September 8, 2003	Monday	Rajab 10, 1424

Karachiites have been suffering more and more breakdowns in electricity services since the first rain this season on 7th July, despite best efforts of the KESC staff and management, within their means, for maintaining regular supply in all areas.

The Sindh Governor and the Chief Minister have held meetings with the heads of various utility companies, asking them to improve their respective services and to immediately attend to the consumer complaints.

Privatization of the KESC is now said to be a matter of a few months and Karachiites hope that with privatization of the utility, quality of its services would improve considerably coupled with reduction in electricity tariff. This might happen if the privatization process is properly structured and additional resources are infused for revamping the generation, transmission and distribution networks.

At the same time, Karachiites must also appreciate that the new investors would largely work to earn the envisaged rate of return to them. Karachiites, particularly its businessmen and industrialists, with a view to protecting their interest, need to actively pursue how the privatization is being structured by the government. Karachiites have to scientifically examine all the allied issues and register their concerns with the KESC operations with the government before the utility is actually privatized.

The proposals for improving the KESC workings, coming from different consumer groups in Karachi, include: (a) handing over the control of the KESC to the Sindh government as presently it is controlled by the federal government and the Privatization Commission (PC) is actively pursuing its privatization; (b) building two new power generation plants on fast track basis in order to meet the shortfall in power supply. Many disruptions in power supply are said to be due to some problem with its link for receiving 400 —500 MW from Wapda; and (c) joining the KESC system with the Hubco at Hub Chowki for meeting the supply gap presently met from Wapda through Jam Shoro. There is presently no transmission line between the Hubco and the KESC for the purpose and its construction might take about two years. Moreover, the Hubco has contract for supply of all electricity to Wapda. The arrangements might have to be first re-negotiated.

Other options for improving the KESC conditions may include: (a) private sector generating power for own industry in Karachi might sell extra power to the KESC at mutually agreed price. This should help augment the capacity available to the KESC and to that extent reduce load-shedding at costs that are not exorbitant; (b) the KESC might offer the existing sites of now obsolete power generation plants within Karachi to the IPPs to install gas-based power plants on fast track and sell power to KESC; and (c) privatization of the KESC to be structured on the pattern of Wapda as against the present scheme of privatizing as an integrated utility.

Distribution function can be privatized or leased out first to 5-10 private sector distribution companies, each company to have clearly marked out licensed area depending upon the number of existing grid stations allocated. Generation might be privatized in the second phase while transmission could be entrusted to the NTDC in the public sector.

The proposals mentioned above reflect the need for concrete remedial actions to effectively tackle all problems confronting the KESC and the Karachiites. However, when each proposal is subjected to the reality test at the experts’ level, only then the full extent of the pre-requisites and problems associated with each proposal would become evident. Moreover, acting on these proposals may have implications some of which might not be fully acceptable or practicable.

Perhaps the existing proposals may have to be modified and improved or new proposals added to the menu of options for rehabilitation of this electric utility. Moreover, financial, technical and managerial resources are needed to put any such proposal into practice once it is found suitable for implementation.

In such circumstances, it is up to the Karachiites and the institutions such as the FPCCI, within the prevailing constraints, to take the leadership role for public good of ensuring regular power supply to the consumers at reasonable rates. Karachiites might take up matters with the government as well as with the KESC management for bringing improvement in the working of the utility for ensuring reliable electric supply to the consumers at reasonable rates. It may be mentioned that within cosmopolitan Karachi there is urgent need to take similar positive initiatives for resolving problems of water, sanitation, sewerage, health, education etc. confronting the people.

It is said that the Nepra sometime back had agreed to allow the KESC the multi-year tariff (MYT) which probably would have opened the way for its early privatization. Chances are that increases in electricity tariff on account of increase in fuel price or other various factors including inflation might be provided for in the MYT. Thus, there is a possibility that the purported MYT has implications for the consumers, particularly for industry in and around Karachi. The government might also be considering adding some sweeteners to the privatization menu for increasing attraction to the prospective investors.

Karachiites might consider ascertaining the factual position on different aspects of the KESC at present as well as after privatization. Karachiites have to know what is in store for them in the privatization of the KESC. They might consider taking it up with the authorities if they find the MYT or other arrangement to be harsh or tilted more in favour of the prospective investors instead of the consumers.

Karachiites, in coordination with the provincial government, might consider holding meetings and conducting of seminars with a view to clarifying things concerning the KESC services and their costs.Seminars may be addressed on the subject by the officials from the PC, the World Bank, the ADB, Nepra, the PPIB, the KESC/Wapda, the IPPs, the FPCCI and its affiliates and the general public, especially experts who are working for the public good.

It may be mentioned that electricity matters came under discussion in the two-day seminar organized by the Institutes of Electrical and Electronic Engineers Pakistan (IEEEP) last year. The Helpline Trust recently organized a talk on ‘Power Crises’ in Karachi which was attended by the KESC senior officers as well. Many points were raised some of which were clarified. KESC efforts for improvement in operations were also noted. More such seminars focusing on different aspects of the KESC would be timely before the utility is privatized. Perhaps, with a view to turning it into a modern electricity utility, consensus may emerge to the appointment of a task force for the rehabilitation and restructuring of the KESC.

The seminars as proposed above should provide the forum to know the reaction of the counter-parties involved and to identify the areas where further action is required to make progress in the desired direction.

The federal government has been supporting the KESC operations by large cash injection for the last few years. Recently the government has allocated Rs1.0 billion for revamping the electricity system in Karachi. The allocated amount, though small, can make a difference if utilized judiciously for revamping of the priority areas. The KESC management has to vigorously continue its campaign for improving its workings. Line losses are the major problem and the KESC management has to take revolutionary steps to overcome this menace. The tendency for illegal connections can be minimized by making the legal connection extra-easy for the consumers.

The KESC might consider providing temporary connections and meters to the consumers just by receiving an application for the purpose and by seeing the original Computerized National Identity Card (CNID) to verify the address and other particulars of the consumer.