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.
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.