The most striking revelation emerging from Nepra’s investigation into the affairs of K-Electric is that the transmission and distribution system of the utility is not capable of handling much more than 2,200MW.
This is striking because the utility’s management repeatedly points out that it has invested in new generation capacity of more than 1,000MW since taking over.
They also point out that the utility’s future potential as an investment opportunity comes from its growing consumer base. But if the transmission and distribution system has not been upgraded to meet this additional demand, or carry the power from the additional generation capacity, then what exactly has the management been doing?
It is critical for the management to answer this claim made by Nepra’s fact-finding team.
If the claim is true, and the recent experience during Karachi’s heatwave suggests it is, it then implies the management has been investing more in tangible assets to build the balance sheet of the company and increase its sale price, than in its transmission and distribution capacity whose impact would be less tangible but more beneficial.
The regulator is clearly struggling to find some leverage over the power utility’s private management. Given the difficulties Nepra is having in exercising any sway over K-Electric, perhaps it is worth asking if the regulator is ready for the privatisation of more distribution companies scheduled for later this year.
Moreover, has the water and power ministry used every lever in its control to influence the decisions made by K-Electric’s management?
For instance, of the three places on the board of the company, how many strong and senior people have been placed on these seats?
And what has been their attendance record at board meetings?
If the management has failed to uphold its promises, the government for its part has also not lived up to its obligations. The sad part is that it is the poorest consumers of Karachi who have paid the price for these failures.
Published in Dawn, July 21st, 2015