AGL 5.64 Increased By ▲ 0.24 (4.44%)
ANL 8.66 Decreased By ▼ -0.13 (-1.48%)
AVN 76.29 Increased By ▲ 0.13 (0.17%)
BOP 5.20 Increased By ▲ 0.03 (0.58%)
CNERGY 4.45 Decreased By ▼ -0.03 (-0.67%)
EFERT 81.50 Increased By ▲ 0.40 (0.49%)
EPCL 49.44 Increased By ▲ 0.44 (0.9%)
FCCL 12.56 Decreased By ▼ -0.14 (-1.1%)
FFL 5.64 Increased By ▲ 0.05 (0.89%)
FLYNG 6.70 Decreased By ▼ -0.28 (-4.01%)
FNEL 4.63 No Change ▼ 0.00 (0%)
GGGL 8.60 Increased By ▲ 0.01 (0.12%)
GGL 14.15 Increased By ▲ 0.09 (0.64%)
HUMNL 6.02 Increased By ▲ 0.52 (9.45%)
KEL 2.59 Decreased By ▼ -0.01 (-0.38%)
LOTCHEM 27.85 Increased By ▲ 0.14 (0.51%)
MLCF 23.70 Increased By ▲ 0.02 (0.08%)
OGDC 71.23 Decreased By ▼ -0.22 (-0.31%)
PAEL 15.25 Increased By ▲ 0.05 (0.33%)
PIBTL 4.88 Decreased By ▼ -0.03 (-0.61%)
PRL 15.99 Increased By ▲ 0.19 (1.2%)
SILK 1.10 Increased By ▲ 0.05 (4.76%)
TELE 8.99 No Change ▼ 0.00 (0%)
TPL 7.12 Decreased By ▼ -0.04 (-0.56%)
TPLP 19.26 Increased By ▲ 0.04 (0.21%)
TREET 20.80 Decreased By ▼ -0.34 (-1.61%)
TRG 138.50 Increased By ▲ 1.75 (1.28%)
UNITY 16.61 Decreased By ▼ -0.19 (-1.13%)
WAVES 9.18 Increased By ▲ 0.08 (0.88%)
WTL 1.35 Decreased By ▼ -0.02 (-1.46%)
BR100 4,164 Decreased By -21.1 (-0.5%)
BR30 15,392 Decreased By -74.8 (-0.48%)
KSE100 41,688 Decreased By -131.1 (-0.31%)
KSE30 15,399 Decreased By -49 (-0.32%)
Follow us

K-Electric is usually in the news for wrong reasons. Either someone in Islamabad or Karachi bashes the company for power generation and other related issues. The fact of the matter is that it is one of the best examples where privatization has yielded results for the public. The supposed city of lights has gained massively due to the operational efficiencies of the company while its shareholders have not benefited much in terms of dividends or capital gains.

Ironically, KE’s privatization has been vehemently opposed by the energy sector bureaucrats in Islamabad and some politicians. They wrongly use the argument against privatization by using K-Electric as a poster child. They say that it’s a natural monopoly and a strategic asset which was best operated under public domain. And the argument is used to negate the need for privatization of other discos.

The story in fact is stark opposite. KE privatization is a great success story. The commitment and acumen of the sponsor is worth mentioning. One argument used by proponent of nationalization is of unsuccessful privatization of PTCL. However, it was not privatization in a strict sense. PTCL's controlling stake remained with a government entity (Etisalat), and it is a mess now. Its group profits after tax were Rs30 billion ($500 mn) in 2004 and now it’s a loss-making entity.

The story of KE is, however, different. KE was privatized in 2005 by KES Power a consortium of Middle Eastern investors who acquired 66 percent shares while Government of Pakistan retained 24 percent minority stake. The consortium has managed to drive significant improvement in the system contrary to perception. Now its deal with Shanghai Electric has been stuck in limbo for the past six years; still the company keeps on improving its operational efficiencies for the betterment of the inhabitants of Karachi.

When KE was privatized, its T&D losses were at 34.2 percent, and within fifteen years, the losses reduced to 15.3 percent, more than half. This doesn’t happen out of thin air. The company has invested $4.1 billion in the value chain since privatization. One the flipside, other discos are losing almost equivalent amounts of money on an annual basis simply because they cannot curb T&D losses.

Before privatization, KESC, known then, was making huge losses which the government used to fund. Privatization reduced this burden, as KE has taken no operational subsidy since 2005. The efficiency improvements made by KE have translated into an annual benefit of Rs170 billion in the form of a reduction in tariff, whereas the conversion of lost units into billed units has enhanced the national tax base with an annual impact of Rs13 billion.

Karachi used to be a messy city and recovery was not easy in the city. When KE started its crackdown, all the political parties joined hands toprotest the entity. But the management stood by its resolve. That yields results. The number of KE consumers has increased from 1.8 million in 2006 to 3.4 million as of now. The quantity of units sold has gone from approximately 8.4 Gigawatt hours (8.4 billion units) to 16.7 billion units. This expansion is due to active marketing and distribution. The company has a full-fledged team working on it. This is in sharp contrast to other discos where there is no incentive for the management to increase the sales or number of consumers.

There are improvements in the generation fleet as well. And the company has a strategy unit that is working on the future planning. The company is working on adding renewable in the mix and on thermal efficiency to lower the cost of generation. The plan is to increase renewable generation from 100MW currently to 1,200 MW by 2030

The other element where KE stood out is customer service. They have a decent app, and the company communication department is active and dynamic. The company has touched the 1 million customer accounts activated on digital touch points - app, Whatsapp and SMS platforms and 100,000 customers have already consented to switch to paperless bills.

It’s about time that Islamabad learns from the success of KE and should start working on the privatization of other discos. It should start with problems making discos such Peshawar, Hyderabad, and Sukkur. Seeing KE turnaround story, others surely can become profitable and efficient entities.

Comments

Comments are closed.

Muhammad Waleed Nov 25, 2022 06:45pm
Unfortunately, you didn't mention inability of KE to synchronize its system with NTDC.
thumb_up Recommended (0)
Az_Iz Nov 26, 2022 09:10am
@Muhammad Waleed, why is that necessary?
thumb_up Recommended (0)
Az_Iz Nov 26, 2022 09:12am
Very nice article. The people who are not happy are the crooked politicians.
thumb_up Recommended (0)
Mohmad Sharif Jamali Nov 26, 2022 11:52am
دوسرے الفاظ میں یہ کہہ رہے کہ کمپنی 15 سال پرائیویٹ رہنے کے باوجود T&D لاسز کو 100٪ کم نہیں کر سکی۔ بلکہ اوور بلنگ اور دوسرے ناانصافیوں کے بعد بھی صرف 84۔7٪ کور کر سکی۔ مطلب کہ جب کالے منہ KESC سے ابھی دودھ دھویا KE کے بعد بھی (2005 کے اعداد کے مطابق) 28.9674٪ لاسز ابھی بھی برقرار ہیں ۔۔ 2022-23 کے اعداد کے مطابق لاسز اراؤنڈ 100٪ ہو رہے ۔۔ یہ پاکستانی ہیں جو جاہل بنتے۔ چائنیز پاگل نہیں جو کیا ہوا معاہدہ چھوڑ رہے۔۔
thumb_up Recommended (0)
Usman Nov 28, 2022 09:14am
Privatize all SOE of Pakistan and deregulate the market that's the only solution to reform the economy.
thumb_up Recommended (0)

KE success story

IATA says Pakistan has blocked from repatriation $225mn in airline funds

Fiscal, monetary steps discussed

Telenor may consider closing operations

Dar meets Alvi to blunt IK’s assembly dissolution threat

Soybean consignments: FTO takes suo motu notice

Intra-day update: rupee witnesses marginal improvement against US dollar

US warns of Chinese influence in ME

China buys Russian oil at multi-month low discounts, brushes off price cap

Nepra not happy over ‘tactics’ aimed at blocking CTBCM

Textile value chain: APTMA demands restoration of ‘zero rating’