ISLAMABAD: The new energy minister said on Thursday that he aims to shift country's energy mix in three years, laying out an ambitious plan to tackle crippling power shortages that have devastated the economy and sparked violent protests, but warned that there would be a lot of "pain", before the "patient" can be up and rinning.
Blackouts lasting more than half a day in some areas have infuriated many Pakistanis, prompting the new prime minister, Nawaz Sharif, to declare tackling the crisis one of his top priorities.
Minister for water and power Khawaja Asif, told Reuters that his team would reduce Pakistan's reliance on expensive oil imports, build new power plants and pay off a chain of debt choking one of the most inefficient energy sectors in the world.
As part of the new plan, Asif said the government would announce
significant cuts to subsidised tariffs for powerful industries in the next few days and boost investment to upgrade ageing transmission lines and power generation facilities.
"The whole thing is a nightmare," said Asif, describing the current state of his sector.
"We are going for a surgery. There will be a lot of pain. A lot of discomfort. But once the patient is up and about, running, then he will say that the pain was worthwhile."
Asif, seen as a pro-market technocrat, served as the petroleum minister in 2008 and was chairman of the privatisation commission in a previous Sharif cabinet in the 1990s.
His plan, due to be unveiled next week, is set to be Pakistan's boldest attempt in over a decade to tackle persistent power cuts that have stunted economic growth in a country already plagued by sectarian violence, poverty and corruption.
But critics have questioned just how far Sharif will be prepared to go to overhaul an important sector criss-crossed by decades-long alliances, industry loyalties and lobby groups watching each other's backs.
Asif said his first step was to plug a Rs500 billion ($5 billion) financing hole, known as 'circular debt' - a vicious cycle of unpaid bills running through the entire power-generation chain - and to reduce the length of power cuts.
"The elimination of loadshedding (power cuts) completely will take place in three years, God willing," he said.
State owned power companies are notoriously inefficient. Many influential families refuse to pay their bills while the poor often cannot afford to pay.
The government sells power below the cost of production but pays subsidies late or not at all. Plants cannot afford fuel. As a result, Pakistan has lost an estimated Rs5 billion in the last five years, a loss it can ill-afford as it struggles to revive its moribund economy and reduce its budget deficit.
The government had already paid $3 billion of the circular debt in its first 40 days in office and plans to pay off the rest by the first week of August, Asif said.
"At the moment we need to get rid of this debt situation," he said. "If we don't do that, it will start piling up again."
In the longer term, he said Pakistan would move from relying on expensive imported oil to hydroelectric, coal and gas-based power to reduce the costs of generation.
"Our goal is to change the energy mix of our country," Asif said. "New generation capacity should be based on cheaper fuel."
For this, at least 10 hydroelectric power plants are in the pipeline, which Asif predicts will come online by 2016.
New projects also include a Chinese-financed wind power plant near the second city of Karachi, solar energy projects in Sharif's home province of Punjab and plans to import liquefied natural gas via a new terminal from 2014.
"Generation can be taken over by the private sector and distribution should be also done by the private sector. The government should gradually get out of this business," said Asif.
"We will increase the tariff in the coming days. Bigger consumers, they will have ... no subsidy. But we will protect the domestic consumers," he said, referring to individual households.
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Minister for water and power Khawaja Asif should be offically rechristend +++++++++++++++++++++++++++++++++++++++++++++++++ as Minister for Loadshedding till he is able to solve the problems.
@naeem khan Manhattan,Ks: Well its more of Saudi pressure instead of US pressure.
Minister and Goverment's attitude is casual. I do not see any sense of urgency. It does not feel like new government has sworn in after recent elections !
Qatar gas will be worst than circular debt. Iran gas is the answer
You need man like Mustafa Kamal to solve energy crisis in Pakistan. Who can work day and night to fix the load shedding.
“The elimination of load shedding (power cuts) completely will take place in three years, God willing,” he said. We have heard this before, does he posses a magic wand that will just do the trick. He talks about expensive oil imports and wants to switch to hydroelectric power but what about the existing power plants. This government does not even mention the Iran-Pakistan gas pipe line any more, Pakistan needs Iranian gas and it could be utilized in the power Stations instead of expensive oil. Did they succumb to the US pressure too and don't look after Pakistan's interests. Is there any leadership in Pakistan who could stand up for the nation's interests instead of being dictated by foreign countries.
I bet not less than 30 years or never. .........!!!!
sound like a pan. Good luck PMLN
The energy crisis won't be resolved until 2021 atleast. "3 years" are only for the mild satisfaction of the people and also coz that's what Nawaz and Shahbaz promised in their election campaign. The formula is very simple actually. If you have the money then there is no loadshedding. The problem is cutting the cost of electricity mainly produced by furnace oil, that would be resolved if the infrastructure shifts from oil to hydro. AND THAT's why its going to take atleast 8 years to build dams and such.
Children will become boys and boys will become Men.
"As a result, Pakistan has lost an estimated Rs5 billion in the last five years, " PKR 5bn rupees.... is wrong = US$ 5bn
Imran Khan would have been better. Because he has a jadoo ki chari and he would have solved all our problems without any pain in 90 days.
With PLM-N, first 3 months then 6 months, then more time, more time and more time and now 3 years, wait till next year. Oh we the Pakistanis voted for them ... so why complain ..... voted for the pain
Remove subsidies from small consumers as well. Get rid of the 'free' electricity for your PM, CM etc. Cut down on theft which will drive down the cost anyway thereby preventing the cost per unit to rise despite removing subsidies. But hey! If we actually did that, God forbid it might help the country.
I would like to give the new government benefit of doubt but load shedding will only increase. We cannot even meet current requirements let alone requirements 3 years hence. And having more hydropower in 3 years is another joke. You can convert oil to gas in a year or two but certainly not set up hydro power plants in 3.
At this stage this is not good enough. The decission to set up oil based units was another government's decission ( why ? ) this clearly was a nation crippling decission and it would be in place to name names, at least, if you are incapable of punishing the guilty.