There is something incongruous about the privatisation of what are known as public utilities.
The fact that something declared ‘public’ is at the same time thrown at the mercy of private interests, is a contradiction in terms. Private firms are concerned mainly with profit-making, and if ‘public’ utilities are governed by this motive alone, what we get is the privatised-KESC that is playing havoc with the lives of Karachiites and heaping ruin upon the industrial and commercial sectors.
The tragedy is that those imported from abroad and imposed upon this hapless country, or cultivated indigenously for that matter, who fully subscribe to the neoliberal economic philosophy, fail to appreciate that market alone cannot deliver what are known as the ‘public goods.’ Nor can it deliver essential infrastructure services by itself.
We should keep in mind that public policy formulation in a given case entails making choices from several alternatives. These should accord with the interests of all stakeholders. Moreover, the choice made should be a balanced one. The choices must also take into account the prevailing values and conditions, and serve the overall interests of the people. When political pressures and vested interests take precedence over the substance of project proposals, societal goals are not promoted, whether it is in economic policy, education, foreign relations, or environmental policy. The relationship among public, private and non-profit interests has to be taken into account. In order to be progressive, economic policy must be guided by the need to safeguard the larger interests of the general public itself. Unfortunately, in privatisation policy, the people’s interests have often been low on the priority list.
Public utilities: A broad view must be taken in issues whose impact goes beyond the immediate problem at hand. The fact is that many kinds of services, such as public utilities, banking and control of credit, etc., impact other sectors in a big way. If utilities are not efficient, and if shortages continually persist, industrial and commercial interests, besides the health and general efficiency of the populace itself, badly suffer. For example, handing over management control of an electric utility to a company whose main interest is selling electrical equipment and generators cannot fail to create a conflict of interest.
Now the Karachi district city council itself has demanded with one voice to abrogate the privatisation agreement of the KESC. Earlier the Karachi Chamber of Commerce and Industry had demanded that the details of the privatisation agreement be made known. Perhaps the load shedding of industry has since been stopped but the burden of load shedding has been transferred solely to the commercial and residential consumers.
Before privatisation, they should have been made to commit on making further investments on pain of penalties if they failed to do so. Not only that, privatisation, if at all it is carried out, should always be made contingent on delivering a higher standard of service and/or cheaper product or service than was available hitherto. Failing this, the government should keep to itself the prerogative to take the utility or enterprise back besides imposing appropriate penalties. This probably has not been done in the case of the privatisation of the KESC, where performance after sell-off has been the most dismal.
The performance of the KESC, and to a lesser extent that of PTCL after privatisation can serve as a good guide to shape of things to come. The elevation of the profit motive above all other considerations has had a highly detrimental effect on the performance of these companies. In fact, the management of infrastructure and utilities is one area of public policy where we must suppress the urge to hold the profit motive supreme as they are auxiliary to the more substantive fields of industry and commerce.
As far as electric power is concerned, availability of power is vital, more important than profitability. Substantive sectors of the economy have their performance depend on electric power and when the required power is available their performance improves drastically.
The source of rapid deterioration of KESC’s services after privatisation can be traced to the preoccupation of the new management with increasing profits and cutting costs in areas where better sense should prevail. Maintenance, repair and replacement of existing equipment leave much to be desired as shown by the repeated breakdowns in Bin Qasim and other power plants. Losses, due both to pilferage of electricity and line loss from worn out equipment and conductors are high.
They have also failed to increase power generation. The government’s contribution in this was the ill-advised decision to shelve plans for construction of more thermal power stations in the state sector a few years ago for reasons best known to them. Some people attribute this to a bid to make life easier for independent private power producers!
The lack of power and prolonged load shedding is having a toll on the economy. Although it is claimed that industrial areas are exempt from load shedding, power outages of as much as eight hours a day in residential and commercial areas leads to sapping of the energy of the industrial and office workers, shortage of water, power riots and traffic jams resulting therefrom. Wednesday, June 13 saw the worst of traffic jams in much of the city as people took to the streets to demonstrate their frustration at repeated load shedding. Commercial and industrial enterprises have to bear the additional expense of maintaining alternative mechanisms such as generators, standby generators and UPS. The overall cost of this to society is much, much more than if the required power stations had been constructed and put into operation.
While our prime minister continually reiterates that “it is not the business of government to do business,” foreign state-owned companies, many from other developing countries like Pakistan, acquire and run some of our ‘privatised’ enterprises and utilities.
Priorities: The current dispensation’s priorities are an object of wonder for the media and the experts alike. They could learn from China, which provides utilities and infrastructure cheap. The growth of Chinese industry and trade has been phenomenal in consequence. True FDI is rushing to China, even as China continues to run state enterprises and use state companies to win contracts abroad! In Pakistan, they are simply overjoyed with the prospects of portfolio investments or selling out state enterprises cheap and present this as FDI.