KARACHI, July 8: The National Electric Power Regulatory Authority has finally come to the conclusion that the induction of the army into the Karachi Electric Supply Corporation has failed to “show any significant improvement”.
A Nepra document (Nepra/trf-14/KESC-2002/4121-23) issued after the submission of a petition for a tariff rise by the power utility late last year says: “We agree that the financial condition of the KESC has reached an unsustainable level. The experiments with public sector management through non-traditional methods including the induction of army personnel in uniform as top managers has not shown any significant improvement in reduction of technical losses and pilferage.”
The Nepra document obtained by Dawn also takes the KESC to task for failing to make proper arrangements to meet increased demand for electricity in the city.
Sources told Dawn that at present the power shortfall stood at 520 megawatts. They added that within three years the power shortfall would rise to over 1,000 megawatts.
The Nepra document says: “The KESC is unable to generate any resource out of its revenues to support capacity expansion in order to meet demand due to genuine load growth. This has resulted in marked deterioration in the quality of service to consumers. The utility resorting to put the burden of financing extensions, system expansion and technical improvement on the consumer has generated a lot of complaints against it and the threat of possible shift to self-generation.”
The sources told Dawn that the magnitude of self- generation in the city had risen to 400 megawatts. “Since the army took over the administration of the power utility in 1999, the KESC losses have more than doubled to Rs16 billion annually from Rs7 billion. Despite a great hype about recovery of outstanding dues, only 65 per cent consumers pay their bills.”
The Nepra document says: “We also agree that substantial increases in tariff may not result in increase in revenues of the KESC due to possibility of shift to self-generation and increase in pilferage. We therefore concur with the government that privatization may be a better or rather the only alternative as compared to further experimentation with the army supporting the management and financial support by the government. We are also convinced that a prospective investor needs to be assured of a reasonable period during which the base tariff remains undisturbed and is not subjected to review. Further that the base tariff should be such that the investor is able to get a reasonable return out of his business on an overall basis during an assured period during which the tariff remains fixed with adjustments for fuel price variations, power purchase and inflation.”
The sources told Dawn that over the past four years the transmission and distribution losses had risen from 38.64 per cent to over 40 per cent. They pointed out that out of the 40 per cent total transmission and distribution losses, about 18 per cent were technical losses, such as copper losses, inductive losses and resistive losses.
