ISLAMABAD: As the management of the Karachi Electric Supply Company (KESC), as well as its former and present buyers stayed away, a Senate panel noted on Friday serious violations of different agreements by the utility’s management and criticised government representatives on its board of directors for staying silent.

The sub-committee of the Senate Standing Committee on Water and Power, led by Senator Shahi Syed, sought legal opinion of the law minister on a couple of key questions within a week so that the committee could submit its final report to Senate for action before Sept 2.

The ministry of law was asked to explain from the legal standpoint if the amended agreement signed with the KESC in 2009 to change the original 2005 agreement was valid given the fact that the original buyer, Al-Jomahia Group, was defaulting on its contractual obligations and if the government could have taken over the utility as provided in the original sale agreement.

The law ministry’s view was also sought on whether re-bidding was not necessary for the KESC when a defaulting original buyer transferred a company having government shares to another private entity and also to explain if the water and power ministry was authorised to provide incentive package to the new buyer – Abraaj Capital, a private entity -- after the original buyer failed to meet contractual obligations.

The law ministry was also asked to give its opinion if rules of business 1973 allowed implementation of decisions of the ECC without proper endorsement by the cabinet or the prime minister and if the ECC was authorised legally to take such decisions to provide incentive package to a privatised entity by bypassing the cabinet committee on privatisation or Council of Common Interests.

And if the ECC decisions were not ratified by the federal cabinet then what was the legal status of the agreements signed with the KESC management.

During the course of briefing by KESC Labour Union (CBA), Senator Humayun Khan Mandokhel and Senator Nisar Mohammad Khan observed that the KESC management was still collecting 15 paisa per unit in additional charges from all consumers it was allowed in 2009 by the National Electric Power Regulatory Authority (Nepra) to meet salary expenditure of 4,500 workers despite the fact that more than 7,000 workers had been sacked shortly after this concession was given to the company.

He asked the ministries of finance and water and power to calculate the impact of 15 paisa per unit being charged to consumers for the salary of the workers who were later fired. A union leader said his body’s calculations put the figure at Rs7 billion.

The committee deplored the conduct of the State Bank of Pakistan which declined to provide details of revenue collected by KESC to assess if the utility’s statements were correct. The union leaders told the committee that more than 10,000 workers had been removed from the company at different times since its privatisation despite a clear commitment in the original privatisation agreement against any retrenchment. They said that a large number of workers were later re-hired through third party contractors at much lower daily wages which proved that the company was not overstaffed.

For example, they said, posts of 800 drivers had been abolished by removing old employees and in their place 1,600 new drivers had been hired through a third party contract while 500 security guards had been sacked and in their place 1,800 new security guards had been hired through the third party contract.

The senators said that the company was not utilising its own generation capacity because of the expenditure involved and was relying on power imported from Wapda and IPPs. It was also resorting to loadshedding.

The committee took exception to poor preparedness of the a lone director in the KESC board of directors — Noor Ahmad, a joint secretary of the finance ministry, and noted with concern that the government-appointed directors were not looking after the interest of the state and its people and nobody took them to task for compromising national interests.

The members said that due to negligence and weakness of the government, the KESC management was taking the entire state for granted by using courts, police and even political leadership through pressure, coercion and misreporting.