K-Electric: A proposal

With reference to the hearing on K-Electric conducted by Nepra in Karachi and your editorial of 30th September which in the midst of load-shedding asked for cool thinking on two broad reasons, I have the following suggestions:-

1. As highlighted during the hearing by participants, PTCL Privatization of not giving exclusivity to its buyer and thereafter allowing new players to enter into the telecom sector has been of a great advantage to people of Pakistan resulting in improved quality of service at an affordable price.

2. Contrary to it, K-Electric's Privatization has not been successful on many counts and hence majority of those present therein welcomed the Nepra's initiative of holding the Public Hearing for APM which raised hopes for Karachiites that better days similar to the telecom sector are ahead.

3. While welcoming the competition, K-Electric's Management asked for level playing field, yet their legal counsel opposed it on the ground that exclusivity granted to the Company is valid till 2023. At the same time a couple of Utility's supporters with a blind fear that the new entrants may target only high revenue areas, did not favor grant of new licenses.

4. Needless to say, it may take minimum of two years for new entrants to start providing service and therefore to avoid any likely legal battle with the utility, which could jeopardize the whole process, placed below is a way forward for your kind consideration:

(a) By the end of 2020, Nepra after due process may notify rules for new entrants interested in the business and among other to ensure level playing field, making it mandatory for participation simultaneously in high and low revenue areas as well as separation of generation from distribution.

(b) In the beginning of first quarter of 2021 expression of interest together with business plan is invited and by the end of second quarter of 2021 those qualified be granted the licenses with a condition that services may be offered post July 2023 whereas in the meantime they must start the ground work.

(c) To achieve the above mentioned aggressive timeline, Nepra will need highly experienced team to evaluate the applications at a fast track for which selection process of the experts must commence immediately.

It is expected that the above proposal being in the larger national interest will be viewed positively by K-Electric since it does not interfere in its exclusivity. Instead it will result in saving the time for developing the required infrastructure which otherwise would commence in 2023.

During the intervening period, as opposed to relying solely on much awaited foreign investment, K-Electric may also consider separating its own generation from distribution and given that Karachi can easily accommodate new players, it can also consider re-engineering process by either disposing part of its business to other potential players and/or create subsidiaries and get new domestic investment including raising funds through IPO's.

Finally, to take the K-Electric out from financial crunch, Government should step-in immediately for speedy settlement of its dues so that load-shedding which during last one week has reduced considerably, perhaps owing to forthcoming hearing by Supreme Court, may not resume again.

Moin M Fudda (Karachi)

Copyright Business Recorder, 2020