ISLAMABAD: Washington in a recent report sees entrenched interests resisting policy reforms needed to transform the economy in Pakistan, and pointed out that political interference continues to hurt the energy sector, which in return has reduced the country’s economic growth by 3-4 percent over the last two years.
According to the quarterly progress and oversight report of the Office of Inspector General of the US (OIG), the effective governance, accountability and financial solvency of power sector institutions is critical to economic reforms but political interference continues to undermine the decision-making ability of power company managers and regulatory officials.
It added that senior managers at power companies and senior government officials at the Ministry of Water and Power are usually political appointees who spend less than two years in their positions.
According to the report, “If Pakistan does not implement fundamental reforms, assistance from the United Statesand other donors will have limited long-term benefits.”
The report said that nearly half of the Pakistani population lacks access to modern energy services. With diminished hydroelectric generation because of low water levels, rolling blackouts often last eight to 20 hours, constraining economic development and disrupting health, education and other services. This form of energy rationing will likely continue until the monsoon rains fill the reservoirs.
“Power shortages have serious implications,” the report said, and added that according to the Asian Development Bank, power and gas shortages had reduced economic growth by 3-4 percent over the last two years. In addition to stunting growth, persistent difficulties in the sector can be destabilising. In late June, anger over limited electrical supplies led to riots in which Pakistani government buildings were attacked and two deaths occurred.
“High subsidies, low tariff collection rates and distorted prices have discouraged private companies from investing in energy infrastructure and building additional capacity,” the report said, adding that the US government and other donors provide technical assistance to help the Pakistani government develop appropriate energy pricing, regulatory and privatisation policies and assist in implementing Pakistan’s energy reforms plan. In addition, the United States aims to increase electricity generation, decrease transmission losses and increase cost recovery by investing in selected energy infrastructure.
The report said that the USAID has nine energy programmes underway to meet the growing energy demands. It added that USAID’s programmes seek to help the Pakistani government supply hydropower through the completion of Gomal Zam and Satpara dams and the rehabilitation of Tarbela Dam. The USAID is also rehabilitating three thermal power stations.