KCCI fully supports modification of KE’s License, withdrawal of exclusivity on generation, sale & distribution

KARACHI: President Karachi Chamber of Commerce & Industry Agha Shahab Ahmed Khan has expressed concerns over K-Electric’s lobbying in the press against the proposed APM by NEPRA in the License No.09/DL/2003 dated July 21, 2003 and putting forth flimsy and untenable arguments against modification of KE’s license to bring an end to its absolute monopoly over the sale and distribution of electric power to the territory of Karachi.

In an addendum to comments sent earlier on Authority proposed modification in existing distribution license of K-Electric Limited sent to Registrar of National Electric Power Regulatory Authority (NEPRA), President KCCI pointed out that as to the contention of KE that the termination of its exclusivity or in other words the “Monopoly” is not in public interest which is ridiculous. KE has given some flawed reasoning in support of its argument. In KE’s flawed theory, the Star/Low Loss consumers who are KE’s primary source of revenue and enable KE to meet its “social obligation costs” would be taken up by new entrants to the distribution market. The statement itself is a testimony to KE’s unfair treatment and exploitation of honest consumers.

He said that these consumers are forced to bear the costs and burden of theft, leakages and line losses, while rewarding those involved in theft of electricity in connivance with the KE’s field staff who provide illegal connections through use of “Kunda”. Ironically, KE calls such shifting of burden on honest consumers as “Social Obligation Costs”.  This is a lame excuse to conceal the deficiencies of KE in identifying and curtailing the theft and leakages. Such arguments do not hold any legal ground and is in fact a blatant infringement upon the rights of those consumers who honestly pay their dues to KE.

President KCCI noted that yet another argument raised by KE is that the sale of KE to Shanghai Electric will be affected should the exclusivity of KEL is withdrawn. He emphasized that KCCI is against any kind of monopoly whether by KE or the Shanghai Electric. Entire industry, trade and residential consumers of Karachi are against any such monopoly and will firmly oppose it. “We believe that take-over of KE by a foreign company will further complicate the matters and will also result in additional burden on forex reserves due to repatriation of profits by the foreign company, if it enjoys the same monopoly as KE.

He said that it is an established principle that the monopoly of a single entity on critical provision of electricity or for that matter any other commodity or service, is never desirable, nor it is in larger public interest. Such exclusivity (monopoly) allows the producer/distributor to dictate terms on a captive market and leads to deterioration in standards of service/ infrastructure in the absence of competition. KE’s claim is therefore illogical and against the international best practices in provision of utilities, while denying the public any alternative options.

“Therefore, KCCI fully supports the modification of KE’s License and withdrawal of exclusivity to KE on generation, sale and distribution of electric power within the territory of Karachi, in order to allow competition in the provision of electric power to the industry, trade and domestic consumers in Karachi who are held hostage for many years by KE”, he added.

He was of the opinion that the monopoly has in fact caused immense economic damage to the country and is in violation of the provisions of Competition Act 2010, as well as the rights of citizens enshrined in the Constitution. Therefore, any regulations, provisions and rules that allow a single entity exclusive rights to conduct any business including the distribution of electricity, is ultra-vires of the constitution.

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