Senate's Standing Committee on Water and Power, headed by Senator Zahid Khan, has summoned Managing Director, Karachi Electric Supply Company, Tabish Gauhar, and top officials of National Transmission and Dispatch Company (NTDC) on Tuesday (today) to discuss the power supply agreement against which Chief Minister Punjab has repeatedly expressed concerns of unfairness.
MD KESC will give detailed briefing on the agreement with the KESC along with installed generation capacity and current generation. This is the first time KESC's top brass has been summoned by the Senate Standing Committee since its privatisation. KESC was privatised in late 2005 under set covenants and thereafter handed-over to new operators in 2008. New owners and operators were allowed extremely lucrative facilities, including writing-off of Rs 44 billion of it's earlier payables to the NTDC, grant of a distribution company status allowing it to purchase power from the National Grid on the DISCO Power Purchase Price (PPP) which was less than half of the marginal cost being billed by the NTDC till late 2008, enhancement of the earlier 250MW supplies to 650MW for a five-year period and payment of some leftover dues in installments (which have yet to be paid).
Owners and operators of KESC were handed over 73 percent of its shares, while the GoP retained nearly 26 percent with 1 percent or so shares with the general public. Additionally, right shares were allowed to be issued by the new operators that may have changed the above percentage of ownership. Analysts believe that much is amiss in the deal which would be evident soon. On the basis of ownership, GoP could and has nominated three directors on the KESC Board of Directors (BoD) that include Secretary Water and Power, Joint Secretary (Power) Ministry of Water and Power and the Joint Secretary (Corporate Finance ) of the Ministry of Finance.
In the recent past, the first two GoP nominees have never attended the BOD meetings. Reportedly, the third person from the Ministry of Finance did attend the meetings where he could not make any mark on account of his being the sole government voice during the proceedings. Reportedly, he has made a report to his Ministry on this.
According to the corporate audit of KESC accounts, the utility does not owe anything to the NTDC nor is it responsible for any mark-up on installments of pre-2008 over-dues etc. This disputed corporate audit has reportedly been accepted by the KESC Board due to continued absence of two of GoP nominees from the Board meetings. Insiders in the Ministry of Water and Power claim that continued absence of GoP nominees is on account of directions from the high ups.
Various laws, rules and notifications issued by the GoP and the SECP require full attendance and continued non-attendance cannot absolve the directors from responsibility. "It is illegal and contributes to corrupt practices in case government nominees do not attend the board meetings and when they do not look after the interests of the GoP in particular and the public at large," commented an official on condition of anonymity.