Nawaz is not simply asking power companies how much they have stuck in circular debt: he is matching their figures against numbers that the party has collected from other sources. PHOTO: AFP/ FILE
KARACHI:
Across the country, the smart-phones of high-ranking engineers and energy sector corporate executives are buzzing with e-mails, texts or phone calls, all emanating from one place: Raiwind. All of them are getting the same message: the prime minister-elect would like to interview you to be part of the team to revamp the state-owned part of the energy sector.
Even before he has been formally sworn in as prime minister, Nawaz Sharif and his team appear to have begun to implement what appears to be a highly detailed plan to solve Pakistan’s energy crisis, according to sources familiar with the matter. The victorious Pakistan Muslim League Nawaz has a week-by-week plan on measures that their government will take in trying to fulfill their single biggest electoral promise: getting the lights back on.
“The new government is going to be ruthless in its management of all the public-sector energy companies,” said Zafar Iqbal Sobani, who was CEO of Hub Power Company until a couple of weeks ago. “Expect to see many people summarily fired from these organisations as well as the ministry of water and power. After all, if he is seen as removing incompetent management of the power sector, who will complain?”
The PML-N appears to have done its homework with respect to the power sector. Over the past week, the party’s senior leadership has met with the CEOs of virtually all privately owned power generation companies in a bid to gauge the exact levels of circular debt in the energy sector.
According to sources familiar with the matter, Nawaz is not simply asking them how much they have stuck in circular debt: he is matching their figures against numbers that the party has collected from other sources, suggesting a degree of thoroughness in research.
“Circular debt is currently in the range of Rs500 billion. If the government can get that down by even 60-70% with a long-term loan from Saudi Arabia or even by issuing treasury bonds, that should be enough to get about 3,000 megawatts of idle power generation capacity back online, which would reduce loadshedding by half,” said Sobani. “That would fulfill the immediate campaign promise to reduce power outages while also buying time to put in place long-term reforms.”
The headhunting for new management of the state-owned power generation and distribution companies is one element of that multi-stage strategy.
In the first stage, the Nawaz government will just want to get the power plants going, all of them, regardless of their levels of efficiency, just to get the confidence of the people in their plan.
In the second stage, the state-owned power companies will get new management teams, and will see a wholesale sacking of large segments of their staff. The new managements will crack down on things like fuel theft and supplying electricity to people who have not paid their bills, as well as power theft. They are expected to invest in improving the efficiency of the machinery by conducting long-neglected repairs.
The idea behind this phase, expected to last between six months and a year, is to get the power sector as it currently exists to perform at maximum efficiency to reduce circular debt accumulation and the need for subsidies.
Having thus built up its credibility, the Nawaz administration is then expected to launch the third phase to further reduce the need for subsidies: increasing power tariffs while simultaneously investing in cheaper sources of electricity. State-owned power companies are expected to invest in hydroelectric power generation, in the hopes of spurring more private sector firms to set up run-of-the-river hydropower plants.
Private sector companies will likely be pressured to invest in converting away from their oil-fired power plants to coal-fired turbines. First in line for coal conversion is likely to be the Nishat Group-owned AES Lalpir.
This phase is expected to last between two-and-a-half and three years. The financing for this phase is likely to come from the Chinese engineering and construction companies that will likely get the contracts for the coal-conversions. “Western firms, and western finance institutions no longer finance coal-fired power plants owing to their negative environmental impact,” said Sobani.
In the final stage, the Nawaz administration is expected to seal the benefits of this proposed transformation by privatising what they hope by then will be a highly profitable state-owned energy sector. The removal of state ownership is hoped to remove the temptation for future governments from trying to implement populist measures at the expense of the energy sector.
Published in The Express Tribune, May 28th, 2013.
COMMENTS (43)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
That's how our experienced and mature Leader gives an interview;
Host: What is your policy on economy? Leader: Aaan ooon that is a very good question. We are going to work hard on economy. We will deliver this time.
Host: But sir what is your POLICY? Leader: Yes, you asked a very valid question. Policy is very important thing. We have a solid policy too.
Host: Will you please explain your policy? Leader: Yes I was just coming to that, will you let me complete?
Host: Sorry sir, please go ahead Leader: Yes our policy will be very detailed and thoroughly reserched. No other party will have this policy
Host: But sir what is the policyyyyyyy? Leader: I am telling you, this nation will never forget this policy. It is a policy which is composed of several policies. Each other policy will have many sub-policies and every sub-policy is on a week by week basis. (Dil he dil main, actually none of our policies will work if we don't get aid from Saudia and if we don't cancel Pak-Iran Gas pipe line project)
Host: Baal nocheta hua walks out :) :)
if nawaz govt. solve the pakistan,s economic instibility, pickle circumstances, load shedding, and terrorism,the nawaz govt. will be completed the duration of five years.
my prayers are with the Nawaz administration.
Sure NS has a team to do that. He will deliver ...best of luck MNS ... i know ppl here are more thinking about their parties and likeness and dislikesness ..they like or not N will solve energy crisis ..I am damn sure about that
Look at number 12 in this list, Hopefully, they will get payments from everyone including ITTEFAQ FOUNDRIES. If PMLN can bring their own money back in Pakistan, this will boost confidence of everyone, otherwise no difference in PMLN and Zardari :(
If every reader or blogger gave just One advice of improving the power system, I think we would have enough advice on how to go about solving this problem. My advice for this problem and for many others would be cut down our birth rate. This will help in solving in the long term nearly all problems, Pakistan is beset with. What would be the use of increasing the power output when we know our birth rate is going to offset anything we are able to provide. This advice if implemented ( Big IF ) would solve housing, health, education, infrastructure, water, transport, food, power, employment, planning, nearly anything one can think of. Pakistani's should grow up and think for themselves, follow Bangladesh, Turkey, Malaysia, China, India, they all have strong long term programmes. We simply don't.
Please do not forget the KESC saga before privatization of state owned energy sector.
Well, a sort of relief.....!!! according to my point of view, loadsheding upto certain limit is acceptable, the thing to be considered on serious note is massive increase in consumption rate. hydro power plants project is the only remedy and if things will happen as per the proposed plan, In Sha Allah, seriously it would be the biggest achievement and I guess this would be more than enough for all opposition leaders n their supporters to understand that like many other mega projects including Motor way, Airports, Metro bus, Chashma Nuclear power plant, the credit goes to PML-N. Hopefully this time they would accept the fact and stop creating issues out of it.... Pakistan Zindabad.....!!! good luck
Sounds like a good plan, but it requires diligent and will, and this means the coming years belong to energy sector in stock market.
NS is risking everything, political career, public acceptence, confidence and 14 million plus votes, lets hope for the best.
To get elected, a politician will do anything, even the right thing (though as a last resort). It's simple, if NS cannot solve the energy crisis, he will be unceremoniously thrown out of power (prematurely, of course -- this is still Pakistan), and this time for good.
Well, Plan seems ok for short term. my concern is what is the plan for 2020 electricity requirement? the demand of electricity is increasing day by day. Moreover if you need economic stability than electricity is key, the Pakistan current economic situation is not good enough to wait for electricity solution for 3, 4 years. finally good luck for PLMN.
Amount of debt = Amount of electricity stolen or unpaid bills. If this is not fixed, the Saudi money will simply add to the debt...
Nawaz Sharif the PM designate is man on a mission to improve electric supply position in Pakistan. The job cannot be done overnight but make take a couple of years to achieve the complete objective and that would certainly give a big boost to country's economy besides providing tremendous relief to 20 crores people now reeling under intense heat. Its good to take inputs from the experts but more important to implement the plan made on the ground. The neighboring country India's Gujarat state with 6.5 crore population is the best case study of achieving an impossible task of improving electric supply whose conditions were quite similar in 2001 as Pakistan today. Gujarat is the only state in India which provides 24hrs supply to all cities, towns and villages and sells surplus electricity to four neighboring states. The state has since prospered economically and many big business houses including from abroad have set up industries here. However, the same was achieved by completely stopping mass electricity thefts and leakages which are much prevalent in Pakistan today. The state had set up special police stations to stop thefts and gave incentives to electricity board staff. This success story is available on net and must read for the future managers and technical staff who are earmarked for the energy plan enhancement in Pakistan.
I am from HAripur (KPK),belongs to Middle class family and in my colony(semi gov.) there is no load shedding from WAPDA.I am against it and I appeal to GOV. to take notice on it. because i cannot see whole Pakistan suffering from Soared power outage and me watching their protest on TV under a fan.
I could not help but smile at the enthusiasm of our learned writer ;with Phrases like " done his homework" "thoroughness in research" " highly detailed " etc. Crux of the matter is they will beg KSA to pay some of the circular debt which will hopefully reduce the load shedding . Rocket science eh? And as we know there is no such thing as free lunch in this world : in getting you out of this circular debt , KSA will have his own innocent little demands. we can expect furthur proliferation of already endemic "Madrassahs" and Jihadi out fits in Pakistan as a return favour.
Feels like getting over-ambitious - a hallmark of Sharif brothers. Looking at the severity of situation, the time frame set seems to be im-practicable. Apart from raising the production, they must equally concentrate on so-called line losses - which is alternate name to power theft. Epic center of this activity is Karachi and some known industrialists. Can they dare check on these two? A huge question mark !!!! However, my best wishes to the new government in their endavour to solev this gigantic problem.
Guys, give the man a chance. A year into his rule is the time to comment. Give him all your support for the sake of the Country and start paying your taxes and electricity bills. Without revenue being collected, there is no chance of a revival. Good Luck.
@Usman:
so if NS solves or improves the energy situtation, all the credit in your view would go to IK?
@abu sayed abu walid, with brothers as saudi's, ( how many Pakistani's have Saudi's decapitated???) rather have a single child family, and keep the "bonuses", oil, and all the rest to yourself. Thanks but no thanks.
Thinking, planning, wishing, talking, is one thing, doing, monitoring, delivering is something else Pakistani's by and large both public and their "leaders" do the former, no one does the latter.That is why after 65years we are still thinking, planning, wishing and talking. We do not know ourselves, others know us and know about us far better. Therefore just hand over this country to others, or simply suffer for the next 65 years.
Most probably now this may be said that energy crises shall be controlled in PML-N's regime because PML-N has seen PPP's the most worst and unexpected climax on May 11,2013.....
Seems to be realistic solutions hope they should implement plans with true spirit and sincerity. All the best.
i hope PML N has the political will to implement this plan.plan is really good but normally political parties hesitate to take tough steps in fear on loosing votes
thanks to the all mighty allah for nawaz sharif. thanks to the saudi arabia - best muslim brother in all middle east. true muslims! they are generous to give electricity. terrorism is only a bonus. thanks for both.
@idiot_gee: I think some people said the same thing when the Motorway was first proposed or when they were wishing that the Metro Bus Service would flop but look at both now. I have no doubt that the assembled team will be able to tackle the energy crisis and load shedding in a reasonable time frame. The fact that Nawaz Sharif and his team are already at work is a good omen for things to come!
One child policy is only solution towards betterment of Pakistan. Period
Mr Sartaj Aziz of PMLN has correctly diagnosed the problem of Loadshedding http://www.pakistantoday.com.pk/2013/04/23/comment/who-is-responsible-4/ A correct diagnosis resolves half of the problem and gives realistic solution to the other half of the problem. Good Luck PMLN and Pakistan!
So the sword is on the neck of salaried people.....!!!!
Questions that comes to mind is why could they not do it in Punjab while they had 5 years of provincial government. I know personally Shahbaz Sharif called the WAPDA staff in one of the villages in Dist. Sialkot and told them to start load shedding - because they did not do any load shedding/sharing as they had enough electricity. This is how they manipulated the condition to put it on Fed. Govt. to make them look bad and now suddenly everything will be fine and they will take credit for their plan. Let's see how far this works.
Thngos will go better Insahallha, Allah will help the new team seems sincere and determined, let us get rid of cheater, PVT stakeholders, they were alos part of the previous governmnet and did nothing for this counrty and peoole just made money, now the time has come they should be productive or leave the companies, very simple. To control power crisis is not possible but no body bothered ever, people rmained suffered and paid heavy BILLs.
PML-N has the most sincere & dedicated Leadership able to deliver Good Governance in Pakistan. All mega projects including Motorways, International airports @ Karachi and Lahore, Chashma Nuclear Power Plant (CHASHNUP), Ghazi Barotha Dam and making Pakistan the 7th Nuclear Power in the world are some of the great achievements of Mian Nawaz Sharif.
We hope & pray that he and his team works with the same enthusiasm, despite distracting trolls on social media, on the day of Youm-e-Takbeeer.
the country really needs this. Who ever gives it. I support khan sb but this energy crisis, who ever solves it, will have a lot of respect for him. the plan seems to be alright, though i dont want them creating a god damn industry out of it in the beginning, need structural, more long-term, solution for this, eventually!! Pakistan ZB
Chairman Wapda along with CEO of all state own Energy producing companies must be sacked and tried for their negligence in duties. And then go down level after level and purge all those negligent of their duties. They all are criminals and must be punished. If few thousand of these crooks will clean the system then so be it. There shouldn't be any tolerance for those who didn't perform and brought the whole nation to its knees.
If wishes were horses...
@Sheikh You seem to be a logical and patient PTI supporter. Out of curiosity, what do u think of NS's recent work? Do you think he's trying? Do you think he's on the right track and is sincere (with respect to solving the energy crisis)?
Just interested to know how a PTI supporter, who's logical and doesn't bash for the sake of bashing, is looking at all these developments, from the appointment of a honest and hardworking Principal secretary (who's the top bureaucrat) to the endless meetings of NS with experts.
And if pigs could fly...
I can almost taste the enthusiasm of the writer in this report, however implementing this will reqiire political will. From a political party that is happy to give the housing ministry to Maulana Fazal, I dont see that kind of political will coming anytime soon. . But this time PMLN will face a real, not a friendly opposition from PTI. That may pressure it to deliver on some of its promises.
Sounds excellent. PMLN need to make sure that theft in Sind, Baluchistan and FATA is brought to an end. Punjab is lowest in theft and it too should be curtailed. Everyone should pay for power consumed, including Judges, Establishment, Politicians, Bureaucrats, Utility Employees and anyone else getting beneficial tariff. Plus collecting overdue defaulted amount with 3x penalty will increase cash flow and curtail need to raise power tariff.
The plan looks impressive but it lacks credibility.....
How is Nawaz going to win votes if he sack state owned enterprise employees?? (will see)
How he can crack down on electricity theft when he himself stole electricity during his election campaign??? (Hypocrites, this part of policy is probably lip service)
indebting highly indebt economy.....God only know what will be next!!!!
By the way I pray that all his ideas work......May Allah Help you in your presumed efforts.
Lastly, I would like to add that the real theft of electricity is done by WAPDA officials who run everything in their house holds (multiple houses) on electricity without paying a paisa for it (on the other hand take bribes, alter meters and forgive bills of their well wishers - and causing immense loss to public owned companies)
Although I support Imran Khan, but if Nawaz Sharif is able to solve the electricity problem, I will have nothing but respect for him. Good luck PML-N, I pray that you are successful because Pakistan's progress is more important than individual success.