Money Matters

Power surplus

Money Matters
By Zeeshan Haider
Mon, 12, 17

Inaugurating the first unit of the1,300-megwatt coal-fired power plant at Port Qasim in Karachi, Prime Minister Shahid Khaqan Abbasi broke a good news to the nation that the country is now surplus in power-generation.

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Inaugurating the first unit of the1,300-megwatt coal-fired power plant at Port Qasim in Karachi, Prime Minister Shahid Khaqan Abbasi broke a good news to the nation that the country is now surplus in power-generation.

Many ordinary Pakistan while hearing this news might think that there would be no loadshedding in the country after attaining surplus power.

While it would be commendable job if this surplus power is used to end power shortages which have made life of the Pakistanis miserable for nearly a decade but we need to keep in mind that power generation has never been a problem in the current energy crisis faced by the country.

In fact, the country has had surplus electricity even in 2007 when the loadshedding reared its head for the first time.

The real issues afflicting our power sector are power theft, corruption, pilferage and poor recovery of dues by the major consumers.

When the present government came into power in 2013, the power cuts were at their worst with country facing loadshedding up to 18 to 20 hours a day during summer, sparking riots and attacks on the offices of power distribution companies by angry protestors in many parts of the country.

A few weeks after settling down, the government tried to activate full installed generation capacity by paying off entire circular debt of Rs480 billion in one go, launched crackdown on power pilferage and tried to recover power dues from provinces as well as big entities showing its seriousness to confront power crisis head on.

But after initial enthusiasm, all efforts were concentrated just only on increasing power generation capacity by installing new power plants, mainly under the China Pakistan Economic Corridor (CPEC) and all other endeavors were abandoned.

Resultantly, according to government’s own estimation until last month the circular debt stood at Rs390 billion while independent experts believe much more than this amount and they believe by the end of the tenure of the PML-N government it would be more than what it inherited from the previous government.

Over the past four years, the power cuts have been drastically reduced because of combination of reasons, including sharp decline in oil prices which brought down cost of thermal power generation to a large extent.

Moreover, gradual withdrawal of subsidies has eased burden on government coffers to a large extent as the load was passed on to consumers and that’s why it is generally complained that electricity prices in Pakistan are much higher than the neighbouring countries.

The government functionaries believe that power cost and charges would eventually be reduced through diversification in energy mix increasing power generation from hydro and other non-thermal sources. But Pakistan needs to take a holistic approach towards problems that afflict its power industry instead of adopting a piece meal approach to address symptoms instead of curing the actual causes.

The disputes with provinces over outstanding dues have largely been settled but recovery of dues from the big government departments has yet to be made in an effective manner.

Moreover, authorities need to launch an effective crackdown on pilferage as well as on power theft.

Replacement of old transmission lines is underway and it needs to be expedited as they are the major cause of power pilferage.

Rampant corruption in the power utilities is also a major problem which is adversely impacting their performance.

Privatization of power distribution and power transmission companies has also been a long overdue demand of the IMF as well as donor countries in order to improve their performance.

The present government has not made any significant progress in this regard and the privatization process has virtually been shelved after botched attempt to sale Pakistan International Airlines.

With less than an year left in the completion of the five year tenure of the present government, it is unlikely to take any major step towards addressing the main problems faced by the power sector and it’s all energies would be geared towards fulfilling the election promises of ending loadshedding in the country before elections.

It is heartening that the country has once again have electricity in surplus but the real challenge is whether we can now run the system in full capacity particularly in sizzling summer season when electricity demand hit its peak.

Though electricity demand drastically falls during winter, it has its own challenges. During winter, hydro power generation declines and now it is to be seen whether thermal generation as well as generation through other means could fully make up for shortfall caused by less hydel generation.

Energy crisis has been a major election stunt in 2008 as well as 2013 and many political pundits believed that it is one of the reasons that contributed to routing of PPP as well as pro-Musharraf parties in general election held in those years.

It will be interesting to see that now when the government is now claiming to have made the country power surplus whether it could cash on this claim during the upcoming general elections as political challenges faced by it seems to have overshadows its achievement.

Observers say, apart from energy crisis, the government seems to have devised a strategy to deal with other challenges on economic front like burgeoning fiscal and external account deficits in the remainder period of its tenure like raising of $2.5 billion through sukuk or Islamic bonds to avert balance of payment crisis and would leave it to the government to be formed after elections to deal with it.

But the most pressing challenges for the PML-N are on political front where its leader and ousted Prime Minister Nawaz Sharif’s as well as of his political successor and daughter, Maryam Nawaz’s political careers are at stake.

The PML-N may have done its homework to tell voters of its performance to address their problems during the election campaign but it is facing a daunting task to satisfy them over sensitive and explosive religious and political issues which may cause dissention and revolt within its ranks.

The resignation of Law Minister Zahid Hamid after army’s mediation has though ended the 22-day sit-in at Faizabad interchange in Islamabad by the newly found Tehrik-e-Labbaik group but political woes of the beleaguered PML-N are far from over.

The absence of over 50 treasury lawmakers from the National Assembly session that voted the bill re-installing Sharif as party head despite his disqualification from the Supreme Court and then growing voices of dissent in ruling party particularly in its Punjab base should be a cause of concern for the party leadership.

In view of these developments, the embattled PML-N leadership, on the one hand, needs to fulfill its populist promises and, on the send hand, has to face political brewing political challenges as it prepares for the general elections.

The run up to the general elections, therefore, is a big test for the PML-N to deal with these challenges.

The writer is senior journalist based in Islamabad