KARACHI, Sept 26: A dispute between the Karachi Electricity Supply Corporation and Siemens over managerial powers and functioning deepened on Wednesday when the KESC announced termination of its contract for financial management with the European giant, terming it a cause of serious losses.
Apparently in a harsh statement, the KESC said Siemens’ association with the KESC had caused serious losses to the company and the recent failure to ensure proper functioning of the SAP software led to this final decision.
“Amongst the various breaches committed by Siemens, which have caused substantial losses to KESC and tremendous inconvenience to the public, is the recent failure of Siemens to ensure the proper functioning of the SAP software programme, which controls the payroll of KESC employees, vendors’ payments and various other outstandings,” said the statement.
It said the KESC offered Siemens a timeframe from Sept 13 to 24 to remove such faults from the system and run it properly by Sept 25.
“Upon Siemens’ failure to do so on Sept 24, KESC terminated Siemens, involvement from the SAP system and made alternative arrangements in order to minimize the losses,” added the statement.
The city has suffered major power breakdowns during the last couple of years since the KESC privatization, which triggered protests across the city, creating a law and order situation. However, the management saw the power crisis more manmade than created by the anti-privatization forces within the utility.
In 2005, a consortium led by Kanooz Al-Watan of Saudi Arabia acquired more than 70 per cent shares of the company at over Rs15 billion. Later, the consortium entered into an agreement with Siemens (Pakistan) to act as a technical partner in reviving the corporation.
However, the working relationship between local managements of the two foreign groups has not been an ideal one, which ultimately caused misery to the consumers. The situation looks set to worsen in the coming days.
“In response to a notice issued by the KESC on Sept 25, KESC has received two notices from Siemens threatening to terminate the O&M (operation and management) agreement if the alleged defaults are not cured within 45 days. The causes to this are disputed by KESC and will be appropriately responded to,” added the KESC statement.
Sources close to the two companies said the KESC would have to compensate Siemens if it adhered to its decision.“The agreement between the two sides suggests if it is terminated by the KESC, it will have to compensate Siemens for each year of the remaining term of the agreement in an amount equal in aggregate to $16 million or 65 per cent of the fixed fee for the remaining term of the agreement,” said a source, citing one of the agreement clauses.
