By Sarah Ahmed

PTCL, by far, has been the highest profit earning state-owned company with real estate assets worth billions of rupees across the country including commercial plazas, residential colonies and exchanges. 

The reason given by government to privatize PTCL was to create an environment where the policies and processes don’t allow discretion by the politicians and the civil service.

The process started in November 2004,

Early in January 2005, 18 companies registered their EOI (Expressions of Interest), out which 3 bidders qualified for the final bidding which held on June 18, 2006.

1.Consortium of Emirates Telecommunication Corporation (Etisalat)

2.Dubai Islamic Bank,3. Etisalat International Pakistan (EIP)

Secret Price Discount Worth Millions  Huge Costs of Employee Layoff Payments Allowed In Instalments &

100% Property Transfer Burden Of Huge Liabilities Management Fee To Etisalat Huge Technical service Payments

Sale at a price much below the worth Full Control Of Management for just 26%

Shares.

PTCL could have generated huge profits if the government managed the company efficiently.

There were other options apart from privatization.

Further the privatization of PTCL didn’t affect market competition largely because the government had already passed Telecommunications De-regulation Law in 2003.

All PTCL needed was good corporate governance

By Syeda Sara Tazeen Jaffer

The Karachi Electric Supply Company Limited was incorporated on 13th September 1913 under the Indian Companies Act, 1882 as amended to date vide the Companies Ordinance 1984

The Company is principally engaged in generation, transmission and distribution of electric energy to industrial, commercial, agricultural and residential consumers under the Electricity Act, 1910 as amended to date & NEPRA Act 1997

In 2003, the Government decided to privatize KESC through a transparent, competitive bidding process, which was supported by the Asian Development Bank (ADB) through the Energy Sector Restructuring Program

The privatization process was successfully concluded in December 2005, when the Government transferred 73% of KESC’s shares to a consortium of investors led by KES Power Limited (KES Power), 60% owned by Al-Jomaih Holding (Al Jomaih), a Saudi industrial group, and 40% by National Industries Holding, a subsidiary of one of the largest Kuwaiti industrial and financial conglomerates

The support group of KESC privatization was on the opinion that the privatization of KESC will bring better services through professional management, new investment, and technology and employment benefits

20 per cent increase in salaries to the contract employees and 10 per cent shareholding of KESC to the employees

Send strong signal to the investors and would speed up and also give impetus to the overall Privatization programme

KESC under the dynamic and professional management would grow and touch new height of standards in terms of improvement in administration and customer services, un-interrupted supply of electricity to the domestic, commercial and industrial consumers

The main objectives of the project were: Increase in power supply to meet current deficit; reduction of technical and commercial losses; Improvement in the quality of service Reduction in fuel costs by using an efficient

combined cycle plant in expansion of generation Improvement in internal work processes Promotion of better public relations and client

satisfaction. of Karachi at competitive rates

Opposition alleged the privatization process was not transparent as the national interest and interest of the employees were not protected and national entities were being sold out at throwaway rate

Amount collected from privatization process was neither being used for repayment of debt nor it had helped alleviate poverty. Therefore, no budgetary allocation be made for privatization commission

Foreign interference in the future was inevitable

KESC could not keep pace with growth in demand (since 2000, electricity units billed have increased 45%, while virtually no investment has been made in the T&D network)

KESC faced severe media criticism and high customer dissatisfaction, eventually resulting in civil disturbance and demands that the Government reconsider the privatization

It was supported by a program of investments (the investment plan) of some PRs52 billion ($809 million) for FY2007–FY2009, which includes the following main components: Generation capacity additions of 780MW2 in two new

combined-cycle power plants on existing sites (PRs34 billion/$525 million),

Rehabilitation and improvement of the T&D network (PRs17 billion/$268 million)

Rehabilitation of existing generation facilities (PRs600 million/$10 million)

Upgrading of commercial systems (PRs400 million/$6 million)

Demand Issues: as of 2006 total demand was around 67,000 GW

Supply Issues: Pakistan has a total installed power generating capacity of 19,450 MW as per 2006: WAPDA provides 11,369 MW (58.4%), the IPPs 5,833 MW (30%), KESC 1,756 MW (9%), AJK Hydro Electric Board 30 MW (0.2%), and Government-owned nuclear power plants 462 MW (2.4%). Hydroelectric generation capacity represents about 6,499 MW, or 33.4% of total installed generation capacity

Interruptions in supply Lack of new power projects Transmission and Distribution losses:

35% in 2006

73% of the company's shares were sold at Rs. 1.65 per share amounting to R.s 20 billion. After the process was over, the government returned Rs. 5 billion to the new management of K.E.S.C for re-structuring and improvement plans

The government was giving the organization a subsidy of Rs. 6 billion, the government was giving the organization a subsidy of Rs. 6 billion

Losses increased from 16billion to 20billion in a year.

The buyers Al-Jumaiyah have further sold 23% shares out of their 73% holding to a Kuwaiti Nasr Al-Mari at Rs. 4 per share. The above indicators all point to the fact that Al Jumaiyah has recovered more than they invested

While taking over the Corporation, the company had made a commitment of making an investment of dollars 361 million out of which it has brought an investment of dollars 81 million

Government has taken on their loan of 120billion and given another Rs 31 billion to facilitate the company