ISLAMABAD: The Asian Development Bank (ABD) has said K-Electric is the only power utility company is financial sustainable as it has improved its system and collection since privatization.
In a Report titled ” Pakistan National Urban Assessment ” the Bank has stated that Pakistan’s inadequate tariff regime is a complex issue undermining the DISCOs’ financial sustainability. It particularly besets DISCO operations in rural areas, where 50%–70% of the serviced populations do not pay their bills, partly because of an inability to pay but also due to inefficiencies and rampant irregularities in billing and collection. By issuing stay orders delaying legal procedures for a year and allowing offenders of meter tampering and related ordinances to merely pay a fixed fine, courts contribute to the problem.
According to the Bank only the privatized K-Electric is financially sustainable. The company used to suffer significant losses but recovered after privatization and has since operated from its revenue collections. Despite considerable resistance, it has succeeded in metering its expansive 6,500 km2 service area, which goes beyond Karachi to five districts in Sindh and Balochistan, reducing electricity theft and a corresponding loss in income.
Through load shedding, it has controlled losses from illegal connections that still exist in some areas. Notwithstanding the successful model presented by K-Electric, political issues and strong resistance from trade unions have blocked the privatization of other DISCOs.
In response, the government is considering segmentizing utility operations and infrastructure expansion, e.g., between urban and rural areas, to reduce costs and control losses. The potential of publicly offering the companies on the stock market, with the government keeping most of the shares, is also being studied.
