Can we even hope for Electicity?

FP Investigative Report

The investigative team of the Financial Post published an in-depth report on the mismanagement of electricity last week in a forgotten and orphan City called Karachi. However, it came as no surprise when the high level meeting of the stakeholders on Monday was chaired by the federal minister for water and power Liaqat Ali Jatoi and attended by the newly appointed CEO and other stakeholders in the power sector came out with no solutions except the same rethoric with no substance.
The water and power minister had the audacity to tell the consumers to conserve electricity and not waste power by switching off one bulb of a 100 watts! Consumers are astonished to say the least, at a time when the worst power generation crisis has hit the metropolis, the minister who lives mostly in Islamabad and maintains a brightly lit house used mostly by his servants, in block 4 Clifton needs to apply immediately the suggestion's to the persons occuping his residence. The meeting was of no consequence to bring any kind of relief to the consumers in this city. Another suggestion we would like to put forth to the stakeholders of K.E.S.C is to do away with the official kunda connections in the city and in the vicinity of the minister's residence, the hugh Clifton park which is lighted like a "Christmas tree" all night long.
We had in our last report pointed out major issues and flaws in the privatization process of K.E.S.C 73% of the company's shares were sold at Rs. 1.65 per share amounting to R.s 20 billion. After the process was over, the government returned Rs. 5 billion to the new management of K.E.S.C for re-structuring and improvement plans. Pre-privatization when a Brigadier was the M.D of the K.E.S.C, the government was giving the organization a subsidy of Rs. 6 billion against loses and tariff. This amount instead of being withdrawn after the new buyers came into the picture, post-privatization subsidy was doubled to Rs. 12 billion against losses and tariff.
When privatization actually took place on 30th November 2005, the losses according to the balance sheet of the organization stood at Rs. 16 billion. However in four months, the balance sheet on 31st March 2006, the losses had increased by 4 billion and rose to Rs. 20 billion, and analyzing the report is no great task. It indicates that in the first quarter the losses have jumped by Rs. 4 billion, than at the year end we could forecast losses of more than Rs. 10 billion.
What than has been the aim of privatizing an entity, which is the sole provider of power and electricity in Karachi. It was hoped that a three-fold benefit would accrue post-privatization, firstly relief would be available for the consumer's by way of efficient generation of power supply, secondly the government would have investment in the country and it would give a boost to the country's economy and foreign direct investment and thirdly, the new buyers would obviously want on organization which would reap benefits in the days to come.
Since none of the above have been achieved and inspite of the minister for water and power's assurances that WAPDA has increased its power supply, the city continues to go through load shedding not once, not twice but three to four times during the day. A classic example is off load shedding on Sunday's when there are no commercial activities in the city. And of course we the consumers must take the promise of WAPDA increasing the power supply with a pinch of salt as only last week the WAPDA chairman is on record saying that dues of about 18 billion are receivable from K.E.S.C, which is a defaulter of WAPDA. Spokesperson of K.E.S.C has further said that an amount of Rs. 5 billion is receivable and owed to the organization by the City government, KWSB and Sindh government department's.
The question, which arises here, is where is the Siemen's management and what have they done for the recovery of these dues. If the government of Sindh and others owe money it should have been recovered by now, and losses should have substantially reduced. However, it has become very, apparent now that providing electricity to the residents of the city is not a priority with Seimens. Their highest priority seems to be the fee to run the operations and management, of K.E.S.C, which as per agreement signed with new management Seimens received from K.E.S.C 9 million $ for the first year and so forth. It has further been revealed to us through documentary evidence that a special grant by GOP to privatized K.E.S.C of Rs. 1.54 billion was given, and this is much higher than what was given to pre-privatized K.E.S.C, which was an amount of 3 crores only.
We were told by sources that the new management of K.E.S.C inherited a clean portfolio and had no loans to repay. However, after new management took over they took a Rs. 310 billion loan against running finance from Habib Bank Ltd. The buyers Al-Jumaiyah have further sold 23% shares out of their 73% holding to a Kuwaiti Nasr Al-Mari at Rs. 4 per share. The above indicators all point to the fact that Al Jumaiyah has recovered more than they invested. And it does not require much wisdom to state that with their requirements having been met the plight of Karachi and its residents and the crises of power failure is nobody's priority.
The new management of K.E.S.C has no dearth of funds______ it can pay a huge package to Seimens, Rs. 11 lakh per month to the CEO, Rs 5 lakh per month to the CHRO (Chief Human Resources Officer) Rs. 4 lakh per month to the divisional director HR, and Rs. 2.5 lakh to the general manager human resources. A combined salary of Rs. 11.5 lakh for the human resources department and the new posts created. No new power generation has been installed and Mr. Liaquat Jatoi's handout to K.E.S.C officials to prepare a comprehensive and practical plan is not even a laughable matter any more. Further it has been brought to our knowledge that local area faults have not been rectified or substituted with alternate feeders or PMT connection's anywhere in the city.
So Karachiites, like we had in our previous report emphasized, be prepared for the nightmare ahead. Will the government in Islamabad continue to be a silent spectator and watch, till such time that the situation goes out of hand and people come out on the streets.
And a recent interview of the federal minister for port and shipping on a private T.V channel is not a far cry from the truth, he rightly said are the people of Karachi being punished or are they being forced to create a law and order situation?