Not all that long ago, there were many discussions about selling surplus electricity to India. Already, that moment seems an eternity away. With relentless population growth and economic expansion, there is a growing and entirely predictable shortfall between the supply and demand of energy.
The consequences of this crisis is available in the shape of the recent riots in Karachi, when suffering citizens finally lost their temper and took to the streets to protest the unending power cuts. But apart from discomfort and lost tempers, there is a direct economic cost of this growing gap. According to economist Shahid Javed Burki, the projected shortfall will result in a lower GDP per capita rise. The reduction in earning per head directly attributable to power availability will be $225 by 2020.
In his paper called ‘The Weight of History: Pakistan’s Energy Problems’, Burki gives an overview of our past and present performance in the energy sector, and discusses what needs to be done. Published in “Fuelling the Future”, a compilation of papers published by the Woodrow Wilson International Centre, Burki’s article focuses on the failure of political will to undertake the policies necessary to meet our energy requirements:
“During this period of economic stabilisation [1999-2002], the IMF forced constraints on the public sector, and the share of public sector development program (PSDP) declined to a historic low of two per cent of GDP – it had reached almost 11 per cent under Zulfikar Ali Bhutto (1971-77). Energy, and electric power in particular, was one sector that suffered.”
When Benazir Bhutto’s government approved a number of independent power projects (IPPs) during her second stint, there was a hue and cry over alleged corruption. Opponents vociferously denounced the deals. Nawaz Sharif, who followed BB into office, made it his business to hound the IPPs. But imagine life without them: today, they supply over 30 per cent of Pakistan’s electricity.
And after the way HUBCO was hassled by the general in charge of Pakistan’s Water and Power Development Authority (WAPDA), foreign interest in Pakistan’s energy sector declined. According to Burki:“His [Nawaz Sharif’s] government … harassed the IPPs and brought an end to the flow of foreign direct investment into the energy sector…”
Recently there was some fresh investment in the shape of the Karachi Electricity Supply Corporation (KESC) sale, but with WAPDA unwilling or unable to meet its commitments to supply power to the Karachi power company, the recently privatised firm is in deep trouble.
This summer, there was a period when the gap between supply and demand touched 3,000 megawatts (MW). Things will only get worse. According to the Planning Commission, while supply equalled demand in 2005, the shortfall will grow to 3.2 million tons of oil (TOE) equivalent in 2010, and 21.5 TOE in 2020. We all know that the claim that supply and demand were in balance two years ago is false. But then our planners in the air-conditioned premises of Islamabad’s secretariat were never in touch with reality.
A major reason for this situation is that Musharraf has failed to add a single megawatt to the national grid during his eight years in power. Despite his endless talk about the need for dams, the hype has remained limited to feasibility reports and seminars. In the private sector, potential investors have been put off by the unrealistically low tariff offered by WAPDA. At the same time, civil servants have been reluctant to take the initiative for fear of being targeted by NAB, the national accountability bureau that has much to answer for.