Axe to fall on KESC workers if MQM agrees?

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Abraaj Capital, the holding company of the Karachi Electric Supply Company (KESC), has been asked by influential members of the Presidency to “convince” and “sort matters out” with the Muttahida Qaumi Movement (MQM); if the MQM agrees, Abraaj can wield the axe on workers it deems as unnecessary, Pakistan Today has learnt. Part of the reason Abraaj is dealing directly with the Presidency is that the company’s chairman, Arif Masood Naqvi, is a man appointed with President Asif Ali Zardari’s blessings. Naqvi served as the general manager of Sakrand Sugar Mills in District Benazirabad (formerly Nawabshah), owned by President Zardari’s close friend Sattar Kerio.
Naqvi, who served Kerio from 1990 to 1998, subsequently became a trusted employee. It was because of his loyalty that he was handpicked to become chairman of Abraaj capital, sources told Pakistan Today. While public posturing of the KESC has been to engage with protesting workers of the power utility, it is because of Naqvi’s influence in the Presidency that the KESC management refused to meet with the committee constituted by the Prime Minister Yousaf Raza Gilani on June 10. The KESC also declined a meeting on June 13 with a committee constituted by President Zardari comprising of Raza Rabbani and Federal Minister Khursheed Shah. Both committees were constituted to bring to an end the row between the management and workers union.
What is equally interesting is that Abraaj Capital had no previous experience of power generation and distribution; in fact, Abraaj Capital is renowned in Dubai for construction and real estate. Privatisation of the power utility was undertaken despite the fact that experiences of privatising the power sector have failed in South Asia, with the governments of India and Sri Lanka also having to reassume control of power utilities in Mumbai and Colombo respectively.
Abraaj Capital assumed control of the KESC soon after the Pakistan People’s Party (PPP) came into power in 2008-09. An agreement was signed between the Water and Power Ministry and Abraaj Capital, but in fact, the agreement was illegal because the former was not responsible for privatising the KESC. Privatisation is the preserve of the Privatisation Commission, which had finalised the KESC’s sale to Al-Jomaih in 2005 after a due process of vetting. Even if KESC was to be sold to Abraaj, it had to be done by the Privatisation Commission. At the time when Abraaj signed an agreement with the Water and Power Ministry, KESC shares were not transferred to them by Al-Jomaih.
In July 2009, the agreement between Abraaj and the Water and Power Ministry was again amended – this time to allow the new management to increase tariffs. According to the first agreement, between the Privatization Commission and Al-Jomaih, tariffs could not be increased up to seven years of privatization. But a new article, Article 8.6, was inducted into the agreement, pinning all liabilities onto the Pakistani government. “The government of Pakistan, in case of a takeover of the company, would pay all liabilities (past and future) of KESC,” reads the text of the new Article.