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THE KARACHI ELECTRIC SUPPLY COMPANY LIMITED

INTRODUCTION

History
Karachi Electric Supply Company Limited (KESC), (formerly Karachi Electric Supply Corporation) is one
of the city's largest employers: around 17,000 people currently work for the company. It is also one of the
oldest companies in Karachi and was established in the city even before the creation of Pakistan in 1947.
Incorporated in September 13, 1913, under the Indian Companies Act of 1882, the company was
nationalized in 1952 but was re-privatized on November 29, 2005. KESC came under new management in
September, 2008.
In 1996, deterioration in KESC’s financial health began, which promoted suggestions for the utility’s
transfer into private hands. During the interim between 1996 and 2005, Army management instated at the
state utility with a view towards enhancing the Company’s operational and financial health in May 1999.
There are conflicting views towards this shift and management, with allegations of severe misconduct.
During 2002 and 2003, incentives were introduced in preparation for KESC’s privatization, which
eventually finalized on November 29, 2005 with a 71% transfer of ownership to an association comprising
of the Saudi Al-Jomaih Group of Companies and Kuwait’s National Industries Group (NIG), with the
government still retaining a 26% stake. Due to various operational setbacks and the unfortunate choice of
Siemens as an Operations and Management (O&M) contractor, the privatized association was unable to
improve the Company’s financial and operational crisis.
In the earlier part of 2008, Saudi Al-Jomaih approached Abraaj Capital, a leading private equity firm based
in Dubai, with a proposal for a potential stake in KESC. The deal was eventually finalized in October 2008
at a ticket price of $361 million for a significant equity stake in the Company, which grants Abraaj Capital
full management control. Abraaj Capital has brought in a professional management team with over 41
senior managers to immediately address the management crisis at KESC.

Nature of Business
At present, KESC is the only vertically-integrated power utility in Pakistan and manages the generation,
transmission and distribution of electricity. KESC covers a vast area of 6,000 square kilometers and
supplies electricity to all the industrial, commercial, agricultural and residential areas that fall under its
network
Karachi Electric Supply Company Generates and supplies electric power to Karachi, a metropolis, with a
population of over 17 million and one the most populous cities in the world. KESC currently provides
electricity to over 2.1 million consumers, not only in Karachi but also in the towns of Dhabeji & Gharo in
the province of Sindh and Hub, Uthal, Vindhar and Bela in the adjacent province of Baluchistan.

Competitors:
As Karachi Electric Supply Company is the only company that has comprehensive distribution network for
distributing electricity to one of the largest city like Karachi so there are no direct competitors of KESC
which may hit the market position of KESC but there are few other companies like WAPDA, Hub Co.,
KANUPP, Gul Ahmed and Tapal Co. which generate electricity to fulfill the demand of Karachi. These
companies can only generate the electricity but have no right to distribute or sell directly to the consumers
of Karachi. For that, they have to sell their generation to the KESC.
Besides the above fact, KESC is not able to fulfill the demand of Karachi unfortunately and because of the
shortage of electricity KESC has to maintain the load through load shedding. Due to the load shedding,
some of the industrial, commercial and residential consumers have started using various other resources to
suffice their electricity need like heavy gas generators, small generators and UPS.

Head of the Company (CEO)

Tabish Gauhar is the CEO of KESC, as of November 2009. He has served as an
Executive Director at Abraaj Capital since 2006 and is the former Group Chief
Financial Officer.

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SUCCESSES / ACHIEVEMENTS OF THE COMPANY

The people of KESC are working hard to serve and satisfy consumers of Karachi. In this regard,
management has taken various decisions out of which some have been achieved.

Oracle To Set Up Thar's First Coal Power Plant

The Karachi Electric Supply Company on December 12, 2009 signed a Memorandum of Understanding
with Oracle Coalfields, a company incorporated in England and Wales and primarily engaged in coal
drilling, exploration, mining and production. The MoU is for setting up a major coal-fired power plant at
mine-mouth fuelled by coal to be mined at Thar Coalfields in Sindh. Oracle Coalfields is to own the mine
supplying coal to the power plant. This MoU is yet another step in KESC's initiative to overcome existing
and projected energy shortage in Karachi by developing and implementing on fast-track basis several
power projects based on local alternate energy sources.

Rental Power Stations

To maintain the equilibrium of supply and demand, KESC has started installing rental power stations in
peak demanded areas. The benefit of this is that KESC became able to maintain load in these areas. After
that KESC do load shedding only fix timings, hence the cases of overloading have been reduced. Rental
Power Stations have been installed in SITE Area, West Wharf & Korangi Industrial Area. Total outcome of
these stations is around 300MW.

Refurbishment Of The Existing Distribution System Of Towns

KESC started refurbishing the existing HT and LT distribution systems of towns of Karachi, which was
taken as model towns in the second phase. This project has been undertaken from 1st October 2009 to 31st
December 2009. The extension of the system of high tension and low tension, including existing 11KV
Underground overhead feeders and existing PMTs and Sub Stations, have been renovated and augmented
through rehabilitation, preventive maintenance and addition of new PMTs and feeders proposed from
nearby grid stations. These towns are:
1. Saddar Town
2. Gadap Town
3. Malir Town
4. Korangi Town
5. North Nazimabad Town
6. Kemari Town
7. Lyari Town
8. Gulberg Town
9. Gulshan Town
10. Shah Faisal Town

Integrated Business Centre

Integrated Business Centre (IBC) is an initiative to improve KESC’s internal and external processes so as
to bring about improvement in billing, customer service and complaint management with the core objective
of enhancing performance standards and satisfying the needs of all its stakeholders and customers within a
defined geographic area. IBCs are playing a critical role in making KESC a profitable enterprise.
Maintenance and Commercial functions within the IBC have been combined under a single General
Manager. The four main departments of an IBC namely Customer Care, Customer Accounts, Revenue
Protection and Recovery and Maintenance have been restructured to provide KESC customers a one-
window facility that will cater to all customer needs ranging from new connections to billing and general
queries.

Other Achievements
→ Launched Grid Stations (Azizabad, Clifton, Memon Goth, Gulshan-e-Maymar)
→ Public Awareness Programs about Safety, Energy Conservation and preventing Theft (TV Ads,
Newspapers Published Ads, Bill Boards, Handouts)
→ SAP Implementation as a Pilot Project in Some Departments.

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→ Electrification of Goths in Karachi Suburbs.

Prepared By Ansab Khan (13925) IU Gulshan

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BEST MANAGEMENT PRACTICES

Health Safety and Environment

While improving KESC's business culture from a safety perspective, KESC is also here to help each and
every employee work responsibly and safely, and most importantly, to go home to their families without
injury. Protecting employees, business partners, customers and the public from ill-health or injury and
promoting employee wellbeing, as well as safeguarding assets from loss, damage, and business disruption,
is fundamental to business philosophy. A risk that can and should be prevented. How? By taking a common
sense approach which is developed By HSE Department that includes:
1. Employee Training
2. Awareness
3. Inspections
4. Planned Maintenance
KESC has started various training and motivational sessions to aware employees. First time in the history
of KESC, not only management has provided the Personal Protection Equipments (PPEs) but also trained
employees for the proper usage of PPEs. PPEs, is checked and replaced after certain period of time.

Trainings & Promotions

Since many years, the KESC employees have been working on same post with same job title in spite of
having vast experience in a specific field. They should have been promoted so the management introduced
a transparent internal job postings system for promotion. After promoting employees, various training
sessions for numerous faculties were arranged periodically. In the meanwhile, management has also
introduced salary increments for deserving individuals.

Corporate Social Responsibilities

Corporate Social Responsibility (CSR) is a non – profitable strategy of an organization. This is an ethical
and social responsibility of the corporation to help people in growing literacy, enhancement of skills,
solving problems of people in health, environment etc.
KESC has also taken different initiatives that the CSR Department undertakes for the betterment of
different communities and the city at large. KESC efforts are focused towards enhancing the living
standards of an ordinary citizen of Karachi through sustainable programs directed towards community
development, environment and cultural advancement. Some achievements of CSR department are as under:
→ Water purification plants at Ibrahim Hydari near Korangi Thermal Power Station (KTPS).
→ Creation of green zones all across the Karachi through plantation.
→ KESC signs memorandum of understanding with Heritage Foundation for restoration of Denso
Hall.
→ KESC signs memorandum of understanding for long term reliable electricity supply to Civil
Hospital
→ KESC, KFC to jointly work for energy conservation.
→ ECI School Program: To instigate and develop a habit of conserving energy among children.

Other Best Management Decisions

→ Automated Time Attendance System was introduced, by installing time machines, issuing digital
card for maintaining the punctuality of employees.
→ Using new technology like Computers, Laptops in each office.
→ Intranet system (E-mail) for fast and effective interdepartmental coordination.
→ Effective MIS System for getting reports on daily, weekly, fortnightly and monthly basis.
→ De-hired the buildings and shifted some offices in own building after renovation.
→ Introduced Appraisal Forms for awarding the capable and skilled employees.
→ Established Centralized Complaint Lodging System to facilitate the consumers.
→ Appoint of Media Advisor and team to direct approach to the consumers.
→ Awareness Campaign on Media for conserving energy and avoiding theft.
→ Fruitful resulting dialogues / negotiation with CBA.

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→ Started Speak Up Campaign to make the employees transparent, honest and motivated to deliver
the best service.
RECOMMENDATION

→ Management should support morally and financially to interested employees for higher
educations. So, employees can improve their professional and personal skills which will be very
beneficial for organization.
→ Open Door Environment should be introduced. Each & every employee should have right to speak
against or in favor to any policy.
→ Status (Permanent, Regular, Contract and Hired) of all employees should be equal. There should
be no discrimination among employees.
→ A separate monitoring team should be formed for SpeakUp Campaign and after rectification of
grievances an effective and efficient feed back system should also be introduced for consumer
satisfaction and for avoiding corruption.
→ Complexity of billing system should be reduced so each and every consumer may be aware of
billing system.
→ Testing Equipments for meter and underground cables and other equipments should be replaced
time to time to meet the requirements of modern era business.
→ Employees must be satisfied by providing them fair and equal medical facility, residential and
conveyance facility.
→ All overhead system should be converted into underground cabling system. This will not only help
reducing theft but will also help minimizing faults.
→ A long term plan should be made for the conversion of 220V system into 110V so the extra
consumption of electricity should be reduced.
→ All vehicles should be replaced after depreciation period this may help minimizing the response
time.
→ Legislation should be approved from parliament about the theft of electricity so that punishment
may be given to the electricity thieves and FIR be lodged against them.
→ Each individual should be motivated about sense of ownership. Everyone should feel his
responsibility towards work.
→ Load shedding schedule should be published in print media and unannounced / unscheduled load
shedding must be avoided.
→ A fair and transparent recruitment system may be introduced for better performance of the
organization.
→ A transparent company’s act should be introduced about the fair trial of employees, who are
involved in misconduct or deliberate harm to the company.
→ Meter should be installed free of cost instead of kunda connection, which will reduce theft of
electricity.
→ According to well-known phrase “From a bad-pay-master, get what you can”, Old billing
defaulters should be relieved by giving them easy installments facility.
→ Prepaid meters should be installed instead of postpaid this may help in reducing theft of
electricity.
→ Length of new connection procedure should be reduced and the procedure should be posted at
notice board of every KESC centre so consumers may submit their application and get the
estimate via post to avoid corruption.
→ E-billing system should be launched at KESC’s official website so consumers may pay their bills
online.
→ All detail regarding new connection, faulty metering procedure, complaint, underground,
maintenance, Sub station maintenance etc should be available on official website so that consumer
may not suffer.

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→ Long term planning is required for electricity self generation resources like Wind, Coal, Garbage
etc., and the purchase of expensive electricity form other companies must be avoid.
→ An effective legal department should be formed to deal with the electricity theft cases, ownership
of land / buildings and other legal matters.
→ Effective coordination is required with local political representatives to avoid the illegal pressure
from various sectarian / political groups.
CONCLUSION

It is evident from the above facts that the Karachi Electric Supply Company Limited (KESC) is one of the
city’s largest and the oldest company patronizing around 17000 employees. After its incorporation in 1913,
the Karachi Electric Supply Company Limited (KESC), (formerly Karachi Electric Supply Corporation)
has witnessed many eras including nationalization, re-privatization and change of management but the
company has the potential of survival even in adverse circumstances. However, it is a fact that in spite of
the alteration in management and standard operating procedures, the company has not yet achieved its
desired objective in full and its resources are still being underutilized because of various reasons and one of
the main reasons is political involvement. There are many local political parties which are active in
Karachi. They are always involved in various decisions like hiring, de-hiring, privatization, change of
management etc. management and staffs are forced to do work in their favor either right or wrong which is
caused to corruption.

Although management has to face political involvement, The CSR department is very active to address
very basic problems of local society. CSR department has installed water purification plants; make aware
our young generation about power conservation, medical camps, educational scholarships for deserving
students etc. and recently KESC has also participate in Earth Hour which was celebrated all over the world.

During the recent years the company has thrived for excellence and is taking every single step to achieve its
desired objectives. The SpeakUp campaign, new billing system and the endeavor for adaptation of the latest
technologies show that the company is heading into the right direction. However, there is still a lot to be
done to successfully run the organization which can surely be achieved by implementing some productive
procedures.

Prepared By Ansab Khan (13925) IU Gulshan

Principle Of Management (Monday Section)