KARACHI, July 24: Former chairman of the Karachi Electric Supply Corporation has attributed the persisting power crisis in the city to gross mismanagement on the part of the KESC, and hinted at ‘foul play’ in privatising the corporation for just Rs22 billion while its assets and receivables were estimated to be around Rs200 billion.
Giving a talk on the ‘Electricity Crisis in Karachi and Its Remedies’, organised by the Pakistan People’s Party at the People’s Secretariat on Monday, Syed Tanzeem Hussain Naqvi expressed doubts that the KESC would be able to overcome the power shortage problem under its current strategy and emphasised the need for seeking legal advice on how to reverse the process of privatisation and as soon as possible.
In reply to a question, he said that after the Supreme Court’s ruling in the Pakistan Steel case, one should look into every possibility in this regard.
A former federal minister, Prof N.D. Khan, presided over the proceedings.
Mr Naqvi stressed the need for the KESC to set up its own power plants to curtail expenses. He said that at least two such plants having a capacity of 300 megawatts each should be built, possibly in the West Wharf area. He claimed that the KESC-produced electricity would be cheaper than that of IPPs, whose role in future must be curtailed to a possible extent. He also advised redistribution of the load on the overloaded 11kv distribution system to avoid losses due to technical reason.
Mr Naqvi, during whose period the KESC resorted to ‘fire-fighting’ method to overcome power shortage due to overloaded system and other technical faults, said that even by a most conservative estimate, the assets of the KESC were valued at not less than Rs150 billion. There were further receivable of over Rs40 billion. Moreover, the KESC possessed 185 plots at prime locations in Karachi which were worth more than Rs22 billion. He pointed out that the Bin Qasim power plant was valued at Rs26 billion.
The ex-KESC chief observed that ever since it’s founding in 1913 till 1996, the utility had been running in profit every year, with the record profit year being 1996, during the government of Benazir Bhutto. Since 1997 till date, there had been not a single year when KESC had shown profits. The accumulated losses over this period were to the tune of over Rs80 billion. He wondered what had happened all of a sudden.
The KESC share value in 1996 stood at a record high of Rs29 per share, while the value of the dollar at that time was Rs30. Now when the dollar is at double of that value, 73 per cent of KESC shares have been disposed of at Rs1.35 per share. “Selling away the corporation at this throwaway price, is criminal, to say the least,” he remarked.
The reason behind the present crisis was that while the load had constantly been increasing, no upgrading had been made in the distribution and transmission network over a decade, he said, adding that the system had now started falling apart.
Quoting latest data from KESC and Wapda, Mr Naqvi said that there was hardly any generation shortfall. The country was generating more electricity than what it was consuming. Although there was an urgent need for new generation plants in Karachi, especially in the public sector, to meet the future demand, the present transmission lines, grid stations and distribution lines were carrying much more load than their capacity and simply could not carry more.
Surprisingly, the sale agreement with the new KESC owners did not bind them to make any investments in the transmission and distribution network over a fixed period. No investment has either been made in the system over the last six months. Mr Naqvi warned that the crisis will grow further if the up-grading of network was not undertaken on war-footings.
He reminded that in mid-1994, he had inherited a similar situation. However, with the backing of the then government and the determined efforts by workers and professional management, the crisis was overcome within four months. This could easily be done again. Almost half of the electricity being lost in transmission and distribution could be saved and tariffs could be brought down significantly. The crisis was not one of shortage of electricity, rather it was one of continuous bad management over a very long period of time, he viewed.
Mr Naqvi supported the idea floated by a questioner of industrial areas putting up their own thermal power plants on a public-private partnership basis. He said that if such plants were put up, the cost of electricity for the industry could greatly be reduced.
Answering another question about the IPPs, Mr Naqvi said that although the IPPs were earning high profits, the present crisis would have hit us five years earlier if the IPPs were not there to meet the shortfall.
Syed Tanzeem Hussain Naqvi also suggested setting up of coal- and gas-based power plants for producing cheaper power.
Prof N.D. Khan, in his presidential remarks, pointed out that the gross mismanagement was not restricted to power sector alone. Under the military regime, this cancer had spread to every sector of our national life. He felt that although the crisis was deep, solutions were available and could be implemented by a democratic government.
