Power crisis measures

Rather than addressing the structural issues plaguing the power sector, the government of Pakistan has once again decided that the best way to manage the gap between demand and supply for electricity is to artificially reduce demand. The government does not seem to have noticed that this strategy — beyond obviously being flawed even in concept — did not work the last time it was tried and seems to have even less efficacy now. Consider some of the measures being proposed: shorter working hours and a two-day weekend. Just last year, these measures were introduced as a means of dealing with the summer peak season of power consumption. By the government’s highly optimistic estimates, these measures can save no more than 500 megawatts of electricity consumption. This is a miniscule proportion of the estimated 9,000 MW shortfall recently witnessed when Pakistan State Oil stopped supplying the power companies with furnace oil. Not only does this policy do nothing to meaningfully address the problem, it acts by reducing economic activity in the country.

The third element of the strategy announced by the Council on Common Interest (CCI) — collecting more than Rs300 billion in outstanding electricity bills — has more promise. Given the fact that the majority of these bills, about Rs155 billion, are owed by the federal and provincial governments themselves, they may want to start off by paying their own dues. Over the longer run, however, the government needs to fundamentally reform the power sector. The special cabinet committee on the energy crisis has reportedly come up with a formula for doing so, which involves ending the unaffordable subsidies, followed by a restructuring and eventual privatisation of the power generation and distribution companies. This should be followed through, because failure to reform may result in lights going out, all over Pakistan, for an uncomfortably long time.

Published in The Express Tribune, October 14^th, 2011.