Power from Iran

It may be early days for optimism but news that the minister for water and power, Raja Pervaiz Ashraf, is visiting Iran to further discuss their offer to sell electricity to Pakistan is welcome. One hopes that the current administration will stand up to American pressure as national interest dictates that it do so.

The record does not look good. Hillary Clinton, the US Secretary of State, was recently in the country and quite forcefully communicated US opposition to Pakistan’s expanding commercial ties with Iran. While the US needs to keep the pressure up on the Iranian government it seems unreasonable for Pakistan to not do business with its own neighbours. After all, was it not an extraordinarily successful model of regional economic integration that was the linchpin of post-World War II European economic recovery?

The Iranian offer for electricity is particularly tempting at a time of chronic power shortages. The Iranians have indicated that they can offer competitive pricing for electricity. Given the dearth of options, Pakistan should take whatever it can get its hands on. However, we would recommend to the government that any power deal should also be accompanied by a quid pro quo with regard to trade. Perhaps an agreement allowing for freer access to Iranian markets for Pakistani goods might be in order.

There must, however, be a realisation that importing electricity from Iran is at best a stop-gap measure. In order to fully ensure that the power crisis ends permanently, the government must reduce its role in pricing and increase it in preventing power theft. There is money to be made in powering Pakistan and investors would be far more interested if theft could effectively be curbed. So while it is good that we are doing business with Iran, perhaps a little more attention at home would be appropriate.

Published in The Express Tribune, July 29^th, 2010.