The Karachi Electric Supply Company (KESC) on Thursday rejected allegations by the Senate standing committee on water and power terming all such charges ‘baseless’.
Further clarifying, the KESC said that privitisation of the corporation was carried out in 2005 in compliance with all regulations.
The 2009 addition of Abraj Capital as shareholders fulfilled all legal requirements even though it was not a new privitisation transaction due to certain conditions.
The KESC alleged that propaganda against the company had turned away a massive number of investors. The new shareholder obtained a proportionate shareholding in the KESC to reflect their investment of fresh equity and funds into the company. It is relevant to point out that since May 2009, Abraaj Capital has already invested USD 361 million increasing generation capacity and spreading the network structure in conformity to the agreement between the government and the firm.
The KESC also clarified that it had always lived up to all commitments made to the government of Pakistan under the implementation agreement and the amendment agreement. Refusal by the company to be susidised by the government was also pointed out.
On the issue of 650 MW from the National Transmission and Dispatch Company (NTDC), the KESC pointed to the fact that it supplied customers in the millions over an area of 6500 square kilometers and so it did not possess excess power generation capacity.
The available dependable capacity is subject to outages, gas pressure issues, fuel shortages among other maladies. To maintain the existing load-shedding regime in Karachi, KESC absolutely needs the 650 MW supply from NTDC, which is only 5 percent of the total generation capacity available to NTDC. KESC entered into an agreement with NTDC after receiving appropriate approvals including the Economic Coordination Committee (ECC) approval back in October 2008.
This issue is was pending in the Sindh High Court added a spokesperson.. Even the Sindh Provincial Assembly passed a on June 11, 2013 in which it unanimously protested against taking the city off the national grid.
Similarly, regarding the retail of NTDC power at DISCO rates to KESC has been approved by all relevant stakeholders including National Electric Power Reulatory Authority (NEPRA) the beneficiaries of which will be the consumers. It’s worth noting that since September 2008, KESC has purchased electricity worth Rs 210.3 billion from NTDC and made payment of Rs 223.9 billion under the payment mechanism/procedure.
At the time of signing of the agreement with the NTDC in January 2010, outstanding arrears were Rs22.5 billion, which has been brought down to Rs 6.1 billion claimed the corporation.
In 2012, KESC’s turnaround management was praised in the State Bank of Pakistan annual report for having developed a sustainable performance structure. Transmission and distribution losses which were around 40 percent at the time of privatization in 2005 have been reduced to 28 percent as of 2013. A privatized KESC is insightful: the utility has shed surplus staff (despite stiff union opposition); has cut power supply on account of unpaid bills (even for high profile government agencies); has invested in more efficient generation units; and has formulated a commercially-driven load-shedding schedule. As a result, the situation is quite different in Karachi compared to the rest of the country.
