No light at tunnel’s end: Strapped for solutions, provinces to share shortage

The energy conference generates plenty of political amity, but no real solutions.

LAHORE/ KARACHI: The government appears to have only one solution to the crippling energy crisis that has threatened to shut down the entire economy: To actually shut down the economy.

That, at least, was the gist of the proposals that were agreed upon at the Second Energy Conference convened by Prime Minister Yousaf Raza Gilani in Lahore on Monday, and attended by the four chief ministers, the federal ministers for water and power, petroleum, and finance along with prominent politicians and businessmen.

Though the prime minister said that some proposals would be discussed with stakeholders before being implemented, hardly any of the measures agreed upon were new. Switching government offices to two weekly holidays during the summer, and closing down commercial areas after 8pm except on Saturdays have both been tried. Increasing the level of consumption below which consumers are considered “lifeline” and pay a nominal sum – from 50 kilowatt-hours to 100 kWh – was clearly a populist step.

About the only measure that was substantive and new was the decision to equitably share the burden of power outages between the provinces, an announcement that delighted the host of the gathering, Punjab Chief Minister Shahbaz Sharif.

“This decision will not only bring relief to Punjab but will also strengthen the federation,” he said. “We [Punjab] will be happy to share resources as we did during the 7th National Finance Commission award.”

In recent weeks, Shahbaz had been publicly lambasting the federal government for the manner in which the energy crisis has affected Punjab, which he felt was discriminatory. Shahbaz will now be able to walk away with at least some measure of a political victory, though Punjab’s shuttered factories are still far from getting a regular power supply.

The prime minister, for his part, appeared keen to allay Punjab’s grievances. The decision to hold the conference in Lahore appears to be part of that thought process. “I understand that Punjab has suffered massively in the past but now we will encourage and help Punjab build power plants. I will personally direct federal resources to help Punjab in this regard,” Gilani said.

Yet while the politics seemed to be working out rather nicely, the economics was howling in agony as the country’s elected leaders, with apparently straight faces, asked the business community to close down retail markets at 8 pm, which is normally peak sales time. What impact this might have on the country’s gross domestic product was a question that went unasked.

The retail and wholesale sector constitutes roughly 20% of the total economy, and employs one in every ten Pakistanis.

Prime Minister Gilani claimed that this measure – along with the others – would shave close to 700 megawatts, or about 3.4% off the expected peak summer demand of around 20,000 megawatts. The peak shortfall is typically close to 30% of demand levels and can reach as high as 50%. Similar claims of savings have not panned out to be true in previous years.

It was perhaps recognising the limited success the government has had in the past that the prime minister said that the government would no longer be experimenting with daylight savings time and instead simply change summer office timings to save energy.

On the core issues of reducing theft, improving the fuel mix of the national grid to cheaper sources of energy, and improving the overall efficiency of the system, the political leadership was mostly silent.

The prime minister said that Punjab has announced that it would clear arrears owed to Pepco, and requested other provinces and federal departments to also follow suit soon as possible – but no concrete undertaking was agreed upon.

The prime minister mentioned that the government would encourage the installation of prepaid electricity meters to discourage theft, distribute energy-saving light-bulbs to reduce consumption and register cases against people caught stealing electricity.

To his credit, however, the prime minister did make one announcement that was bold, considering that he comes from the Pakistan Peoples Party, which has its political base in Sindh. He suggested that gas would soon be shared amongst the provinces in an equitable manner, too, just like electricity had been decided upon.

Sindh has 71% of the country’s gas production and has a constitutionally guaranteed “right of first use” on it. As a result, during peak demand for gas in the winter, Punjab faces gas rationing and also has less gas for its thermal power plants. Punjab has been demanding an NFC-like formula for the distribution of gas, but Sindh has thus far refused to budge. Prime Minister Gilani appears to have only floated the idea, since he gave no timelines of when he might be able to accomplish this.

The prime minister pointed out that the government had increased the national power generation capacity by 3,400 megawatts (or about 17%) during their four years in office. The annual rate of increase in the demand for power, however, has been – by the prime minister’s own admission – between 7% and 8%, meaning that the demand-supply gap has continued to worsen under the current administration.

Published in The Express Tribune, April 10^th, 2012.