INSTITUTE OF BUSINESS

MANAGEMENT
Topic : Diagnosis of KESC
Faculty: Maryam Siyal
Program: BBA(H)
Course: Principles of management

Information gathered by group members:

• Hafiz Muhammad Owais
• Salman Bakht Temori
• Sunil Kumar
• Zunaira Ahmed
• Anum
• Fariha Ali
 CONTENTS

• History of KESC
• Who they are?
• What they do?
• KESC’s vision.

• Strategic planning.

• Turnaround strategy.

• Working environment.

• Facts and figures.

• Hierarchy of KESC organization

members.
• Problems faced by KESC.

• Best Practices Framework, and

Compliance. and Monitoring by

KESC.
• Increasing and improving KESC’s

generation capacity.
• Sources and links.
 KARACHI ELECTRIC
SUPPLY COMPANY
HISTORY OF KESC
KESC is one of the oldest companies in Karachi and was established in
the city even before the creation of Pakistan in 1947. Incorporated on
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; a
significant number of professional managers with experience in
running utility and other large companies have joined under this
management and will be running it until the company is turned into a
best practice utility.

The electricity supply business in Pakistan is under two companies. For

Karachi city and adjoining areas of Sindh and Balochistan, it is under
Karachi Electric Supply Corporation (KESC). For rest of the Pakistan it
falls under Water and Power Development Authority (WAPDA). Both
companies operate their own networks and they are also interconnected
to each other at two points. One is the Jamshoro – Bin Qasim link in
East of Karachi and other is HUBCO-KESC link in West of Karachi. Both
companies can provide power to each other through these links.

WHO THEY ARE

Karachi Electric Supply Company (KESC) generates and supplies
electric power to Karachi, a metropolis with a population of over 17
million and one of the most populous cities in the world.

WHAT THEY DO
They currently provide electricity to over 2.1million consumers, not
only in Karachi but also in the towns of Dhabeji and Gharo in the
province of Sindh and Hub, Uthal, Vindhar and Bela in the adjacent
province of Baluchistan.
 KESC’s VISSION
Our vision is to be a value-driven and service integrated company,
with innovative ideas, where the core set of values is shared amongst
everyone.

Our vision is based on the following four pillars;

• Thought Leadership
• Knowledge Based Learning
• Values
• Social Responsibility

Our key goal is to provide uninterrupted, reliable electric power at an

affordable price to our consumers as it is our core priority. We also
play a responsible role when it comes to giving back to our society,
which we believe is developing to its fullest potential.

We are devoted to developing positive relationships amongst our

consumers, employees and stakeholders. Increasing employee morale
and presenting a more positive image of KESC are all part of our
ambitious five-year plan for the company. To make distribution and
customer service more efficient, the city's electric network is divided
into four different regions, each of which is monitored by an
independent centre.

Employee development is another top priority for us, and has

therefore, led to the initiation of professional partnership program.

STRATEGIC PLANNING
Strategic plan with implementation mechanism was
prepared for rehabilitation of out dated and
dilapidated transmission and distribution network
which has been under execution in a phased and
prioritised manner.
A number of critically important projects have been commissioned or
are in the final stage of completion, which has improved network
reliability and increased transmission & distribution capacity.
Establishment of a computerized system for management of
generation, transmission and distribution known as SCADA is being
executed as one of the prioritized projects. The commissioning of this
critically important project would significantly improve efficiency of
power system control & monitoring, facilitate timely operational
decisions & economic dispatch of power and would minimise outages
and technical losses.

Augmentation and expansion of outdated and fragile distribution

network has always been among the priority areas of the management
in order to facilitate valued consumers of the Company by providing
uninterrupted supply of electricity. Ninety eight 11kV feeders have
been commissioned and 323 PMTs have been installed & energised.
Customers are provided with one-widow service with the inception of
Integrated Business Centre and a transparent computerised new
connections sanctioning procedure has been introduced.

Turnaround Strategy
The new owners, in partnership with KESC management and Siemens,
have come up with a three-tier turnaround strategy:

(i) Restructure and develop the organization to make the operation

more customer- focused while improving collections and administrative
losses. This will lead to better revenue protection and cash-flow
generation, while enhancing KESC’s management capabilities and
increasing customer satisfaction.

(ii) Balance, modernize, and replace the T&D network to be able to

cater for peak capacity demand in the future and reduce technical
losses, which will lead to lower energy losses and higher billing per
units dispatched.

(iii) Increase and improve KESC’s generation capacity to increase the

revenue base, diversify sources of power for KESC, lower the blended
cost of generation, and enhance the Karachi area’s overall generation
capacity to cater for the increasing demand.
 Working Environment
We assure our employees job security and long-term employment
provided they fulfill their responsibilities. To ensure merit-based job
selection, and that we select highly qualified candidates, an Internal
Job Posting process has been implemented. To be promoted to higher-
level positions in the company, employees will be required to take
tests conducted by the Institution of Engineers, Pakistan (IEP) and
participate in panel interviews.
In this rapidly changing world, one must constantly brush up one's
skills. To encourage our current employees to do so, we have
introduced an organizational development project. KESC is partnering
with IEP to develop several certifiable professional-skill enhancement
programs. A new lab has been established at the KESC Training Centre
to train and test employees' technical skills.

GENERATION TRANSMISSION DISTRIBUTION

Capacity: Capacity: Capacity:

KESC 59 grid stations & 123 power 11 KV Feeders

transformers 1107 Nos
Available Capacity: 1,400
MW Network of 220, 132, and 66 KV Substations
circuits 2571 Nos
(Rental Inclusive)
The purchased and own generated PMT,S
Fuel types: Gas, HFO electricity is being transmitted through 11562 Nos
transmission network. The current
External transmission losses are less than 3% Dist Transformers
13992 Nos
WAPDA & IPPs - About 45
% of the electricity is HT Underground Cable
purchased from WAPDA & 4940 KM
IPPs
HT Overhead Mains
Internal 2445 KM

KESC - Nearly 55% of the LT Underground Cable

electricity is generated 1186 KM
through our own system
LT Overhead Mains
10665 KM

Dist Capacity
4328 MVA
 FACTS & FIGURES
KESC is an integrated power utility with exclusive franchise rights to
serve Karachi and its surrounding areas, with a licensed network area
spanning 6,000 square kilometers.

Fully integrated power utility involved in generation, transmission, and

Operations:
distribution. KESC is a public limited company listed on all stock exchanges.

2,350 MW (1350 MW Own capacity; 379 MW IPPs; 620 MW WAPDA/NDTC;

Total Capacity:
Aggreko Rental 50 MW)

Employees: Around 17,000(52% permanent, 48% contract, 89% staff, 11% officers)
Key Status Overview Key Status Overview
Grid Stations 59 • Transmits Transformers • Distributes
electricity electricity to 2
Transformers from Pole 13,414 million
generation to mounted customers.
220 KV/ 132 12 distribution at Feeders 1,020
KV high voltage. • Bulk
132 KV/ 11 105 Power Lines customers get
KV • Only 11 supply from
Total 117 customers on 11 KV 7,096 km 11 KV lines.
the
Power Lines 0.4 KV 11,718 km
transmission • All other
network. consumer has
12 220 KV 223 connections
Lines km • Grid stations from the 0.4
56 x 132 KV 617 step-down KV circuit.
km electricity.
5 x 66 KV 149
km
Total 989 Total 18,814
km

KESC’s TEAM: Their team ensures performance

quality and provides in-depth oversight on strategic issues.

We are a value driven company whose main emphasis is based on the

following four pillars:
• Thought Leadership
• Knowledge Base Learning
• Values
• Social Responsibility
We have to pertain to our values; these values include integrity,
accountability and the drive for continuous improvement. Living theses
values means managing our environmental impact in ways that strike
the right balance between society's economic and environmental needs

KESC
 ORGANIZATION STRUCTURE
KESC Board of Directors

Chief Internal Auditor

Executive Management Committee

Chief Executive

Chief HR Officer Chief Financial Officer Chief Operating Officer

Generation
Chief Legal Adviser IT Department Head

Transmission

Chief Supply Chain Officer

Engineering

Program Productivity Head

PROBLEMS FACED BY KESC

The Karachi Electric Supply Company has been facing big deficit of cash flow on the
part of its non-paying consumers, who owe Rs. 36 billion to KESC, and this in turn is
resulting in shortfall of power supply to the Metropolis. The KWSB is in debt of over Rs.
8 billion because of which a rotational load-shedding is being carried out on 12 dedicated
feeders at its Water Pumping Stations for four hours during night time.
They are facing the problem of theft of electricity.
• They are having short means of generations.
• They are neglected by the government.
• They have serious disagreements among themselves.
• Kunda system is very rampant. It causes major loss in KESC.

• Corrupt employees have a hand in providing kundas to some people.

 • The public does not consider theft of electricity as theft. They see it as their right
to electricity.

• There is a simple connection of kunda and there are also planned connections.

• Media presents just the consumers problems and does not show problems faced
by them

• Their biggest threats are the kunda system and the public.

• Corrupt employees exist thus bribe systems are present.

• Corrupt employees have a hand in providing kundas to some people.

• Those employees that are not corrupt are very sincere in their work showing up
for work during severe load shedding days though they know that their building
can be attacked by angry mob.

• Geographic Location of KESC Power Plants: Most of the generation

capacity of KESC is located in east of the city. This adds an unnecessary
transmission cost in moving this power to north, west and south of the
city.

• Distribution Problems: Now let us come to KESC’s distribution woes.

The distribution network is not only below demand but there is a huge
factor of power theft also. This theft happens in three ways:
• KESC clients, who already have connections, bypass the electricity meters.
Few years ago KESC was being run by the Army and even they couldn’t
stop the power theft in spite of moving electricity meters of most of the city
out on the streets. This was done to ensure the meters are not tempered
with.
Industrial clients who are billed according to a sanctioned load use bigger
grips to get more power

Best Practices Framework,

and Compliance and
Monitoring by KESC
KESC is in the process of benchmarking itself against international best
practices. This will include internal and external benchmarking
processes. Internally, benchmarks will be used to identify business
units, divisions, and departments where best practices exist. As best
practices are identified in one area, they can then be implemented
across all other areas. Externally, benchmarking will be used as a tool
to identify the extent of the deviation from best business practices.
This will be achieved by selecting a partner within the benchmarking
network. The partner may be an organization within the same service
sector or industry, or one from different industries or
sectors. Having identified best business practices, KESC can implement
these practices, procedures, or systems to its own benefit. At present,
KESC is in the process of implementing.
The management is currently focused on trying to implement a high-
performance culture, based on merit and enabling open
communication without regard to social or corporate hierarchy.
Management has devised broad cultural guidelines that each person
and group (as well as KESC as a corporate entity) will aspire to live by
in the discharge of their duties.

Increasing and Improving KESC’s

Generation Capacity
This component is divided into two components of rehabilitation of
existing facilities and generation capacity addition.

1. Rehabilitation of Existing Generation Facilities

The rehabilitation program aims to increase power generation capacity
from existing plants by 213 MW before the summer of 2007. Key areas
for improvement are heat rate, auxiliary consumption, and load factor.
The total amount allocated for rehabilitation for 2007 and 2008 is
approximately PRs0.6 billion ($10 million).

2. Capacity Addition:
Capacity addition of 780 MW through two new combined-cycle power
generation plants is planned under this component. The plants will
have a dependable capacity of approximately 745 MW. The first plant
of 220 MW will be built on surplus land within the boundary of Korangi
Thermal Power Station and will cost PRs11.0 billion ($174 million).

SOURCES AND LINKS

• http://www.kesc.com.pk/en
• http://docs.google.com/gview?
a=v&q=cache:_Vdfkg0C0lsJ:www.adb.
org/Documents/RRPs/PAK/40943-PAK-
RRP.pdf+KESC+mission+statement&hl
=en&gl=pk&pid=bl&srcid=ADGEEShuJ
kRiPhq-
szu718ZTeIl6KwewFfkj50TiPpxHANTNI
4nlTIltmkuu7z5_izEfSJlXLZvz33nR3RS
VzIMTj-poa-
QkcthPApnkTiOZfdJGhoM2uWfKDudgU
e_wFpt6QLdCvYZ2&sig=AFQjCNEbUCti
hyWo-gM9-dyaTzA1bMf4hg.