Energy crisis: Political will required to make ‘hard decisions’, says US official

Says Washington is committed to working with Islamabad.

WASHINGTON:

USAID’s Assistant to the Administrator for the Office of Pakistan and Afghanistan Affairs Alex Thier says political will is required from Pakistan’s government and opposition parties to make hard decisions on the country’s energy crisis.

Returning from a trip to Pakistan last week, the USAID representative told The Express Tribune that USAID programmes would have added 900 megawatts to the grid by early next year.

“Pakistan is only going to solve its energy crisis if it better governs the energy system,” said Thier, adding that this requires work on the transmission system’s losses, cracking down on theft, ensuring payment of electricity bills and an efficient load shedding management system.

“What really needs to happen is at the political level, that some of these changes, like making sure the electricity tariffs are equivalent to the costs because otherwise the circular debt problem is never going to go away. If Pakistan can’t generate electricity and basically can’t charge consumers for the electricity that it generates then the system is never going to reach a balance. But you can’t charge people more for energy if you don’t provide it consistently, so you need to improve the management and delivery of the system.”

Thier said the Pakistan government has made clear to the US that their number one development priority for Pakistan is Diamer-Bhasha Dam.

Thier says the US has committed to working with the Asian Development Bank and the government to carry out the necessary studies – feasibility, environmental, social safeguards, engineering and financing.

“The financing plan is deeply tied to these questions of energy reform. The financing plan basically has to say that is there a business model by which this investment will be productive and will yield sufficient returns over time to pay back loans, to pay the private sector and so on. So all five of those feasibility studies need to be conducted in order to get the international financing to actually build the dam,” said Thier.

“The first thing the United States government is committed to do is assisting with these feasibility studies so we know that all of this can be done. Once that gets done then the financing picture will become clear.

We’ve also committed diplomatically that all of the challenges including the issue of disputed territory with India can be resolved and the project can move forward.”

Thier also said that he visited India during his trip to the region to get a sense of the problems and issues in trade between India and Pakistan.

In new programmes, USAID is spending $44 million on the Pakistan Private Investment Initiative, which aims to match private sector funds in investment in small to medium enterprises in Pakistan.

While highlighting that Pakistani mangoes had been exported to the US last year, Thier admitted that there were a number of challenges in the process. “The next level of investment in Pakistan is to make these products more easily exportable. If you have those facilities in Pakistan, it’ll become easier to export agricultural produce directly.”

He added that under the Kerry-Lugar-Berman legislation, the US has spent about $3.1 billion dollars of funding since 2009, of which $1 billion was spent on flood relief. They have asked Congress for about $800 million for Pakistan for fiscal year 2013, adding that they already have $1.6 billon that has already been appropriated.

Published in The Express Tribune, December 19^th, 2012.