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KESC admits it lacks funds for furnace oil

* Since the utility uses gas for 90 percent of its total power generation, the short supply of gas has halted the entire process leading to unannounced load shedding

By Irfan Aligi

KARACHI: Karachi Electric Supply Company (KESC) is going through a major financial crisis, as no funds are available to purchase furnace oil for the power plant, said KESC Chief Executive Officer Naveed Ismail.

Addressing a press conference at a local hotel, Ismail said that due to the lack of fuel, the utility is compelled to close three Bin Qasim Thermal Power Stations (BQTPS) power generation units.

He said that other factors were also responsible for load shedding and one key factor was the shortage of gas supply that is used as fuel for power generation and presently, one-third of the required amount of gas is obtained from the gas company. Since the utility uses gas for 90 percent of its total power generation, the short supply of gas has halted the entire process leading to unannounced load shedding, regretted Ismail.

Blaming the lack of power generation to insufficient funds needed for buying furnace oil, Ismail remarked, “the situation could be improved, provided that the City District Government, Karachi Water and Sewerage Board and other institutions pay their outstanding dues to KESC.”

On the other hand, KESC owes Rs 24.8 billion to Pakistan Electric Power Company (PEPCO). KESC has paid Rs 2 billion to PEPCO in the last two months and now a payment plan has been signed for the remaining dues, added Ismail.

The government’s decisions regarding the power tariff have also created many problems for KESC. The tariff was sanctioned and then withheld temporarily, after which in November, KESC had to issue four different bills. KESC thus suffered a straight loss of Rs 2 billion, regretted Ismail.

Despite all these hindrances, the new management of KESC has initiated and completed several projects in a significantly short period of time. In November this year, 94 MWs have been added to KESC’s grid, which is a part of the 220 MW power plants being installed at Korangi Gas Turbine Power Station (KGTPS). This is the first ever addition during the last ten years. Another 90 MW were added in December this year, said Ismail.

KESC has also started a survey for the installation of 190 MW power plants on a fast track basis of which one portion of 95 MW will be installed at SITE while the other will be installed in Korangi. One of these power plants will be operational by June 2009 while the other will be connected to KESC’s grid by September 2009, claimed Ismail.

KESC has already ensured the addition of 450 MW till September 2009 as the documentation processes, such as agreements, have been signed. Likewise, a 560 MW project is in the pipeline and will come into being by 2011, added Ismail.

“KESC has also improved on the technical side as the engineers restored all feeders that tripped during the recent rain in the city despite the fact that these feeders are spread across an area of 17,500 kilometers,” said Ismail.

Although, 13 out of 19 power plants have exceeded their life span of 27 years, KESC is confident that the load shedding during summer 2009 will be much less due to an ample supply of gas. KESC will install 110 11kV new feeders while 909 will be installed to improve the power distribution in the city. The utility will also arrange for 300 to 500 transformers by 2009, said Ismail.

Addressing the press conference, KESC Group Head Organizational Management Zafar Usmani said that KESC has the strength of around 10,000 capable personnel including 2,000 executives and officers, 8,000 unionized staffers in the non-executive cadre and 7,000 contract workers. He said that KESC has introduced a mechanism within the utility and it is all about internal job posting. KESC has also reached an understanding with Institute of Engineers Pakistan for necessary updating processes to enable KESC engineers to improve their feasibility and professional expertise, which in turn would benefit the company. Usmani also said that no employee should worry about being sacked or retrenched, said Usmani.

He added that although career development has been ignored during the past three decades leading to a pessimistic attitude among the engineers but the new management has taken up the situation on a priority basis. Usmani also said that KESC is able to make decisions on its own and does not need to seek any prior approval from the ministry which in the past was a major hurdle in the decision making process.

Talking about the engineers at KESC, Usmani said that the staff members are well qualified and able to deal with technical problems and the needs of KESC. Elaborating on the allowances being given to engineers, Usmani said that allowances, varying between Rs 5,000 to 8,000 that are given according to experience, job-length and performance and are a good way to appreciate the talent of the employees.

Regretting the tariff changes that led to problems in the billing department and further added to the miseries of consumers and leading to a backlash, Usmani said that the billing process is a tedious job for which 10,000 staffers are engaged round the clock to prepare and dispatch the monthly electricity bills. Meter reading and call centre services have also been upgraded, while the monthly bills have been justly prepared and the arrears have been divided into four equal installments so that the consumers could pay their electricity bills in time, Usmani informed.

Meanwhile, Chief Operating Officer Jan Abbas Zaidi said that power theft is another major issue faced by KESC and needs to be addressed through stern corrective measures. He said KESC has devised a comprehensive strategy in this regard and those involved in power theft would be taken to task.

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