Pakistan continues to face electricity shortages and persistent load-shedding. How did the country get here and what can be done to get its power supply on the right track?
Power moves in Karachi
The electricity supply has improved in some parts of the city but Karachi Electric’s high profits indicate it could invest more in improving an inefficient grid and infrastructure
In September 2008, Karachi Electric Supply Company (KESC), now known as just Karachi Electric (KE), was taken over by new management as part of its buyout by the Abraaj Group. That same month I was late for a job interview; the assembled interview panel was ready to cancel the proceedings until I told them the reason of my delay: I was stuck in a traffic jam which was due to protests against electricity outages. Once the interviewers heard my story of driving around burning tires and reasoning with men half-crazed, they were more than ready to excuse my tardiness.
Everyone in Karachi, and many outside, were aware of the situation. That summer, the heat was brutal and there were power outages of up to 12 hours. Many people, especially in low-income areas, had taken to sleeping in open parks and there were newspaper advertisements from industrialists begging for uninterrupted power so they could run their machines.
At that time only 23pc of the city was load-shedding free. These areas included hospitals, the red zones and some parts of Clifton and DHA. Power generation was at 1,700 MW leading to a huge shortfall in Pakistan’s largest city and industrial capital. The transmission and distribution (T&D) losses were at 40pc as many people resorted to electricity theft through kundas.
In fact, recovery of bills was as low as 60pc leading to losses for the beleaguered KESC. On the customer service side, people could not differentiate between load-shedding and faults, and complaints went unanswered. The anguish of people led them to the streets and some parts of the city were no-go areas for bill collectors.
Light at the end of the tunnel
Eight years on, Karachi’s summers are as hot or even hotter but the situation is different. According to KE, power production has increased to 2,800 megawatt (MW), and even though the city still has a need of 3,200 MW and suffers peak short fall of around 400 MW, the overall electricity coverage and efficiencies have improved.
A few months back KE announced plans to operationalise the 700 MW coal-fired power plant at Port Qasim. According to the company 60pc of the city is now load-shedding free and strategic installations and industry is now exempt from it. T&D losses have been brought down to 23pc through insulated wiring and better grid systems which make theft difficult. KE has spent $1.2b in improving the infrastructure and made investments in centralised customer support, integrated business centres, IT operations, implementation, and Supervisory Control and Data Acquisition (SCADA) systems which track electricity usage and power delivery.
A mass media campaign of ‘naming and shaming’ plus work on new meters and motivating staff led to improvements in the recovery of bills while load-shedding has been regularised albeit at the cost of collective punishment to paying consumers. Power purchases and pricing contracts with regulators and stakeholders were negotiated and formalised and human resources improved.
However, a few days ago I was again stuck in a traffic jam and the story was the same: people were protesting against power outages. Many experts point out that electric power is a human right much like water and gas but this isn’t a view necessarily shared by the KE management who are tasked with the city’s power generation and distribution. People need and expect uninterrupted power for their business and homes. KE, though, has a simple formula in power supply; it is a private company and its main mandate is to run a profitable business.
People need and expect uninterrupted power... KE, though, has a simple formula in power supply; it is a private company and its main mandate is to run a profitable business.
Capitalism trumps all
Making a profit is something KE has excelled at. In fact, the company recorded a massive rise of 119pc in net profit in fiscal year 2014-15 and then an increase of 43pc in the half-year period that ended on Dec 31, 2015 on the back of increased sales and collections, while its electricity buying and finance costs have decreased.
The model is simple; the company has divided the city into load-shedding zones which correlated with bill recoveries. Localities with low losses are given uninterrupted power while those which are running on losses suffer power cuts. For full-paying customers living in an area with losses this is unacceptable. Among these is Farzana Naqvi who resides in Gulshan-e-Maymar, a locality where bill collections are not optimum, and experiences regular loading-shedding of two hours every day. She understands the overall policy but says, “It isn’t fair that we have to sit through power outages even though we pay our bills on time. They [KE] are making money off customers like me but we end up suffering.”
This tactic of cutting power from whole localities, as KE critics aptly put it, amounts to ‘collective punishment’. This is a term that, unsurprisingly, the management disagrees with: “Thirty two per cent of Karachi is unplanned and doesn’t even exist on KMC’s maps,” says Fakhar Ahmed, KE’s chief marketing officer. However, according to an agreement between KE and the government, the company is legally obliged to provide electricity to all of Karachi’s residents.
Maps or no maps, these neighbourhoods exist but struggle for gas, power and water. And due to the essential service not being provided by KE, groups who can provide it have stepped in: “These places are victims of mafias which on one hand are involved in theft through kundas and also have an alternate arrangement for providing electricity through illegal private generators. They charge three times for the same electricity as people would get from a KE connection,” claims Ahmed.
The protest I ran into a few days ago was symptomatic of these issues. Residents of Qalandarabad, Block 10 in Gulistan-e-Jauhar had blocked the Jauhar Chowrangi and were also protesting in front of the KE office nearby. “We haven’t received electricity for three months,” a tearful lady told me. “It’s Ramazan and how can we survive without electricity in this heat?”
The people were protesting against load-shedding and also the endemic corruption and mafias they claimed were being abetted by some of KE’s staff. Many waved counterfeit bills sent to them or receipts made out to the electricity mafia that had promised them electricity or a kunda connection but then reneged on their promises. Some also had bills for arrears and could not understand why they should pay when they were not getting power. Pushed to desperation, these people had taken to the streets in the hope that their protest could lead to a solution.
When asked about this Ahmed says he is aware of mafia scams, adding “Look, why would we not provide electricity? That’s our business after all. For us stakeholder management is the key. The problem is more developmental but we have been trying to work with communities to help them, not work against them”.
Earning community goodwill
The company has found solutions in localities such as Lyari, parts of which are free of load-shedding. There is a multipronged approach to addressing bill collection and load-shedding. Through a community development programme the neighbourhood leaders are brought on board and in return for proper procedures and bill collections, the participants get uninterrupted power and also other benefits such as trash clean-up or free health-care camps.
Around 4,000 kunda connections are removed every week and proper meters are installed. The idea is that these people will inspire those around them and they will become part of the programmes which have been implemented in areas such as Altaf Town, Korangi, and Rehmat Chowk. Meanwhile collections from places like Liaquatabad and Buffer Zone have improved and they are now 70pc load-shedding free.
Citizens of Karachi have noticed the changes and Salman Alvi is one of them. “There has been a definite improvement in the situation in the majority of areas especially the ones who pay on time. The situation in Karachi is much better than Lahore. However, some categories of staff who cause issues are still within their [KE’s] ranks but unfortunately protected by political parties.”
The idea of low-loss areas receiving uninterrupted power is mostly understood by the city’s residents, one of whom said, “The government needs to support KE against the kunda mafia so that better revenues can be generated from those areas also and they too can have a better supply situation. However, it will still take some time to revamp the technical aspect. The areas which are regular payers are less disturbed and that is by design.”
Is renewable energy the answer?
As the city’s power situation gets better, the next problem for KE becomes incorporating better technology and smarter solutions. One consumer was clear about this and said, “KE should go for an off-grid strategy and encourage residential users to move off the grid starting with low billers. In five years Karachi residences must be off the grid. Karachi can use both wind and solar [once they are off the grid]. Pass on the electricity to the industry.”
While there may be some distance to go before Karachi gets the sort of solutions as in Germany where 1.5 million of the country’s citizens, nearly 2pc of the population, sell electricity to the grid. Still it is heartening to know that there is some investment in solar and a 150 MW solar plant will be in operation once it gets the go ahead from regulators. There were also plans of a biogas power plant that would be put up with help of General Electric and USAID.
Karachi’s power situation is still far from ideal; some parts of Karachi still get load-shedding of six hours daily, but Ahmed is hopeful, “In eight years we have decreased losses and increased capacity and coverage. We are working for Karachi to be completely free of load-shedding but obviously there are no overnight solutions.”
The dark ages
Lesco suffers from a lack of resources and inefficient management, and is plagued by corruption according to the Prime Minister’s Inspection Commission
Substandard technology, poor human resources, corruption, inefficiency and incorrect billing are the main reasons behind Lesco consumers’ woes. Add to it the unbearable discomfort and inconvenience of load-shedding and sudden, prolonged power cuts, and one can only sympathise with them.
Here is a company with such poor technological and human resource base that it cannot serve its four million consumers round the clock even if it so desires. Due to this limitation, it can operate only within certain weather parameters. If it is windy or rainy at any given time, which happens to be characteristic of Lahore’s weather, around 40pc of its 1,540 feeders can, and normally do, trip and the retrieval may take between 12 to 48 hours because of perennial staffing constraints.
Things get worse when one finds out that Lesco, according to popular belief, is not only inefficient but corrupt as well. In 2014, for instance, the company was accused of using “extra billing as a policy” by the Prime Minister’s Inspection Commission (PMIC). The PMIC claimed that the new meters installed by Lesco were 30-35pc faster than the old ones.
The situation persists in an area with one of the largest consumer bases — over 3.9m — and consumption (over 4,500MW, or 25pc of total national generation in summers). In financial terms, it billed Rs22.54 billion in the last fiscal year. Despite this massive base, its distribution gadgetry is still mired in the 1960s. Due to this poor technological base, it can fully serve only 70pc of its clientele, and the rest of the 30pc suffer different kinds of ‘system constraints’ — a euphemism for the inability to provide full 24/7 service.
Technological improvements (like load-break switchers, sectionalisers, etc.), which came through foreign funding in the ’80s, were rendered useless in the 90s because no one followed up on them. Innovations like advance metering infrastructure (AMI), which were pushed down Lesco’s throat by lenders such as the World Bank, the Asian Development Bank and USAID are still at the PC-I stage.
Lesco, which was severely understaffed till a few weeks ago, is now full of untrained people serving at the lower rung. The recently hired personnel of around 4,500, recruited in the last four months, were directly inducted into the field without proper training to release pressure there. The net result is redundant technology, handled by poorly-trained staff, resulting in massive dissatisfaction of consumers. Complaints of exaggerated billing, low voltage, delayed or no response to complaints, unscheduled load-shedding, delayed or non-attendance to localised problems are all prevalent in the Lahore region.
Lesco’s own record concedes consumers’ complaints, and their extent, according to which there were some 82,532 outages of different durations in the last one year — considering that these are recorded outages, the unrecorded ones may be even higher. It stopped publishing wrong billing data when the media started picking up the information. It also admits the burn out of 4,275 transformers last year. This, by the way, is by far the highest number by any company in the country. For example, the neighbouring Fesco (Faisalabad) had only 1,904 transformers burnt out.
“The company’s problems are multilayered,” says a former head of Lesco, who wishes to remain anonymous. “On top of a lousy technological and human resource base and ad-hoc rules, both at the chief executive and board of directors’ levels. The consumer base is non-cooperative and to top it all, there is no concept of service in the company.”
A game of musical chairs
In the last 10 years, the company breezed through eight CEOs — each staying an average period of a little over a year, he explained. To make matters worse, all of them were ad-hoc CEOs: serving the company on a temporary-charge basis. Two of them (including the incumbent one) were on extended service after their retirement.
How much interest and mandate these CEOs have is not a matter of subjective opinion. On the top, sit the board of directors: none of its members have any experience of running a utility company such as Lesco. All are competent, but in their own respective fields, not in the power sector and certainly not in the field of utilities. At the company level, human resources are the weakest link, with the result that there is no career path for officers. This leads to jockeying by employees for the top post all the time, because they can be removed and replaced any moment. That is how the company is being run for the last one decade, he concludes and adds: “That is why no one found time to work on customer care or technological improvements. Everyone has just been busy in their own survival — needless to say at the cost of the company and consumers.”
“All these are theoretical explanations of what afflicts Lesco. In practice, it is simply disastrous for the consumer,” laments Malik Parvez, a consumer from Lahore. There is a huge disconnect in what people pay for, what they expect in return and what Lesco delivers [on].”
Paying through the nose
People pay for 24-hour uninterrupted electric supply and for readily available employees to fix problems if and when they arise. According to Parvez, however, “What they actually get is continuously interrupted supply, with no one ready to listen and tackle their problems”. Getting one’s complaint registered is a Herculean task; all telephone numbers mentioned on the electricity bills for emergency calls are either busy or unattended. The officers simply don’t attend their cells. In most of the cases, one has to travel to local offices to register any problem.
Invariably, the response is that the teams are busy somewhere and will be duly informed on their return. This process may take anything between two to eight hours, and by that time the on-duty team changes and the buck is passed on to the next shift, where one might have to repeat the process yet again.
“Most of the consumers’ problems have one source; wrong billing, which in 99pc of the cases means exaggerated billing,” laments Muhammad Ramzan. The billing cycle allows this rigging, with a huge financial cost for consumers. The reading is normally taken at least 15 to 20 days before the actual bill is issued. The meter reader can easily add extra units, change the billing slab, and charge much more than the actual reading. By the time the bill is delivered, consumption squares up with reading. This is an in-built flaw, which is exploited to the hilt by Lesco.
With the guy on top sitting to keep the chair warm for the next one, extra billing becomes a policy matter; it shows performance of the top man at the cost of consumers. The PMIC team is on record about how the distribution companies manoeuver billing process to punish people and cover their own shortcomings, Ramzan claimed and added: “The Board of Directors itself has held press conferences revealing rampant corruption in the company. It is thus a lethal combination: allowing corrupt officials to carry on with wrong billing, to keep making money both for themselves and the company.”
“Just this one issue makes people’s lives hellish; with rates of electricity among the most expensive on the globe, made the highest with the addition of over 50pc of taxes, each additional unit turns the bill into an unbearable burden for the common man,” says Muhammad Jameel of suburban Lahore.
Once caught in the excessive billing cycle, there is no way out, except for either paying the bill or paying almost part of it in bribes and that too after countless visits to the local revenue office and spending painful days in the process. There is hardly any consumer of Lesco who has not suffered it at least once in the last two years. A visit to any sub-division at any given time explains the extent and depth of the crushing burden for the common man. The devastation has not spared even the most vulnerable segments of society; those falling in the ‘lifeline’ (or consuming less than 50 units) category and their violent protests.
“Lesco is an exact reflection of the power sector of the country, where poverty of technology and human resource, richness of ad-hocism and total absence of rules and systems have become central issues — and all of them going unattended far too long,” concludes a former head of the Pakistan Electric Power Company.
All these factors feed on each other and keep the company caught in an already lost battle. Unless the government learns to pick the right person for the right job and then lets management run the company for a respectable timeframe, hardly anything will change — at least not in the power sector and all its allied companies of generation, transmission and distribution.
Published in Dawn, Sunday Magazine, July 17th, 2016