Senate panel asks govt to undo KESC sale

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ISLAMABAD: The Senate’s Standing Committee on Water and Power has asked the federal government to take over the management of the Karachi Electric Supply Company (KESC) and register cases against officials responsible for causing losses of over Rs110 billion to the exchequer through ‘illegal’ agreements signed with the private owners of the company. The KESC denies the allegations. The committee recommended a judicial commission be set up to probe violations of the agreements, reinstatement of 7000 KESC employees sacked by the private owners and payment of their dues since their removal from service. The committee came up with the recommendations at a meeting on Monday which adopted a report of its sub-committee, headed by Senator Shahi Syed and comprising Nisar Mohammad Khan and Humayun Khan Mandokhel. The meeting was presided over by the committee’s chairman, Senator Zahid Khan.

The report alleged that all agreements signed with Al Jomaiah group — the original buyers of the KESC — were illegal. The company was given an undue favour of Rs72 billion when it was accorded the status of a distribution company of Wapda by reducing its power purchase rates in violation of rules, the sub-committee alleged.

It noted that the KESC management did not make investments as required under the privatisation agreement. On the other hand, the government took over its arrears worth about Rs31bn.

The company was provided a facility of supply of 650MW from the national grid at reduced rates, leading to a loss of Rs110bn to the government, the report said. Furthermore, taxes to the tune of Rs320 million it had to pay were waived.

It said the amendment agreement of 2009 signed with Al Jomaiah had not been approved by the federal cabinet even until now.

The committee said the KESC had failed to ensure power supply as required under the agreements for eight years.

It recommended to the government to cancel agreements pertaining to KESC sale and recover favours granted to the privatised entity.

Shahi Syed said the decision to supply 650MW from the national grid to KESC had been made by the ministry of water and power and was not even approved by the prime minister.

The committee held the ministry of water and power, Wapda and power companies responsible for energy crisis.

Senator Zahid Khan said the prime minister had issued directives to set up power plants to raise generation capacity by 10,000MW by 2018, but the target seemed impossible because of lack of coordination among those concerned.

The Minister of State for Water and Power, Abid Sher Ali, reported to the committee that massive electricity theft continued in Peshawar under official patronage and that the Khyber Pakhtunkhwa government was becoming a hurdle in a crackdown against thieves.

He said the members of the provincial assembly were supporting power thieves, creating a scare among Wapda officials.

KESC REBUTS CHARGES: Ahmad Faraz, a spokesman for the KESC, has said the allegations against the company are “baseless, false propaganda and without any justification” which can cast an adverse impact on Pakistan’s attempts to woo foreign investors.

He said in a statement that KESC privatisation had taken place in accordance with laws and with the approval of the federal cabinet, the Economic Coordination Committee and the Council of Common Interests. The subsequent induction of Abraaj Capital as a new shareholder in KESC three years after the privatisation was legally in order, the company contended.

He said Abraaj Capital had invested $361m to increase the company’s generation capacity by 1010 MW and rehabilitate its network infrastructure, thus complying with its obligations under the amendment agreement. The company is compliant with all commitments made by it.