K-E monopoly

KE is still dependent on national grid and seems to have little interest in becoming a self-sufficient supply company

The recent extended power outages in Karachi have again raised questions about K-Electric’s stranglehold on the city’s power supply. One of the proposals gaining steam is increased competition. Typically, there are many costs and benefits related to competition in power supply. All of these must be weighed against each other before policymakers decide on what path to take. In the case of K-electric, however, the decision is much easier. The company has done little, if anything, to improve the situation for consumers in over a decade of operating. Meanwhile, despite charging some of the country’s highest tariffs, the company keeps milking the state for more support and subsidies. The promises of privatisation when the erstwhile KESC was sold off have never truly come. The company is still mostly dependent on the national grid and seems to have little interest in becoming a self-sufficient supply company. Meanwhile, after a temporary reprieve in the early days of new ownership, power outages have come back with a bang, arguably worse than ever.

Meanwhile, politicians have consistently pointed to poor corporate governance, such as the knee-jerk firing of employees and high executive compensation, despite the company’s customers giving it a failing grade. Under these circumstances, competition can do no harm. But regulators continue to drag their feet, perhaps due to the close relationship between staffers at different companies within the power sector. Even an earful from the Supreme Court has not been enough to truly set the gears of reform in motion. The court had also pushed for Nepra to move ahead with actions to break K-Electric’s monopoly. But instead of making a concerted effort, Nepra appears to be dragging its feet. Even the recent public meeting made no sense. Parts of Karachi were without power for days. That should be proof enough that the company had failed to do its job. Ideally, competition would reduce outages and prices by forcing efficiency. But at this point, citizens would be more than happy with either of those outcomes.

Published in The Express Tribune, September 23^rd, 2020.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.