The major irritant that has plagued the people of this country since the President Zardari-led government took over power in 2008 remains the energy crisis. This continuing crisis, political analysts as well as party loyalists unhesitatingly aver, may well be the factor that may lead the jiyalas not to cast their votes in the forthcoming elections; and may seriously compromise the President's strategy to win over non-PPPP electables or, as recent defections indicate, keep his own MNAs and MPAs from joining the PML (N).
The question that begs an answer is why has the government not been able to take effective measures to deal with the energy crisis given the fact that it may well be the single most potent factor that may impact on the political fortunes of the ruling party in the forthcoming elections? Is the government not aware of the problem? Does it not have a list of solutions required to be implemented? Prior to responding to these questions, it is relevant to acknowledge that the PPPP-led government inherited the power crisis which was a consequence of three major flawed Musharraf-era policies: (i) massive subsidies to the oil sector to keep prices down in spite of a rise in the international price of oil for political considerations; (ii) heavy annual outlay on inter-disco tariff differential (a form of subsidy) which essentially implied subsidising those government-owned and operated discos that were performing poorly. This negated the very objective of unbundling the power sector through establishing nine discos for different geographical locations; and (iii) the rise in the inter-circular debt that led to severe liquidity issues thereby compromising the ability of the generating companies to operate at capacity. It is unfortunate that barring (i) the two remaining flawed policies continue to be followed.
The government since it took over power in 2008 was fully aware of all the issues that plagued the power sector. This is indicated by clauses contained in the November 20, 2008 Letter of Intent (LoI) submitted by the government as a perquisite to the release of the 7.6 billion dollar Stand-By Arrangement (SBA) by the International Monetary Fund (IMF) and include: (i) the government's commitment to "reduce non-interest current expenditure by about 1.5 percentage points mainly through elimination of oil subsidies by December 2008 and electricity subsidies by June 2009". The LoI noted that petroleum prices were adjusted thrice since 2008 which led to the "complete elimination of petroleum subsidies." Electricity tariffs were adjusted by an average of 18 percent effective 5th September 2008 and the government committed to eliminating all tariff differential subsidies by end June 2009. Analysts refer to these policy measures as pre-SBA loan conditions; and (ii) LoI committed that "to achieve this objective, the average base tariff will be further increased during 2008/09 according to a schedule agreed with the World Bank by end December 2008 (structural benchmark) and the government will use fuel and other surcharges as necessary." Tariffs, all are agreed still do not reflect full cost recovery.
The Finance Minister (the fourth since 2008) lays the blame on the Minister for Water and Power (changed three times since 2008) for failing to implement the necessary reforms, and the Minister for Water and Power blames the Finance Minister for not releasing the amount necessary to enable PSO to pay for Letters of Credit (L/Cs) for import of fuel. And the most recent powerful Secretary of Water and Power, (holding several portfolios reflecting unprecedented political confidence in her) has been unable to ensure that power sector customers who routinely default on the payment of their bills, notably government departments, autonomous entities as well as influential private sector individuals clear their dues or to have their electricity supply cut. The result: an inter-circular debt that has peaked at over 400 billion rupees with the PSO threatening the government that until and unless it releases the amount that would cover the payment due for the L/Cs by the end of this month it would default internationally and the government's December instructions to ensure import of 22,000 tons of fuel daily would not be met leading to heavy loadshedding with obvious repercussions on the political fortunes of the incumbent government.
The government is fully aware of what it needs to do to resolve the power crisis and specific reforms have been identified by multilaterals (World Bank) and bilaterals (the US) that were approved by the government but not implemented. In September 2010, the US approved 29.49 million dollars for the power distribution programme scheduled to end in 2015 that included implementation of some critical reforms: (i) Operational audits conducted of eight power distribution companies, with the results presented to each company with a performance action plan; (ii) Training provided to more than 2,100 power distribution company staff in implementation of the performance action plan; (iii) Support provided to the Ministry of Water and Power to improve the governance and regulation of the country's power sector, strengthen the ministry's operational capacity, develop a National Power Plan, and introduce best practices in performance measurement, (iv) 727 capacitors installed on tubewell pumps, reducing the demand for electricity by 17.7 million kilowatt hours, valued at $1.96 million annually, (v) 265 MVAR of capacitor banks installed, reducing demand by 47 megawatts, valued at $18.3 million annually, (vi) 580 faulty meters replaced, resulting in a decrease in overall losses by 8.9 percent, valued at $328,000 annually, (vii) A consumer census programme initiated to identify the location of illegal connections and legal connections not properly billed, and (viii) 35 Pakistan power distribution company staff members sent to the United States and other countries for capacity-building.
In its own defence, the government continues to point out that the power crisis was an inherited problem, a defence that doesn't hold after five years in power. Initially, under the leadership of Raja Pervez Ashraf, the Water and Power Ministry insisted that the issue was one of inadequate generational capacity which could be resolved through rental power projects (RPPs) - a view that was not supported by the third party audit and subsequently declared null and void by the Supreme Court.
The government has repeatedly held extremely high-level meetings chaired by the Prime Minister with all the relevant ministers participating, who all belong to the PPPP, and all have bafflingly ended inconclusively. The most recent was just a few days ago. This shows that the PPPP's relevant federal ministers are simply not on the same page and it is totally mind-boggling as to why this issue continues to be ignored by the party leadership at great cost to national productivity and rising public discontent. To conclude, there simply does not appear to be any rational reason for the government's sustained inability to implement reforms with the objective of minimising loadshedding that would fuel productivity and ease voters' anger.
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