July 16, 2007	Monday	Jamadi-us-Sani 30, 1428

The power crisis that people were being alerted to soon after the KESC’s privatisation assumed serious proportions a year and a half down the road. Around the turn of 2006, all warnings went unheeded.

Instead, the cry was for giving time to the new private sector management and confidence was being reposed in their capability to turn the organisation around. As had been pointed out then that turn around is not just about reviving profitability. Rather, turnaround is about all round performance with customer satisfaction at the centre.

The scepticism shown early 2006 is borne out to the extent that Karachi’s city council’s treasury and opposition benches unanimously resolved mid-June 2007 that KESC’s privatisation agreement should be abrogated. This is not just an affirmation of the failure of KESC’s turnaround plan through privatisation but actually takes a jab at the imported privatisation policy itself.

A privatisation plan not allowed for Pak Steel by the judiciary must now be enforced even though the mill has turned the corner. So intense is the obsession with privatisation that this foreign pet solution must be fitted to organisations regardless of the specific situation on the ground. KESC’s example should establish once and for all that not just scribes but the people’s representatives too clearly see that privatisation is not a solution and that privatisation may have to be reversed to improve organisational performance. That is, organisations may have to go back to the public sector to arrest decline and decay.

Why might a private sector organisation not be able to serve the interests of the people, the communities, and the society at large? Siemens is now known for its unacceptable disposition in the case of KESC. A private management that may have to first serve its interests overseas might trade-off the interests of domestic stakeholders with that of the foreign stakeholders. This is not the first time as this maximisation behaviour has been demonstrated by some independent power producers also in the not too distant past. Instead of learning from our own recent history, we implemented the dictates of foreign lenders who complement their private sector counterparts when they give advice (read dictate).

As we act according to foreign advice, we may gain acceptability of foreign lenders and become more secure in our positions regardless of the performance of sensitive organisations that may take a nosedive in the process. As the new private owners trade-off various interests while aiming at the maximisation of the gains of owner managers whoever and wherever they may be, we too seek personal interest maximisation in policy formulation and implementation even if it is at the interest of the organisation and its stakeholders.

If the interests of the stakeholders cannot be served through the above mechanism as we now know for sure through KESC’s failure, alternative is to go back into the public sector. Even privately held business organisations must go public so as to not just seek the participation of the general public but to also get vital inputs into decision-making that would enable the business accomplish its mission and achieve the over-arching goal of customer delight without which no one would beat the path to their door and no shareholder would get the desired return sustainably.

What we have seen happening in privatised KESC is simply primitive even from the point of view of business organisations. No MNC can engulf the world if it operates at complete cross-purpose with the host-country interests. Shell—Nigeria had to pay an enormous price in terms of image and stigma that it had to live with due to their poor environmental and human rights management in the country they thought was backward. Nigeria was underdeveloped but not the world as Shell—Nigeria was taken to task for their behaviour in Nigeria as was Nike by none other than Americans themselves for Nike’s sweatshops in third world countries.

This is not to say that MNCs are altruistic. MNCs are, however, rational enough to now realise that their global presence is a function of their good global corporate citizenship. That it is not perceived as such by many in developing countries is the challenge that MNCs still face and must surmount so that the gap between their actions, intentions, and perceptions is closed as much in host countries as it is in their home countries.

However, to be predatory is simply down and out as has happened in the case of KESC where even the complaint numbers now are useless as no one even answers the phone for hours on end. One may then call the governor’s house complaint cell at 136 where the respondents are as exasperated as the consumer since the governor’s house complaint cell attendants too have the same complaint that no one from KESC responds to them either. Could it be more pathetic?

Let no one tell us that KESC was always like this prior to its takeover end-2005. For, it was not. It may have been termed inefficient then according to the standards people had in mind for it but now it is simply non-performing. True, there is a supply-demand gap as it was then too. Has this supply-demand gap spiked all of a sudden post-November 2005 take-over? All of a sudden, are there more kundas, more ACs, more appliances, and more people that the system cannot handle? If electricity consumption is a function of GDP growth rate, the same had increased to 7.5 per cent in 2003-04 but the people were not left half as hapless as they are now.

The GDP growth rate increased to nine per cent in 2004-05 and KESC was subsequently privatised in November 2005 but then in 2005-06, GDP growth rate fell to 6.6 per cent when people’s power woes began to worsen significantly. This growth rate in 2005-06 was lower than that in 2003-04 but people’s power related miseries compounded in 2005-06 and not in 2003-04 when the growth rate was higher.

Growth rate cannot be used to explain away power shortage and crisis. Situation is so bad now that people face load-shedding related outages several times during 24 hours in addition to power failures due to faulty equipment that is not even replaced on time with quality equipment. This leads to repeated prolonged failures. None of this was the norm prior to KESC’s privatisation. And, if sub-standard materials and equipment are being used even now, tell me the difference between the post-November 2005 KESC and the KESC prior to that.

Also, we must be told the difference between the line losses post- and pre- November 2005. If these have not come down significantly from the 40 per cent line losses of the old KESC and are nowhere near the international level of 10 per cent line losses, where is the new KESC? Further, the reduction in illegal connections needs to be felt as it poses a burden on the consumers. `Kundas’ are widespread and not possible without the complicity of the corrupt elements inside KESC. If corrupt KESC elements still rule the roost after a year and a half of take-over by private sector including big global names, where is the new management and what has it done thus far?

KESC is to be evaluated not just on the basis of power generation capacity it may or may not create, KESC needs to show performance on each one of the above scores.

Since nothing much has been accomplished by the privatised KESC in 18 months and since performance has only deteriorated rapidly, it is a case for a new management that should promote the interest of stakeholders. A utility is to serve the community and the society and cannot be run like a closed shop shut out from the world like it has been since the fateful decision taken in November 2005 to privatise this utility. Let the public weal prevail and let the public run their utility that must exist for them first and last.