Pakistan has seen an upsurge in electricity production in 2017. On April 19, the Bhikki power plant, situated near Sheikhupura came online, injecting 717MW into the national grid. A steam turbine is expected to be added in November, ramping up the plant’s output to 1180MW.
A month later, Prime Minister Nawaz Sharif inaugurated a coal-fired power plant in Sahiwal. It comprises of two units, each capable of generating 660MW of electricity. For now, one unit is operational while the second is expected to come online shortly. This plant is one of the key early harvest projects of the China-Pakistan Economic Corridor (CPEC).
The Federal Minister for Water and Power has proudly been touting this upsurge in electricity production on social media. On June 3, he tweeted that power generation was 19200MW as compared to 11952MW five years ago. And as the energy output increases, he makes sure to make it public.
But somehow this new power generation is not converting into lower power outages. On June 6, much of Lahore faced rampant power outages, ranging from 6 to 12 hours in many areas of the provincial capital. And the situation is equally grim across the country. There have been violent protests against power outages in Khyber Pakhtunkhwa (KP), which left two people dead and 11 injured. In Karachi, protestors burnt tyres and disrupted traffic for the same reason.
Ironically, the upsurge in power outages comes at a time when a large section of Pakistani society is busy observing the month of Ramzan. Not only that, the country is currently facing one of its most severe heat spells in recent history.
Experts that I’ve spoken to sing the same song. Pakistan’s electricity woes are not of generation, but more of finances and delivery. The government notified tariff for electricity is below the recovery rate, which is what the power producer needs, to not go into loss. To cover this deficit, the government did what governments do: announce a subsidy. However, for the last 12 months, this subsidy has not been paid.
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It was reported in May that the total circular debt currently stands at Rs401 billion, out of which the prime minister has ordered an immediate release of Rs104 billion. To put things into perspective, soon after coming into power, the PML-N had cleared circular debt worth Rs480 billion. Four years later, we’re nearly there again.
The government has now decided to acquire a loan worth Rs41 billion from commercial banks to partially retire the circular debt. The burden of this debt, it should be understood, will be passed on to the consumers, both of the principal amount borrowed as well as the interest.
For a very small section of Pakistani society, this won’t be a problem, as someone said to me, ‘I’ll pay whatever I have to, as long as I get electricity,’ but for a vast section of Pakistani society, it will create further pressure on the limited income they earn.
On the other hand, this partial retirement will provide a band aid on the financial problems of the power sector but the government continues to turn a blind eye to major structural problems that are a key factor in the continuing emergence of this problem.
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The circular debt trap Pakistan finds itself in, is, according to former finance minister Shaukat Tareen, because of the “inefficiency of DISCOs (to recover full amounts owed to them for electricity provided) and nonpayment of subsidies by the federal government”.
To Tareen, the fix is simple: end corruption at the Power distribution companies (DISCO’s) end. “People pay Rs2,000 under the table for a bill of Rs10,000,” he says. “At the very least, you have to privatise the collection so that the recovery of dues is complete.”
He adds that over a period of time, the government should reduce the cost of electricity so that there is no need for injection of subsidies at all.
With corruption and finance playing such a vital role to make the power mess we are currently in, the government blindly continues to invest its time and our money into generation capacity.
According to the government-run CPEC website, the following energy projects are expected to be completed by mid-2018.
2 x 660 (1320) MW Coal fired plant at Port Qasim, Karachi
50MW Hydro China Dawood Wind Farm at Gharo, Thatta
100MW UEP Wind Farm at Jhimpir, Thatta
50MW Sachal Wind Farm at Jhimpir, Thatta
By the time the next elections roll in, a total of 1520MW will be further added into the national grid. The latest demand and supply figures tweeted by Khawaja Asif give the following detail as at 8pm, on June 7:
How many hours of power outages this shortfall converts into, is anybody’s guess. But surely not what’s happening across the country at the moment.
It is also worth mentioning here that the Bhikki power plant, which was inaugurated by the Prime Minister in April, is currently not operational, due to some technical faults. Newspapers claim that the plant stopped contributing 660MW into the national grid at least a week ago. There has also been criticism that some of the recent power plants have been inaugurated prematurely, only for optics and political mileage, when in fact, their test runs and due diligence has not been completed.
The PML-N strolled into power on the back of a promise to rid Pakistan of loadshedding, once and for all. Throughout their tenure, their mantra has not changed; the dates may have a little, but the chorus is the same: we will deliver electricity.
‘The PML-N has only focused on two things: roads/motorways, and energy,” says political analyst Suhail Warraich. “If they are unable to deliver the energy component, they will have a serious setback.”
Warraich claims that the PML-N is currently in a fix whether to push for early elections or not. “If they do (go for early elections), there is a chance that the power projects will not be ready by then,” he says. At the same time, the current political happenings are also “costing them too much”.
For the PML-N, the focus right now is on survival. If they clear the JIT, they will somehow need to ensure that by the time elections roll in, there is electricity in most homes. If they don’t, it’s game over anyway.
Under these opaque circumstances, it is not beyond the realm of possibility to expect large portions of the circular debt to be repaid as the election season approaches. At the same time, if this debt is repaid by commercial loans whose burden will be passed on to the end consumer, which is us, will we be up in arms, like we are about the lack of electricity?
This is not a case of electricity at all costs, but more so electricity at an affordable cost.