KESC FAILS TO FULFILL CONTRACTUAL OBLIGATIONS-Senate Body Observes
 

Islamabad, April 27, 2010 (APP) A meeting of the Senate Standing Committee on Privatisation (SSCOP), which met under the chairmanship of Senator Adnan Khan here today, observed that the management of Karachi Electric Supply Company (KESC) has failed to fulfill the contractual obligations since its privatisation in November 2005.

The optimal installed production capacity of KESC is 1600 MW while at the time of its privatisation it was generating 1200 MW. Whereas the new management failed to install 1000 MW generation within 3 years from its privatisation, as per sale agreement. The management was required to continue the O & M agreement with Seimens for a period of three years, which was terminated without Privatisation Commission’s approval while the GoP invested Rs.10 billion in the entity for improving its generation production, the meeting was informed.

Senator Adnan Khan Chairman Senate Standing Committee on Privatisation (SSCOP) directed the Privatisation Commission to get road map regarding their future plan of action in order to proceed further in formulating recommendations.

While briefing the SSCOP on KESC’s post privatisation affairs, Senator waqar Ahmed Khan Federal for Privatisation informed that the company was facing two major issues, which include lack of management and operating efficiency and circular debt. The Privatisation Commission would demonstrate its proactive role by extending support to KESC to improve its performance by enhancing its capacity.

Under the guidance of President Asif Ali Zardari the government led by Prime minister Yusuf Raza Gilani was determined to have no political interference in the appointment of the management of the State Owned Entities, he said.

The Minister further informed that we were learning from the previous mistakes and for future transactions an important performance base clause would be included in the SPA, which would enable the Privatisation Commission to take corrective measures in case of any failure. It was our policy that prior to taking transactions to the market we were building the cpapcity, enhancing the value and creating the value addition of SoEs through Public Private Partnership, he added.

The MD KESC also briefed the SSCOP regarding the operations and generation activity of the company