added generating capacity, actual generation has not improved by the same proportion. In fact disruption at its lifeline Bin Qasim power plant and teething problems of the recently added 220MW plant often reduced the supply to a level when frequent tripping of the system causes more problems. May be the situation would have been worse had the utility working under the state control, but many critics say the prevailing situation is because of the failure of the new management in understanding KESC's operations and taking the right measures. It may also be correct to say that these critics overlook the ground realities and often indulge in spreading in correct information.
The problems faced by the KESC are 1) power theft 2) poor cash flow, 3) huge receivables and 4) gross inefficiencies. Reportedly, T&D losses of the company are around 40 per cent, which mostly comprise of theft, going on for ages with the connivance of staff.
While the number of units billed is pathetically low bulk of it is hardly received, evident from mounting receivables. It has been often brought to the notice of the management and federal and provincial governments that arranging funds can't help in overcoming cash crunch, the mother of all evils facing the KESC. Immediate arrangements have to be made to recover the overdue bills, both from the public and private sectors. Deduction at source provides immediate remedy in some of the cases and immediate suspension may be the last resort in many cases. Consumers haven't learnt to pay despite the KESC spending millions of rupees in trying to pursue the pilferers that others have to pay the cost of their misdeeds.
It is often said that pilferage is very high in KESC but when it comes to taking action against 'power thieves' new management looks helpless. It is known to all and sundry that electricity pilferage can't be contained without catching the 'big fish', industrial and commercial consumers. Despite investing millions of rupees in revamping distribution network, post privatisation record does not show any substantial reduction in T&D losses. One of the reasons for not catching the thieves is that these localities are 'no go areas' for the KESC staff. One of the most legitimised ways of electricity pilferage is temporary connections. Since no meters are installed the actual consumption is far higher than the fixed amount being charged. Installing of meters at temporary connections can and converting of Kundas into legitimate connection can improve cash flow of the company substantially.
Another reason of mounting losses is failure in recovering the full cost. Since entire generation of the KESC is thermal based, the average cost of generation is very high added to this is power purchases from IPPs and PEPCO. Any hike in prices of furnace oil and gas pushed up cost of generation but the company often can't recover the full cost from consumers, because of the tariff fixed by the government for various types of consumers and the policy of keeping smaller consumers are immune from tariff hike.
The policy may be good but financial viability of the KESC can't be restored without government paying the difference or subsidy. While operating under state control billions of rupees were injected into KESC to keep it operational. While the losses were mounting additional funds were given to the utility but hardly efforts were made to reduce the T&D losses and recover outstanding dues.
According to some sector experts electricity demand in KESC's franchised area has exceeded 5,000MW. However, peak load stated by the management of KESC is just half of this. Hundred of industrial and commercial establishments have installed in-house generating system. Over the years the KESC had been installing limited number of new connections because of limited availability of electricity. If uninterrupted supply at affordable cost can be insured to these customers, most of the consumers would prefer to revert back to KESC.
It is encouraging that both the federal and provincial governments are monitoring KESC's operation and have also arranged for additional funds as well as made it mandatory for the PEPCO to supply 650MW electricity. But a lot more needs to be done to overcome the menace of load shedding in Karachi. The government has to facilitate the new management, which is willing to inject more funds for adding new generation facilities and revamping T&D network. The task is enormous and can't be achieved without the help of the government.
It is encouraging that the new management of KESC is investing heavily in adding new generation capacity and also revamping T&D network. However, without containing T&D losses cash flow of the company can't be improved. Industrial and commercial Kundas can't be removed without the help of law enforcing agencies. All the Kundas should be converted into legitimate connection in the first phase. In the second face actual load should be checked against sanction load. The consensus view is that in most of the cases the actual load drawn is double the sanctioned load.
Making KESC a self sustained entity is the collective responsibility of all the stakeholders, technical staff will have to run power plants at optimum capacities, recovery staff will have to work closely with finance department to ensure full and in time collection of bills, meters have to be installed at all the Kundas. The basic purpose of privatisation of KESC just cannot be achieved without ensuring uninterrupted supply of electricity at affordable cost. Consumers will also have to learn to pay the bills. Mean time every consumer should try to conserve energy, each unit saved is equal to a unit generated.