It can seem unfair to criticize someone for doing a difficult job badly, but when that job is as essential as running an electric utility company, one must do so anyway. And there is no way to sugarcoat this: K-Electric is being rather badly run – for many reasons, many of which are outside the control of the current management – and the government of Pakistan appears to be providing some cover to this mismanagement.
The crux of the story is this: In the 2010s, K-Electric was the success story that was able to improve bill collection and reduce theft in an incredibly tough law and order environment in Karachi during one of the worst decades in the city’s history. In the 2020s, it appears to be the only utility company in the country that is now presiding over increasing bill evasion and theft.
So what happened?
Lots of details, but fundamentally, two things have hit K-Electric hard: a lack of clarity as to who has clear management control, which has meant that major decisions about the strategic direction of the company have not been made and cannot been made until that question is settled. And secondly, perhaps more importantly, that lack of direction has left K-Electric completely unprepared to deal with the world of distributed electricity generation brought about by the rise of solar electricity in Pakistan, but especially Karachi.
But first, let us take a look at the numbers to describe the symptoms of what ails K-Electric. To summarize, here is what happened: bill recovery rates have fallen sharply at K-Electric over the past two years, and this is driven largely by middle class and wealthier household consumers not paying their bills. None of the possible explanations of this change bode well for the company, and the bruising board fight means that while they can continue to manage the company on a day-to-day basis, the strategic decisions needed to confront the challenges facing the company are simply not being made. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
