WAPDA, being a mega department, has always been in the lime light-more so because it provides electricity to the smallest of the shacks and also to the biggest of the industrial units. And all along it’s efficiency seems to have been gauged from the level of service evident in distribution of power.

The fact that a large number of people do not pay utility bills has been ignored and no effort seems to the underway to redeem the situation. The worst has been FATA which owes upwards of Rs46 billion ending FY 2004-05.

The best solution that ever came-up was the World Bank edict to corporatize, commercialize and lastly to sell Wapda’s generation and distribution assets. This, the WB proclaimed, was to be done through vertical unbundling of Wapda’s power wing. The ‘terms of reference’ (TOR) for this demolition is the executive order dated October 24, 1999 issued by the then prime minister. This two-page document is about all that has been considered as necessary to break-up a national institution that took more than forty years to make.

This TOR then goes on to declare Wapda as subservient to the newly created Pakistan Electric Power Company (PEPCO), which was first to be considered as a holding company and thus the real owner of the un-bundled segments of Wapda. This somehow changed immediately - all which would be explained in the narration to come, when this new entity became a management company.

As a management company, PECO has to it’s credit a manpower transit programme (MPTP) through which a majority of the employees of Wapda’s power wing have since been transferred to the 13 corporatized entities including the nine distribution, one transmission and the three generation companies.

As the utility staffing is a specialized job, PEPCO by way of enhancing the human resource of these new firms has only been able to add up a few un-connected finance people to the new corporations (in the current lingo).

The present edifices at the company level are most weak and surely poor in comparison to the resource available at the Wapda level. The PM’s edict laid down that PEPCO would conduct detailed financial analysis, identify the extent of technical and non- technical losses (and then propose remedies), create commercial and financial skills and structures within the newly corporatized entities (which was thought to be lacking in Wapda),to institute a management change programme and lastly, to develop the outlines of a competitive modern and dynamic power sector which would meet the ends of the consumer in the cheapest and most efficiency manner).The outcome speaks volumes of naivety of the policy makers.

The fact that no effort was ever evident in shape of re-engineering of the existing systems (but for re-naming engineers as mangers) or towards re-tooling of the personnel further tells us about the lukewarm and non- professional approach towards change management. And it all has led to great losses, both tangible and intrinsic, since 1998.

There is indeed a strong need for the government to revisit the whole effort. This is all the more important when we see the ministry of Water and Power trying ungainly to seek direct control of the new corporations.

In order to come up with viable options, we should firstly understand the way to corporatise an existing entity and to comprehend holding companies etc. What is the concept of a holding company or a group of undertakings (including the parent undertaking and the subsidiaries) that are put together to pool resources and share profits.

We would also try to understand the dynamics of first incorporating a firm as a holding company which then proceeds to incorporate subsidiaries. A holding company while owner of the whole or part of the share capital of the subsidiaries, is not regarded as the owner of the assets of the subsidiary in absence of an express agency or trust relationship and thus all the enterprises can be independent— specially when the directors of the parent company, as such, owe no duties to protect the interests of the subsidiaries (when these have their own independent boards).

The law further states that the subsidiaries are under no fiduciary duties to the holding company merely as a majority share holder. Further expostulating, we hold that the directors of the subsidiary must not simply act as puppets of the holding company. This leads us to the conclusion that the best way of unbundling Wapda’s power wing i.e. if all this was a necessity, was through the creation of parent Wapda as a holding company and the un-bundled segments as the subsidiaries and as an extension. There was no need at all to conjure up PEPCO and that too as a holding company on paper and then as a management company. All this more ridiculous when we see that the least of PEPCO’s attributes has been it’s management skills.

Going back to the theory of unbundling and the creation of subsidiaries listed in the preceding paras, we clearly understand that who-so-ever holds the majority shares or power, should be able to add up to the resources of the subsidiary entities and in extension if the ministry of Water and Power is to hold the reins, it should, as a rule, have the ability to add on to the expertise of the corporatized or unbundled segments of Wapda. It is a retrograde step for the ministry to ever think of controlling the new corporations directly.

What then is the answer to another set of the problems: the different level of tariffs for each of the distribution companies and the fact that price to the consumer per unit would vary with the richest accessing electricity at cheaper rates relative to the far-flung areas. All permutations and combinations lead only to one conclusion— that a singular uniform tariff is a must for the country and anything other would be basically wrong on many accounts.

The different tariff for Karachi through KESC is a different case as the utility was incorporated eighty years ago and has been the city’s way of life. The KESC was much more efficient up to 1996. This issue alone is enough to come up with something other than the eventual privatization.

UNDP in a most appreciable way, on the other hand, is urging national policy makers to realize that there are many other options including restructuring of the public sector enterprises (PSE) and the concept of public-led partnerships with the private sector. But this may be at odds with the edicts of the IMF/WB.

It is also important to understand the actual problems besetting Wapda and the reasons of its default in provision of the best service to the consumers. We would also dilate upon the factors that disallowed Wapda as a utility to come up to the expectations of its customers. The past governments starved Wapda of necessary funds from 1988 to 1998 and instead came up with the induction of independent power producers (IPP) to cater for the load growth.

Except for the GBHPP (Ghazi Barotha), no worth-while power project was allowed to be started by Wapda. This led to the public perception that the utility was unable to cater for their needs. It was also somehow ingrained in the minds of the people and even experts that WAPDA was over-staffed and simply unable to set tariff rates that took account of the actual costs incurred. All this too was inherently incorrect.

The stagnation was mainly because of non-addition to Wapda’s generation capacity, continued management by non-professionals at the senior level and a blatant political interference. This later interference did stop during Army’s management of Wapda during 1998-2003, but the new managers were unable to look after the long-term goals of the utility. However, we cannot hold anything against them because running a power utility was much away from their core responsibilities, training and even psyche.

It is time to re-visit the whole concept of Wapda’s corporatization. Thereafter, a new direction has to be given by considering Wapda as a holding company with the nine distribution, one transmission and three generation companies as its subsidiaries. As Wapda and its professional cadres have learnt a lot during the last decade 1994-2005 and the other stake holders also now understand that utility-specific resource is only available with this mega-organization, the proposed way of corporatization is bound to succeed.

Once it is set up, this new structure can then report to the government through the various related ministries including the most one ministry for Water and Power. It would also be appropriate to suggest that disasters do not just happen –actually these are the amalgam of undesirable changes in critical set of events. As a consequence, the quickly we revisit Wapda’s corporatization, the better it would be for both the utility and the country.