TESCOCasestudy

This case study is conducted only for inst itut ional

information purpose not for specialist services.This

mater ialmay not be quoted or r eproduced in any form

without pr ior consent of Quaid-E-Azam College of

Commerce,University of Peshawar.

HAMDANKHANKHADUKHEL

Roll #14, M.COM1st Semester

4/14/2014

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1-Executive Summary:

The electrical energy services industry in Pakistan headed by Ministry of water and

power aim to rising enlighten Pakistan is providing electrical power services to its

customers in whole country through its 15 companies. One of them is Tribal Areas

Electricity Supply Company (TESCO), which was founded in August 2004. It provides

electricity to homes, houses, factories, commercial shops and tube wells in Tribal Areas

of Pakistan.

Engr: Zakaullah Khan Gandapur is currently working as its CEO and answerable for his

work of four divisions and 11 sub divisions to WAPDA House Lahore. TESCO supply

electricity to 1200 km Area of Tribal Areas and 2, 89,729 consumers. It covers 7

agencies and 7 Frontier regions. It has more than 2 Arab of assets.

I have done my Case study on this organization where I found a major problem of Bills

payment which is a serious cause for TESCO. Some of the suggestion in this regard is :>

Law and order, incentives, FCR(frontier crimes regulation) removal, Security providing

from Terror, Nomination to KPK assembly, Royalties, Equal employment opportunities,

Awareness in people, Land disputes solution, GIS for decision making, New technology,

Good communication with Jirga, Economic benefits, Check and balance, proper team

work, Quality assurance and so on.

Lastly I would say that TESCO will become fruit full company in future if this problem is

solved and it continues its integrating Strategic and culture policy for peoples of tribal

areas of Pakistan.

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2-Key Words:

Strategic plan, Agencies, Integration, Law & order, Bills payment.

3-Organizational Background:

Organization History:

Tribal Areas Electr ic Supply Company (TESCO) came into being on 05-Aug-2004 as a

corporate body under PEPCOas one of the step taken towards ver tical

disintegration of the power sector of Pakistan. So Government of Pakistan is its

Founder. Power , energy and electr icity sector is in Pakistan is gradually moving

from monopoly to pr ivatization and from integration to disintegration. To keep

enhance with this change, the Pakistani Government approved a strategic company

plan in 1994 as a consequence ofwhich the power wing of Water and power

development Author ity has been divided into 15 corporations for generation,

transmission and distr ibution of electr ic power inside Pakistan. Thus TESCOcame

into being in electr ical services industry to provide electr ical services to Tribal Areas

of Pakistan.

Type and Natu re of business:

TESCOwas formed as a Semi-Government Autonomous Body (Corporation) in

public sector for the purpose of coordinating and giving a unified direction to the

development of schemes in different sectors i.e. Water and Power , which were

previously being deal by the respective Electr icity and Irr igation Depar tment of the

different Provinces. TESCO is one of the biggest Distr ibution entities of water and

power development author ity (WADPA). Its area of operation is the seven different

Agencies and related Frontier regions (FR). It covers the entire tr ibal areas of

Pakistan and it is the only corporation, which is providing electr icity facility to the

customers of this area.

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All the construction work of 11 kilowatt (KV) transmission line and 132 / 66 KVline

are being carried out by the operational staff of TESCO.More over its maintenance is

also carried out by separate GSOand SS&TLDivision/ Depar tment. Transmission

lines of electr icity are from Tarbela Dam and Warsak Dam. The area of jur isdiction of

TESCO is more than 1200 kilometers. It consists of seven agencies and FRs that are

situated along Afghanistan boundary. The seven agencies are :> ( Kurram Agency ,

Orakzai Agency,Khyber Agency, North Wazir istan Agency, South Wazir istan Agency,

Bajur Agency,Mohmand Agency).The frontier regions are :> ( FRPeshawar,FR

Kohat, FRBannu,FRLakki, FRDera Ismail Khan,FRTank).

Services That Organization offe rs: As the

leading electr icity distr ibution corporate body, TESCOstr ive to provide un-

interrupted electr ic supply and quality full services to all customers/ consumers at

the minimum possible cost/ rate.Federally Administrated TribalAreas (FATA) has 2,

89,729 number of electr icity consumers spread over in area of 27,333 sq.Kilometers.

TESCOhas four Operational Divisions with 11 Sub Divisions in that area, which are

engaged in operation and maintenance of electr icity and power system. This area

was previously being served by FATACircle of Peshawar Electr icity Supply

Company (PESCO). However , in order to improve operational efficiency and better

customer services, a separate company TESCOwas established to carry-out

expeditious execution, development, operation, maintenance and augmentation of

electr ical network with revenue collect ion in that area.

Financial Status: Currently

Tesco is earning revenue of RS7crore/ monthly, while total expenditure for 2013

was above 50 crore and revenue was 84 crore.Most of its revenue is from factor ies.

Total assets worth of this company is 200 crore.Sources of income are factor ies,

Shops,Tube well of ir r igation department and C&W(communication and works

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department) etc. Bank reconciliat ion occur monthly as Bank statement received

then Accounts section make it tally with their own books and send copy to Wapda

House as well. Basis of accounting is on Cash not accrual. It generates its own

revenue. It has its own vehicles include of Jeep,pick-up, Dotson, and Truck. They

prepare financial statements annually and do their audit internal Through WAPDA

House as well as on Nouman and Co Auditor Firm as external audit. They keep books

of accounts on manual basis not in computers. They also keep a budget set aside for

petty cash fund.Net profit transferred to Wapda House each year as final accounting

done.

4-Setting the Stage:

Organizational St ructure:

TESCO is technocratic, functional and semi-Government organization consists of

different departments inside the organization. It has 2500 employees working on

permanent basis. As its CEO is appoint by FederalMinister of water &power

and his office is in Lahore. Depar tments inside the TESCO working are :>

1-Technical Depar tment, 2-Commercial Depar tment, 3-Finance

Depar tment 4-Executive Depar tment. It has different branch offices in Hangu,

Bannu,Tank and Hayatabad.Government of Pakistan is stockholder in TESCO.

Key individuals inside the organization &Role:

Eng:Pervez Khankhel Swati is chief executive Officer of TESCO leading the

organization. Who has 4 subordinates whose ranks are :> 1-Director Technical +

operational + CS. 2- Deputy Director Corporate 3- DGHR/ Admin 4- Secretary

> Director Technical + operational + CShas vast responsibilities.Which includes:

checking the work of Two Directors,Manager Operations, XEN construction &1

Deputy Director . >

Secretary is full time legal and government officer responsible for day to day office

work, funds transfer, Liaison etc.

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>Deputy Director corporate is responsible for business activities i.e. services

rendered,profit and other activities.

> DGHR/ Admin is responsible for employment and Audit activities in which he is

assisted by two deputy directors.

Management Practices:

Main management power is with CEO. Lower level staffing done by SDO. Planning

process is done through CEO, S.E (superintending engineer),SDO,Line

superintendent. Information flow is technical type inside organization. Outside flow

of information done through Pakistan Post.PRO is also liable for different kind of

information. International affairs held through WAPDAHouse Lahore. Supervisory

staff is responsible for quality focus. Training centre’s is in Faisalabad and

Islamabad.

Organizational Cultu re:

Here in this organization “Do respect have respect” policy is implemented. Good and

fr iendly environment for employees. There is policy for casual, annual and

emergency leave for employees. Group life insurance policy is also available for all

employees which process is done through WAPDAhouse Lahore. Company also

provide loan facility to employees for motor cycle, land/ plot buying.WAPDAwelfare

fund is also for internal employees.

Key players outside the Organization:

Ministry of water and power , PEPCO,WAPDA,USAID, UKAID, NTDC,FBR,are main

key players outside the organization. Governor Khyber Pakhtunkhwa and Political

Agents of different agencies also have influence on this organization.

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5-Case Description:

Integrating St rategy &Cultu re in Tribal Areas Regarding Collection of Bills:

Every society has its own culture, norms, beliefs, customs, r ituals, myth, ceremonies,

and sagas.Any organization providing goods and services to society must take into

consideration those factors while making strategies. Now here question is ar ising

that what is culture, strategy and its integration. So I am going to discuss it.

Culture is ar ts and other manifestation of human intellectual achievement

regarded collect ively. Or It is character istics of a par ticular group of people

defined by everything from language, religion, social, habits, cuisine, ar ts and

music. It consists of two wings that can give to community a different

identity that are :> -performance distr ibution -Equilibr ium behavior

distr ibution. Culture of different organization implicit in lives of all

members who belong to a community. Culture manifestation in

organization includes formal practice, informal practice and values.

Strategy is plan of top levelmanagement in entity to achieve one or more

goals under ambiguous condit ion. Or the way you accomplish plan. Or How

to act upon your plan is strategy.HenryMint bergdefines it as “Apattern in

stream of decision”. It can also be defines as A systematic approach of

probing,making and developing a doctr ine that will ensure long time success

if followed faithfully”. It can be understandable as “The ar t and science of

planning and marshalling resources for their most efficient and effective uses

”.

Integration means mixing up,making acceptable,making in affiliation with,

synchronization of two.

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From the above it is abstracted that integrating strategy and culture means to not

spoil the culture and implement your strategy regarding bills collect ion which is

looking favorable to customer/ consumer in Tribal areas.

Importance for Organization:

The chances of desirable outcomes increase due to integration of strategy and

culture in organization. So if strategy is not synchronizing with culture of that

specific geographical area/ location then strategic plan of an organization will

become fail/ flop. As we know that strategy is product of culture and culture is

product of strategy as well it relates to strategic management concept. So culture can

inhibit Strategic management of different organizations. As electr icity theft is

substantial in magnitude. So here the concept of integrating the strategy and culture

will be implemented. For every organization providing goods and services they have

to follow the strategy which is socially acceptable for their customers as well as goal

achievable.As strategic plan apply across all the departments of business

organizations so plans and policies must be in according with culture, norms, belief

of that specific geographical location.

Respondent View s:

As I conduct interview of resource person who is also respondent

personality inside this organization. His views about this main Challenge are:

Tribal people have no proof/ evidence ofWarsak dam compensation so they are not

exempted from bills.Kunda culture exists there which is theft of electricity.

60 % of factories pay bill. But also arrears to them. Supply of power is varying from

1 region to other region.

2 to 3 hours electricity supply to domestic people. If someone cooperates then

duration of electric supply extend and also relief given to them.

Policy of collection is that “We have Bills distributor also”. Some of them submit bills

by bank and some by cheaque.

If amount of bill not tally then theymake noise, rude and unethical behavior.

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Every1 inside organization is doing effort to increase revenue.As in 2001 the bills

collection was 75lac monthly and now it is 140 million/ month.

Political interference is much more. Ifwe increase the duration ofpower supply then

they are not willing to pay bills.

Some of shops give only 200Rs/ monthly which is not enough.

“They are Greedy people”. “Hell man is a no man”.

Practicing:

In today’s evolutionary world where technology keeps on revolutionizing, the

eradication of pover ty and to provide them reliable and affordable energy services is

motto of organizations. As low income household spend a substantial share of their

income on utility services such as electr icity, heating.The difficulty is that consumer

has in affording fur ther tar iff. The affordability of energy at house hold level

embodies the relationship between broader energy, social and housing policies.As

we know Tribal areas are not in jur isdiction of provincial government but in Federal

administration so for maximum benefit in TESCO the above concept is practiced

upto some extent to br ing that people in national development scenario. As TESCO is

giving relief to tr ibal peoples in this regard so we can say that this management

concept applied here in this organization.

General View s:

As energy is considered as life line of an economy and most vital instrument of socio

economic development of a country.We examine the effect of electr icity market

reform on residential consumers, using hypothetical scenarios likely to be prompted

by reform.To control over the problem of guns,Opium, heroine and other addicted

sowings in tr ibal areas,Government of Pakistan takes step of supplying electr icity to

them. So TESCOstar t their services. I

conduct interview of Senior Jirga Member (Name hidden) of Afr idi Caste to know

about Tr ibal areas people views which are :>

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At the time of building Warsak Dam there was meeting conducted between

TribalAreas Jirga and FederalGovt of Pakistan in which Govt accept the

point to provide free electr icity services upto 100 years to TribalAreas.

The 30% trade between Afghanistan and Pakistan done through the route of

Khyber agency and other tr ibal areas on which no subsidy is given to Tribal

people, therefore no bills paid.

Federal govt does not do anything for them therefore they give the bills

amount in lump sum as compensation to TESCO on behalf of Tr ibal people.

Feeder repair charges given by political agent of respective agency to TESCO

from annual fund/ budget.So they not pay bills/ charges.

There is tradition that they will not pay bills due to their ancestor ’s advice.

TESCOemployee’s communication is not good with general public.

Some time they also take br ibe from public to provide them uninterrupted electr ic

supply for factor ies in Dara Adam Khel and so on .

6-Management Challenges Faced by TESCO:

As power theft is exhibits characteristic consistent with the political capture of public

service delivery by local elites and it is widespread in developing countries. It is

politically correlated. Challenges face by organization in solving problem is :>

Lack of government attention.

Firing from tribal people side.

Illiteracy and uneducated culture of FATA.

Kidnapping of officers.

Beating of employees.

Talibanization, terrorist activities.

Noise and crying on employees.

Threats given to employees.

Appointments make on MNA recommendation.

Corruption inside TESCO.

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Jirga member’s opposition.

Non cooperation of Tribal peoples.

Dynamic and complex environment.

Resistance to change.

Reluctance to establish strategy.

Short fall of electricity from grid stations.

Oil dependency on foreign countries.

Lack of latest technology.

7-Possible Solutions/Recommendations for Problem:

There are number of ways through which the social impact of tariff adjustment can be

mitigated, chief among them are targeted assistance program and life line tariffs. But it

requires competent institution and considerable administration capacity inside TESCO.

Different reforms in the power sector are in progress that will bring significant changes

including innovative technology, improved reliabilities and quality of electric supply. In

my opinion steps for solution are :>

Groundreali tiesmust befollowed.

Facilitiesin provincemustbeprovided toFATA.

FCR/FATARegulationmustberemoved.

Equal employment opportunitiesmustbegiven to FATApeople

asgiven to otherprovinces.

Incentivesfrom governmentmust beprovided to them.

Bring law and order situation in FATA.

Nomination in provincial assembly given to them.

RoyaltiesofWarsak damandTorkham tradegiven to them.

Reformsin land sector andGISimplementation.

Gasandother benefits to bringthem in national developmentscenario.

Buildingawarenessand aligningwith strategy.

Shiftingof industry and economicbenefitsmustbegiven to them.

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Exemptionsand incentivesallowed to them.

Giving incentives to them.

Committee arrangement.

Check andbalance.

Providingfuel assistancepayment.

Makingenergy efficiency improvement to low incomeresidence.

Goodcommunicationwith Tribal people.

Pursue thecustomers through Jirgasystem.

Proper team for collection of bill matters.

Internal rulesand regulation setting.

Improvement in qualityof infrastructureservices.

Enacting tariff mechanism thatcharge lesser amount for electricity usage.

8-Conclusion:

From the above data it is concluded that TESCO is taking a part in economic and social

development of Pakistan and continue to bring people of tribal areas from uneducated

culture towards new Pakistan and taking a part in making of a progressive Pakistan.

If sincere work is done for solution of this problem then it is sure that this problem will be

solved within a year. But it requires team work, Good strategic plan, Operational staff

competency, Full Security to employees, Table talk/Meeting with Tribal Jirga. Implement

rule by Governor KPK and so on.

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9-References:

Taimur Kurm &William HSanhelm,Culture integration and its Discontents.

Joanne Martin (2004), Organizational Culture.

Samuel Fankhase &Sladjana Tepic, Can poor consumer pay for energy &

water? An affordability analysis for transition country.

Maria Golden &Brian Mint, Theft &loss of electr icity.

Raissahe (2012), Electronic bills payment in Canada.

Majid Ali (2010), Reason of increase in electr icity rates in Pakistan.

Stefen Buzar (2007), The “Hidden” geographies of energy pover ty in post

socialism: Between institution and households.

CWPrice, Kpalm (2009), Utility policy: The impact of electr icity market

reform on consumers.

World summit for sustainable development (Sep 2002), JohannesburgS.A.

Mian Muhammad Nawaz Sharif P.Mof Pakistan, (April 2014) BAVOforum

China: Speech on Energy cr isis and Asian Affairs.

RStephan and William J, USAID, Aregional review of social safety net

approaches in suppor t of energy sector reforms.

Muhammad Shah Bacha,Accounts Officer , TESCOHayatabad, Peshawar.

Interview of Senior Tr ibal Jirga member of Afr idi Caste (Name Hidden).

www.livescience.com

www.businessdictionary.com www.TESCO.org.pk www.wikipedia.com News papers include DAWN,The NEWS,Daily Mashriq and Daily AAJ.

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