The beast of privatisation is upon us, for yet another time, with the business and policy elite postulating it as the panacea for all ills plaguing Pakistani economy. Perhaps the private sector needs to be more proactive in fixing the economy, but why must the emphasis remain on privatising existing government ventures? Competition necessitates opening up a sector – as was the case with the telecommunications industry – and now is as good a time as any to welcome new generation and distribution companies into the power sector.
Privatisation has been in vogue since 1978, under the regime of General Zia-ul-Haq. But for every venture the government chooses to get rid of, it must face the privatisation paradox: a government would only get lucrative bids for ventures that are profitable and productive. Private entities do not wish to purchase a loss-incurring venture as these would compromise their profit motive.
One such entity sold off by the government was the Karachi Electric Supply Company (KESC). There was a suggestion in the early 1990s to sell the KESC off to the company constructing the Lahore-Islamabad motorway in an attempt to pay its costs, argue power sector sources. This did not materialise for some reason, but the KESC had been marked for privatisation – a plan that came together in 2005 under the General Musharraf regime.
In November, 2005, 73 percent of the government stakes in KESC were transferred to a consortium led by Hasan Associate (Pvt) Limited and Saudi-based Al-Jomaih Holding Company and Premier Mercantile Services. This consortium found the going very tough, to the extent that by September 2008, a new management – led by a Dubai-based company named Abraaj – had to enter the scene and assume charge.
Some three years on, Abraaj continues to operate the KESC but its relationships with the citizens of Karachi as well as the Sindh government are rather strained. The KESC currently employs 17,000 workers, but few of them were hired with the gracious nod of the Abraaj authorities. As per the KESC’s plan, many of the non-core employees – drivers, office attendants, sanitary workers and security guards, among others – did not need to be on the payroll of the company. Many of these were appointments made at the behest of one or the other political influential. With their functions outsourced, the company could redirect the money saved into power generation and distribution – avenues that the Abraaj management till now has largely ignored.
It is not as if the KESC has not been spending at all, but the “investments” made by Abraaj are strategic: political leaders’ relatives as well as retired chiefs of intelligence have been hired in the company. To quote a story published in this newspaper, MQM MNA Khushbakht Shujat’s son, Shahbaz Beg, was appointed as training director for a salary of Rs 500,000. Senior provincial minister from the PPP, Pir Mazharul Haq, got his son Pir Danish employed in the KESC as Government Affairs Director, also on a package worth Rs 500,000. Abid Hussain, brother of MQM’s parliamentary leader in the Sindh Assembly, Syed Sardar Ahmed, was hired as a project director – also at a package worth Rs 500,000. Former chiefs of ISI-Karachi and ISI-Islamabad, Brig (retd) Mazhar Ahmed and Brig (retd) Masood Ahmed, pocket Rs three million every month in monthly salaries.
Of course, a private entity is well within its rights to hire whosoever it wishes to, and at whatever remuneration package they choose to dole out. But since the entire Karachi (and parts of Balochistan) are reliant on the KESC, the power utility cannot keep itself insulated from public perception – one that considers the Abraaj management as thieves and plunderers, intent on putting some 4,500 families into the throes of extreme poverty. Since this sentiment seems to go amiss from the KESC’s workings, the relationship between the power utility and the citizenry is at an all-time low.
On the other hand, the Sindh government too is constrained by Abraaj’s antics: it has few answers in the face of power riots in Karachi that have now become a routine matter. When the current row between the KESC and the workers started, one of the power utility’s senior officials was invited by Sindh Assembly Speaker Nisar Khuhro to discuss how the matter could be resolved. After the discussion was over, an incumbent minister requested the KESC official to resolve the power crisis of his area in Karachi, which had lost power for over a week. The minister was chided and humiliated in return. Certainly, neither the company nor the government can be entirely comfortable with the current arrangement.
Notwithstanding the social costs of privatisation, we seem to conveniently forget that the privatisation of public utilities has not created competition which, in theory, should be the case. If it is time for out-of-the-box solutions, then competitive distribution of power needs to be promoted. This way, even those fired from the KESC would have the comfort of knowing alternative employment exits.
Dragging Pakistan out of the abyss cannot merely be the responsibility of the private sector. We are all part of it. Let us not make the same mistakes and privatise the same carcasses.
The writer is Deputy City Editor, Pakistan Today, Karachi.