WAPDA

˜c 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.
˜c WAPDA is now fully responsible for the development of Hydel Power
and Water Sector Projects.
˜c 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).
˜c The Companies are administratively autonomous and leading to
financial autonomy by restructuring their balance sheets by bringing
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 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





 






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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 Ǯpoliticizationǯ.

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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 WAPDAǯs 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:

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AIMS OF CHANGE :

Because of the power sectorǯs poor operational and financial performance

since the mid-1990s, the government decided to restructure the sector as the
government claimed Dzfrom an inefficient state-controlled monopoly to a
competitive, market-driven systemdz. Its first step was to amend the WAPDA

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Act in December 1998, which allowed the establishment of the Pakistan
Electric Power Company (PEPCO) for unbundling of the WAPDAǯs Power Wing
into eight distribution companies (formed from existing area boards); three
generating companies (comprising 11 of Wapdaǯs 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.

˜c Competitive generation with independent system operators and a bulk

power market;
˜c nbundled, open, and undiscriminating access to transmission and
distribution services
˜c An independent regulatory body for effective market governance.
˜c Better customer service.
˜c Augmentation of the system.
˜c Restructuring of power wing.
˜c Decentralization of power.

The second step of the governmentǯs plan was to (i) sell PEPCOǯs 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
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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

 

  
   
 

    
 
   


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The corporatization process was effectively completed and the corporatized
entities of WAPDA

˜c 9 DISCOs,
˜c † GENCOs
˜c a nd N T DC ar e f u nc t i o n i ng u n d e r i n d ep e nd e nt Bo ar d o f Dir
ectors

New organization PEPCO was formed to materialize the change.

Change task evolved around

˜c Corporatization
˜c Privatization

nder new set up there is new power wing.

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THERMAL GENERATION:

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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.

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NEW STRCTRE:

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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.

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What happened after change?

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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.

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CHANGE ROLES:

Change initiator

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

d

 
 along with the    
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d.

Vision:

Because of the power sectorǯs poor operational and financial performance

since the mid-1990s, the government decided to restructure the sector as the
government claimed Dzfrom an inefficient state-controlled monopoly to a
competitive, market-driven systemdz.

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 WAPDAǯs Power Wing into eight distribution companies
(formed from existing area boards); three generating companies (comprising
11 of Wapdaǯs 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
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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.

˜c Deregulation of power sector.

˜c Promotion of IPPs(independent power producers)
˜c Restructuring of WAPDA
˜c Privatization of selected corporate entities.
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 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.

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Wapdaǯs all the wings have further been strengthened / reinforced in the new
corporate restructured set-up and human resource directorates have been
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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.
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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 governmentǯs 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 S$†50 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:

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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 nion has launched protest
campaigns against privatization of WAPDA. nion 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.
nion secretary-general Khursheed Ahmed Khan has called upon all worker
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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

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

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