WAPDA

WAPDA, the Pakistan Water and Power Development Authority, was

created in 1958 as a Semi-Autonomous Body for the purpose of

coordinating and giving a unified direction to the development of

schemes in Water and Power Sectors, which were previously being

dealt with, by the respective Electricity and Irrigation Department of the

Provinces. Since October 2007, WAPDA has been bifurcated into two

distinct entities i.e. WAPDA and Pakistan Electric Power Company

(PEPCO). WAPDA is responsible for water and hydropower

development whereas PEPCO is vested with the responsibility of

thermal power generation, transmission, distribution and billing. There

is an independent Chairman and MD

(PEPCO) www.pepco.gov.pk replacing Chairman WAPDA and Member

(Power) who were previously holding the additional charges of these

posts.

WAPDA is now fully responsible for the development of Hydel Power

and Water Sector Projects.

PEPCO has been fully empowered and is responsible for the

management of all the affairs of corporatized nine Distribution

Companies (DISCOs), four Generation Companies (GENCOs) and a

National Transmission Dispatch Company (NTDC). These companies are

working under independent Board of Directors (Chairman and some

Directors are from Private Sectors).

The Companies are administratively autonomous and leading to

financial autonomy by restructuring their balance sheets by bringing

their equity position to at least 20 percent, required to meet the

prudential regulations and to facilitate financing from commercial

sector (approved by ECC).

Forces for change

PRIMARY OBJECTIVES:

The central argument for privatization revolves around efficiency.

It is argued that governments have grown too fat to effectively handle the

delivery and provision of public services including WAPDA. It is also asserted

that the decline in the quality and performance of public sector services is

largely due to ‘politicization’.

WAPDA

REGULATIONS

POLITICS

CUSTOMERS

STUCTURE

These departments also suffer from bureaucratic irregularities, official

arrogance, and corrupt and socially irresponsible practices which cause major

obstacles to efficient provision of services.

According to the proponents this can be put to end by de-bureaucratization,

deregulation, and involving the private sector in the provision of public

services.

Privatization is seen as a panacea for these ills as, according to them, private

concerns are more efficient in production of goods and in service delivery.

Management of WAPDA’s 12 Companies for their transition towards a

corporate and commercial operating environment through Business Process

Reengineering.

Institute a Change Management Program to induct a new culture, latest

technologies & Management practices

Develop framework for a competitive modern power sector for cost effective

operations for provision of affordable electric power to customers.

CHANGE PROCESS:

AIMS OF CHANGE :

Because of the power sector’s poor operational and financial performance

since the mid-1990s, the government decided to restructure the sector as the

government claimed “from an inefficient state-controlled monopoly to a

competitive, market-driven system”. Its first step was to amend the WAPDA

Act in December 1998, which allowed the establishment of the Pakistan

Electric Power Company (PEPCO) for unbundling of the WAPDA’s Power Wing

into eight distribution companies (formed from existing area boards); three

generating companies (comprising 11 of Wapda’s generating plants); and the

National Transmission and Dispatch Company (NTDC). The restructured

power sector was to consist of (i) competitive generation with independent

system operators and a bulk power market; (ii) unbundled, open, and

undiscriminating access to transmission and distribution services; and (iii) an

independent regulatory body for effective market governance.

Competitive generation with independent system operators and a bulk

power market;

Unbundled, open, and undiscriminating access to transmission and

distribution services

An independent regulatory body for effective market governance.

Better customer service.

Augmentation of the system.

Restructuring of power wing.

Decentralization of power.

The second step of the government’s plan was to (i) sell PEPCO’s generating

and distribution companies and (ii) privatize Karachi Electric Supply

Corporation (KESC). The transformation of the power sector into a privatized

electricity market was expected to take a number of years and would

comprise two phases. In the first phase, the system was to be a single buyer

type where all electricity would be bought by NTDC from various private and

public generating companies for resale to the distribution companies. In the

second phase, the system was to be of a multiple buyer and seller type where

the distribution companies and large consumers would have a choice of which

generating company to buy from.

CHANGE PROCESS

The corporatization process was effectively completed and the corporatized

entities of WAPDA

9 DISCOs,

3 GENCOs

and NTDC are   fun ct ioni ng  under   indepe ndent  Board of  

Directors

New organization PEPCO was formed to materialize the change.

Change task evolved around

Corporatization

Privatization

Under new set up there is new power wing.

THERMAL GENERATION:

POWER WING

MD PEPCO

LESCO GEPCO FESCO IESCO PESCO TESCO MEPCOO HESCO

SESCO

QESCO

NORTHREN SOUTHREN

Effects on departments:

Human resource department:

Over 46 years of operations, WAPDA's human resource has developed into a

reservoir of knowledge, competence and expertise through training and

experience gained at the accomplished projects and remaining associated

with the diversified development program.

GENERATION COMPANIES

JAM SHORO KOT ADU MUZZAFAGARH

NEW STRUCTURE:

HR AND ADMIN DIRECTOR

MANAGER HR

DY MANAGER HRM

DY MANAGER TMP

MANAGER ADMIN

DY MANAGER SERVICES

MANAGER L&L

DY MANAGER L&L

CEO

DY DIRECTOR HR

ASST DIRECTOR HR

ASSISTANT DIRECTOR HR

HEAD CLERK

PUBLIC RELATION OFFICER

CLERICAL STAFF

employees performance evaluation is done at the end of the each

t h r o u g h   A n n u a l   C o n f i d e n t i a l Report (ACR)

Due to privatization large number of changes occurred in designation.

Large number of changes occurred at clerical level.

Due to new structure it became top heave organization as large number of

people are in top management and middle management.

What happened after change?

Over the past 14 years, Pakistan has been following a strategy of deregulation,

privatization and transformation of its public sector entities (PSEs). The key

shortcomings are: Poor governance; Political and bureaucratic interference;

Institutional weakness; and Lack of professional management. In the 1990s,

IFIs like the WB, IMF and ADB asked the Pakistan government that the fiscal

situation could not improve unless and until the losses from PSEs are

substantially curtailed or eliminated, and that this was only possible through a

massive restructuring of these entities leading to their privatization. The

process of restructuring of wapda started in it 1999 and at that time it was

planned to accomplish it in 2 years but unfortunately it did not goa s planned

and still the privatization process is in practice. PEPCO is still not dissolved.

Though they succeeded to develop customer service centres but failed to

deliver the service. They failed to augment the system as well as they could

not break the status quo and attitude of people.

CHANGE ROLES:

Change initiator

In case of privatization of WAPDA change initiator role was played by

chairman WAPDA along with the member power, member water and

member finance.

Vision:

Because of the power sector’s poor operational and financial performance

since the mid-1990s, the government decided to restructure the sector as the

government claimed “from an inefficient state-controlled monopoly to a

competitive, market-driven system”.

CHANGE TASK:

Its first step they amended the WAPDA Act in December 1998, which allowed

the establishment of the Pakistan Electric Power Company (PEPCO) for

unbundling of the WAPDA’s Power Wing into eight distribution companies

(formed from existing area boards); three generating companies (comprising

11 of Wapda’s generating plants); and the National Transmission and

Dispatch Company (NTDC).

Trade union activities were suspended, and handed over control of energy

transmission to the army (this was before the military takeover of Pakistan

government itself). The union was suspended by presidential decree, which

abrogated the right of the union to operate, even as a bargaining agent

Proposal Submitted to GOP for Price consideration to be paid or settled by

GOP with WAPDA so that share of the corporate entities owned by WAPDA

can be transferred in the name of GOP

Spitted the organization structure and designed new decentralized structure.

CHANGE IMPLEMENTOR:

To materialize the change PEPCO was formed.

The Pakistan Electric Power Company (Private) Limited (PEPCO) has been

entrusted the task of managing the transition of WAPDA from a bureaucratic

structure to a corporate, commercially viable and productive entity.

It is a mammoth task and progress in the initial months was rather slow, but

one should keep in mind that responsibility is enormous and transition is a

long drawn process.

Deregulation of power sector.

Promotion of IPPs(independent power producers)

Restructuring of WAPDA

Privatization of selected corporate entities.

The Authority issued licenses, franchising monopoly business, setting and enforcing performance standards and codes of practices, enforcing competitive policies, and setting charges for the monopoly parts of the industry.

It is also mandated to protect consumers against monopolistic prices, encourage efficiency in licensee operations through financial incentives, encourage economic efficiency by promoting competition, and eliminate cross-subsidies between regions and consumer groups.

Wapda’s all the wings have further been strengthened / reinforced in the new

corporate restructured set-up and human resource directorates have been

established in all the distribution companies to plan and manage the human

resource.

CHANGE FACILITATOR

To facilitate the change process and ease out all the complications outside

consultants were hired.

These consultants were hired in the areas of finance, human resource and

technical assistance.

POWER WING

MD PEPCO

LESCO GEPCO FESCO IESCO PESCO TESCO MEPCOO HESCO

SESCO

QESCO

NORTHREN SOUTHREN

These consultants include Philippine based company, ADB (Asian

development Bank) and WB.

For facilitation process and adjustments to new posts and jobs they called

seminars, trainings, workshops and meetings.

The WB and ADB supported the government’s plan for the restructuring and

privatization of the energy, oil and gas sectors, and provision of a legal

framework to implement the Oil and Gas Reform Program in addition to

strengthening the regulatory framework.

The World Bank under the SAL (Structural Adjustment Loan) approved in

1999 US$350 million for working on the power sector to restore financial

viability of Wapda and KESC to ensure line losses are reduced, distribution is

improved and cross-arrears between energy utilities and governments are

settled.

It also envisaged formation of the NEPRA, to regulate the power companies

and provide necessary comfort to investors and consumers. The World Bank

was also responsible for converting the various distribution centers of

WAPDA into corporate entities and then privatizing them.

CHANGE RECIPIENT:

In this change process change recipients were all those employees who were

shifted from wapda to Pepco.

Roles changed; seniority levels revised.

Designations changed.

Employee between scale 1-15 were shifted from wapda to pepco through an

executive order.

Employees between scale 17-20 were given option.

Active resistance came from employees in form of protests including sit ins

infront of the parliament house

Pakistan Wapda Hydro Electric Central Labour Union has launched protest

campaigns against privatization of WAPDA. Union members have taken out

processions and held rallies in different cities of the country from time to time

to urge the government to desist from privatizing the organization. The

slogan-chanting workers have urged the federal government not to privatize

profit-earning organizations like Wapda at the behest of the World Bank and

IMF.

They criticize the policies of downsizing and rightsizing of the government

which, according to the union leaders, have caused an unprecedented

unemployment and lawlessness in the country. The union leaders and

workers are determined to resist the privatization of Wapda's regional

organizations.

Union secretary-general Khursheed Ahmed Khan has called upon all worker

unions to join hands with Wapda workers in their just struggle against the

anti-labour bureaucracy. He warns they will continue their struggle against

the exploitation of workers by multinational companies and their Pakistani

supporters

Power Sector and Consumer Concerns

Power sector has undergone major developments in recent years, including partial privatization, but despite that electricity services in the country remain substandard and unsatisfactory. The benefits of privatization have not been passed on to the consumers, who remain confronted with a host of problems ranging from arbitrary price increases to power fluctuations and very poor quality of services.

As far as the rationale for the privatization of the power sector is concerned, it is important to note that the main justification given for its privatization was to attract the foreign investors. The efficiency gains did not constitute any significant or primary rationale for privatization.

The privatization of the power sector has been opposed on various counts. It has been argued that the maintenance and security of the assets like bulbs, electricity lines, poles, etc. scattered all over the country is difficult, and their replacement or repair is expensive and costly. There is a huge risk involved in their maintenance and security, and their handing over to the private sector is likely to increase that risk. Though the government had decided to privatize the sector in early 1990s, it took years to actually start privatizing the sector. The efforts for privatization could only materialize in 1996, when the government decided to privatize Kot Addu and Jamshoro thermal power

plants and the Faisalabad Area Electricity Board. In addition, the government decided to privatize KESC as well.