ISLAMABAD: Amid allegations of overbilling and non-payment of dues by K-Electric to public sector entities, the government has opposed the ‘third privatisation’ of the power utility and hinted at going for arbitration to resolve a host of disputes with it.

Testifying before the National Assembly’s standing committee on water and power, Minister for Water and Power Khwaja Mohammad Asif raised serious questions about the last two deals – divestment of 74 per cent share by the Musharraf government and later by the PPP government in 2009.

MQM’s Waseem Hussain accused K-Electric of issuing inflated bills, causing severe hardship to over 20 million people. He said the company should be reined in and made accountable.

The committee’s chairman Mohammad Arshad Khan Leghari and some members asked if the government still had shareholding in the KE and why it had turned a blind eye to the plight of consumers in Karachi.

Khwaja Asif said the government still held 24-25pc shares in the company and had two members on its board of directors. He said the government had expressed concern over the company’s past two transactions in which 74pc shares were divested and then the original buyers offloaded 35pc shares to a second party.

“Both the transactions were against the public interest,” he said, adding that the new shareholders had the reputation of doubling their money in a few years and moving out. They have made similar deals elsewhere.

The minister said Karachi required about 4000MW of electricity of which 600MW was contributed by the national grid on “highly subsidised rates” in the interest of the people of the city. The government also picks the difference between the cost of gas and oil for K-Electric’s power plants to protect consumers. But despite these, he regretted, the utility had “engaged us in litigation over billions of rupees it owed to public sector entities”.

Minister questions past two deals made during Musharraf and PPP govts

He said the KE was not paying more than Rs40 billion to Sui Southern Gas Company (SSGC). Although the utility has admitted to having owed Rs28bn to SSGC, it is not clearing even this amount.

Moreover, Khwaja Asif said, K-Electric charged interest for delayed payments by the government and its companies, but it was not ready to pay interest on non-payment of dues to SSGC. It is also holding back more than Rs32bn to be paid to the water board and has taken the matter to courts, particularly the Sindh High Court.

The minister said the new managers of the company were businessmen who had recovered their investments along with profits. He claimed that the government had information that the present management was planning to move out by selling its stakes to a Korean company and the change of its name from KESC to K-Electric was a step in that direction.

Khwaja Asif urged the parliamentarians belonging to Karachi to take up the matter also with the Sindh governor who could act as a mediator and ask the KE management and the federal and provincial governments to see if a respectable solution could be found.

Meanwhile, K-Electric has described Khwaja Asif’s statement as “baseless and clearly untrue”.

Its spokesperson said the company was receiving 650MW from the national grid through the National Transmission and Dispatch Company (NTDC) under an agreement as was the case with other regional distribution companies. The utility has fully complied with its obligations and paid Rs278bn to the NTDC over the past five years and adjusted Rs29bn of arrears pending since 2008.

“Over the past several years, the KE has invested over $1bn for boosting its generation, transmission and distribution network. Furthermore, we will invest an additional $2bn to enhance our capacity to serve Karachi. Its privatisation took place in accordance with all applicable laws and relevant approvals from the ECC (Economic Coordination Committee), the cabinet and the CCI (Council of Common Interests) are in place,” he said.

The company also denied that there was any move to transfer its strategic stake to a Korean entity. The spokesperson claimed that the company had been up to date on all monthly bills of SSGC for three years as per the mutually agreed payment plan. Over the past 30 months, he added, the KE had paid Rs93.5bn in respect of current bills and an additional Rs6.4bn to adjust outstanding bills.

On the other hand, he claimed, several federal and provincial government organisations owed more than Rs111bn to KE, most noteworthy among them being KWSB where Rs33.8bn was outstanding till date.

He claimed that Karachi was the only city in the country where all five industrial zones as well as 58pc areas of the city were exempted from loadshedding.

Published in Dawn December 20th , 2014