Underpowered everywhere

Nothing is going to change, until there is a change in the culture that nurtures circular debt & grubby self-interest.

The government has passed the point at which it can palm off the blame for the disaster that is the entire power sector by blaming it all on their predecessors. The government of Nawaz Sharif has been in office over a year and it has completely failed to get a grip of multiple issues along the power chain — from generation to distribution to line-loss and theft and above all, the monster of circular debt. There was a much-trumpeted ‘retirement’ of circular debt several months ago, and for a matter of days there was a glimmer of light on the horizon. It was snuffed out in the next round of unpaid settlements at provincial, federal and international level. Simply put, Pakistan does not pay its bills, either those it owes itself internally as well as the debts accrued to foreign suppliers. A direct consequence of this is a loss of confidence by inward investors, China in particular, which has recently questioned by what mechanism the government will pay its bills if the Chinese go ahead with front-loading and then jointly operating a number of power-related projects.

The federal minister for water and power on July 14 admitted that once again circular debt has ballooned to Rs300 billion, that unannounced loadshedding was rife across the country and he invoked the assistance of the Deity in turning around what by now is a rolling disaster. The Rs480 billion that the government poured on the fires of circular debt was little more than an accelerant to the activities of the monster. The entire energy chain is now crippled by power theft and line losses as well as the chronic and debilitating unwillingness to pay bills in a timely manner.

The culture of non-payment (and not just of electricity bills, the problem infects the entire economy) negates any attempt to roll it back. Power defaulters are allowed to continue to have a supply because they are ‘influential’. On the rare occasions when supplies are interdicted to debtors there is the swift application of political pressure behind the scenes, and lo-and-behold the lights are quickly back on, the bills still unpaid.

Speaking at a press conference on July 14, the water and power minister looked distinctly underpowered himself. Two transformers in Lahore have ‘defaulted’ — shut down — with the loss of 1,500MW. Power generation is now down to 13,000MW whereas demand, in the height of the summer, is now between 19 and 20,000MW. In that scenario power managers have no choice but to resort to unannounced loadshedding as they try to prevent overload and damage — further damage — to the creaking and out-of-date system.

By way of mitigation the minister said that the government had been providing uninterrupted power to industries for the last 10 months, a statement that is at variance with those made by some of those industries, in particular steel. On the same day that Khawaja Asif was ‘looking heavenwards’ the Pakistan Steel Re-rolling Mills Association was warning of massive job losses and social unrest if the government did not restore their supplies.

The dim-bulbs that pass for managers across the power sector are matched for their lack of luminosity by their political masters, creating a circle of mediocrity that feeds on itself. Grand talk of short, medium and long-term plans does nothing to lighten the burden carried by the ordinary consumer. Self-serving mendacity is no solution, and the minister was, at least, good enough to admit that ‘it was not in the government’s control to remove deficiencies in the system’. So what is in the government’s power? Anything? Nothing? A few bits here and there? Unless and until there is a change in the culture that nurtures circular debt and grubby self-interest and enrichment, then nothing is going to change. This is self-inflicted damage; there is no foreign hand in the background. Fixable? Yes, but only via some heroic surgery.

Published in The Express Tribune, July 16^th, 2014.

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