KE’s Turnaround: Online
‘‘With hard work and passion, nothing is impossible’’- this adage truly defines the story of the only power entity of Pakistan which has emerged as a benchmark for other electricity suppliers in the country. There had been a time when the company was in shambles; endless cycle of unannounced load shedding, power breakdowns along with ever-increasing bills disturbed the lives of the inhabitants of the city. In fact prior to 2008, electricity was considered a rare commodity. Once power would go out, one had no other option but to wait for its resumption. Meanwhile, complaints about these frequent power outages used to go through a long and tedious procedure without positive results. However, it all transformed drastically after 2008, when K-Electric (formerly Karachi Electric Supply Company) went through the process of privatization. The entity took up the challenges and with its renewed approach on key strategies as well as noticeable differences in the services created a positive difference in the lives of millions of residents of the city.
After privatization, some of the major issues that KE had to deal with were frequent load-shedding, line losses and power theft. Despite against odds, the entity took up challenges and managed to work on each element. The first step the management took was to overcome the problem of load-shedding. An uphill task, so to speak, the company came up with a segmented and scheduled load-shed plan so people could plan their lives accordingly. The plan was implemented on the basis of electricity theft and non-recovery of bills according to which the entity categorized areas into four types; low loss, medium loss, high loss and very high loss areas. K-Electric’s representative cited, “Low loss areas face 15 percent power theft; the occurrence of electricity theft in medium loss areas is above 15 percent but less than 35 percent. The city areas with losses over 35 per cent are termed as high loss localities which are subjected to load-shedding of longest duration.”
Energizing a population of 20 million, KE is the only vertically integrated entity that manages generation, transmission and distribution of the electricity to the city. With its privatization, over 1 billion dollars have been invested in enhancing the entity’s core functions. KE has increased its generation capacity by 1,010MWs. In 2009, the power demand had stood at 2,200 MW; however, lately it increases to 3,000 MW recently, and is growing every year. The current installed capacity of KE is 2,345MW whereas the total available capacity from both internal and external generating stations is 2,745MW. Further a power purchase agreement with National Transmission and Dispatch Company was also signed according to which 650 MW electricity being provided to the city.
Growing demand of Energy
Considering the growing demand of the energy in the city, the utility has improved the efficiency of power plants. The Bin Qasim Power station-I (BQPS-1) has gone through rigorous rehabilitation resulting in recovery of up to 50MW and improvement in efficiency.
K-Electric Generation Plants–A success point behind KE’s turnaround: Online
Similarly, an additional 220MWs has been incorporated with the successful implementation of Korangi Combined Cycle Power Plant. Meanwhile two open cycle plants of General Electric’s Jenbacher engines (220 MW and 180 MW GE JB) are converted into combined cycle power plants. Moreover with the addition of 560MW state-of-the-art combined cycle; the Bin Qasim Power Plant Complex becomes the country’s largest plant, with an installed capacity of 1820MWs which is a landmark achievement in local power sector.
Furthermore, KE has been working in converting the power production from biogas to coal. The power entity intends to take full advantage of the lignite coal reserves in Pakistan and wants to shifts its energy reliance on coal based plants. With the construction of coal-fired boilers on 2 units of BQPS 1 in association with Harbin Electric International and recent Coal Conversion Project of 420 MW at Bin Qasim Power Station 1 as well as foundation of 700 MW coal power plants at Port Qasim in collaboration with China Machinery Engineering Corporation (CMEC) would assist in power tariff reduction by utilizing low cost fuel sources for its electricity generation, hence overcoming the increasing electricity demand of the port city of Pakistan. Chief Executive Officer of K-Electric, Tayyab Tareen stated, “These projects will contribute to KE’s fuel diversification strategy and marks a significant step towards a new era of cheap base load power in Pakistan.”
In view of all these measures conducted by the entity, Karachi has become the only city in Pakistan where all industrial zones as well as 60 percent of the city is exempted from load-shedding.
Curbing Transmission and Distribution losses
Curtailing menace of power theft has not been an easy task. After KE’s privatization, massive anti-theft drives have been conducted to curtail losses, including raids on daily basis, monitoring affected areas and cutting off illegal connections. Following the measures conducted by KE team, a major reduction in transmission and distribution (T&D) losses has been observed since 2008. Over the years, the entity has been able to increase reliability of transmission network, signifying a 2.7percent reduction in transmission losses along with rehabilitation of 189 km of Extra High tension (EHT) lines. Meanwhile initiatives such as High Voltage Distribution System and installation of Aerial Bundled Cables (ABC) have reduced T&D losses from 30 percent to 24 percent since 2008. According to KE’s estimation, 1 percent of loss reduction saves around Rs. 2.5 billion.
K-Electric Core functions–Transmission and Distribution: Online
It is pertinent to mention here that KE is one of the first companies to use ABC in its electric power transmission and distribution system. These are overhead power lines that use several insulated phase conductors bundled tightly together with a bare neutral conductor in contrast to traditional practice of using uninsulated conductors separated by air gaps. ABCs provide protection against short circuits caused by external forces (such as wind or fallen branches), hence minimizing the voltage fluctuation and breakage of wires while enhancing the life of Pole Mounted Transformers (PMTs). This project has proved to be one of the most effective solutions for power theft reduction.
KE becomes the first ever distribution facility in Pakistan to have earned an ISO 9001-2008 accreditation for improvement in the functions and operations, attributing quality in customer care and satisfaction.
Before 2008, the customer service department faced severe criticism for its slow operation in addressing complaints by the customers. Nevertheless, after privatization, the entity has shifted its focus towards improving interactions with its consumers in a structured manner. The management has emphasized in creating efficient platforms and alternate channels; the company invests in expanding state-of-the-art call centers and streamlined call handling through Primary Rate Interface (PRI) lines; established ISO-complaint server room and increase in the number of customer representatives. The staff in customer centers acquires full-fledged training in dealing with consumers in amiable manner. Moreover, complaints are handled with utmost priority; several alternate channels have been upgraded such as email, website, SMS and social media so that consumers can have an easy access to the company. Twitter is a clear example of the entity’s modernized service where the team instantly replied to any concern or queries. Shamaila Abdullah, a banker and consumer of KE, expressed her elation over KE’s improved service. Sharing her experience, she said “Last month, there had been a severe power outage in my area; unfortunately my land-line was dead at that time so I thought to complain on twitter through my mobile. I got surprised when I received an instant response on my twitter account where the KE team informed about the fault in my area. ” Then she added beamingly, “Guess what? The electricity supply resumed within an hour.”
Besides to provide more real-time feedback to the customer, SAP has been integrated with the system to allow for better data management and enhanced communications with other business related units.
Further SMS facility provides customers with an additional means to access K-Electric. Through 8119 number, the customers can be proactively informed about the major developments in regard to faults, load-shed schedule and shutdown along with monthly billing details.
With the growth in core functions, KE has managed to produce profitable figures in short span of time. In 2008 revenue generation was PKR 85.2 billion, which jumped up to PKR.195 billion in 2014. In the three previous fiscal years, its average annual loss had been Rs.15.33 billion while things changed, as in FY14, it earned a profit of Rs. 12 billion. With these figures of profit, the entity reflected quite a success story as recently it had received FT/IFC Transformational
K-Electric embeds its foundation as a profitable entity: Online pic
business award for its exceptional financial projects, subsequently becoming the only utility in the energy sector to have won international recognition of this stature.
KE’s turnaround story has not only stirred the country but its success also echoes at the International level where Harvard Business School introduces a special course ‘Corporate turnarounds’ where students are taught through case study designed around KE’s revival.
KE’s revival has been a story of optimistic approach and unwavering determination. The turnaround of KE has also become an exemplar for the present government as on one hand, it has embarked on privatizing state-run power suppliers whereas on the other hand, the government has adopted the policy of exempting industries from load-shed. Considering all these achievements, it is evident that the entity has surely come a long way from a loss making entity to a profitable one.