KARACHI, Dec 11: More than two years after taking over the affairs of the Karachi Electric Supply Corporation into its hands, the army has not only failed to effect an economic turnaround in the Karachi Electric Supply Corporation but also pushed the power utility in deeper financial trouble.

In June 1999 — the year the army took over the management of the KESC — the accumulated losses of the power utility stood at Rs19.3 billion. By June 2001, the accumulated losses had risen to a staggering Rs48.5 billion, registering an increase of 151 per cent.

According to the annual report of the KESC for the year ended June 30, 2001, the transmission and distribution losses of the power utility stood at “36.8 per cent of the total electricity generated in 2001”. Last year, the transmission and distribution losses were 40.2 per cent of the total electricity generated.

Sources told Dawn that according to a memorandum of understanding signed by the KESC with the Asian Development Bank the transmission and distribution losses should have been reduced to 33.6 per cent of the total electricity generated.

They added that while 550-strong army monitoring teams had been inducted into the KESC in Aug 2000 with the avowed objective of checking power pilferage, higher than the ADB’s given target of transmission and distribution losses showed that the efforts of the army had not been adequately fruitful.

The auditors of the KESC say: “One of the factors attributable to these losses is the alleged theft of electricity, which has directly affected the profitability of the Corporation”.

The annual audit report says that during last year “the overtime paid to the employees (of the KESC) amounted to Rs412.827 million, which is 77.7 per cent of the basic salary”.

In the audit report, the chairman of the KESC, Lt-Gen Zulfiqar Ali Khan, says: “The net loss for the financial year 2000-01 comes to Rs16.2 billion as against 12.7 billion during previous year. The main reasons for the loss are the increased fuel and power purchase costs.”

Analysts point out that in 2000 the KESC consumed fuel and oil worth Rs13.9 billion. In 2001, the KESC used fuel and oil worth Rs17.7 billion. In 2000, the KESC spent Rs12.2 billion on the purchase of electricity from the Karachi Nuclear Power Plant, Water and Power Development Authority, Pakistan Steel Mills Corporation, Tapal Energy and Gul Ahmed Energy. In 2001, the KESC spent Rs13.7 billion on the purchase of electricity.

The analysts say that the total increase in fuel and power purchase costs comes to Rs5.3 billion while the net loss for the financial year 2000-01 is Rs16.2 billion. “The increased fuel and power purchase costs account for a little over 32 per cent of the net losses,” they argue.

They add that while the KESC suffered a net loss of Rs16.2 billion last year, the managerial remuneration of the managing director rose by 113 per cent, from Rs159,000 to Rs338,000.

The analysts point out that the trade debts of the KESC also increased, adding that the trade debts showed a new receivable of Rs813 million for the federal autonomous bodies. The annual audit report does not explain this huge figure. Also remains unexplained is the provision of Rs1.72 billion made for “doubtful debts” which has increased by 58 per cent, from Rs1.09 billion last year.