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August 14, 2020

Typical monopoly

Newspost

 
August 14, 2020

This refers to the editorial, 'KE and the court' (July 13, 2020). The problems of K-Electric do not involve any issues of law that the courts can resolve. It is purely a problem of public administration and economic organization which has resulted from policies followed in the past. When the government could not manage electric supply in Karachi properly, it handed over KESC to a private concern without any regard to the fact that in economics the monopoly of a public utility in private hands is the worst form of organization.

Now KE is doing exactly what a monopolist would do. Its objective is not to supply electricity at the lowest cost, but to maximise its profits. In a decreasing cost industry, as electric supply and distribution are, withholding investment and restricting supplies will be in KE's interest so as to maximise profits. KE is a monopoly in private hands and nothing better should be expected from it. The government should take over KE, hire a few competent professionals from the international market and let them handle the problem without any political interference.

Abdul Majeed

Islamabad