Universal access to energy

Addressing a meeting convened by Pakistan's Permanent Mission to the United Nations (UN) Ambassador Masood Khan called on the international community to set a new target: universal access to energy. He noted that around 800 million people living in South Asia out of a total of 1.6 billion do not have access to electricity; however, the UN Secretary General's Advisor on Energy Elizabeth Thomson advised mainstreaming access to energy with other sectors including health, water, food and women empowerment. This is good advice as viewing any sector in isolation, however critical from the point of view of the economy, is unlikely to get donor attention. And while multilaterals and bilaterals can and do support single sector objectives yet they invariably include the favourable impact of any project-specific assistance on the quality of life as an overarching objective.
Access to energy for all is not a Millennium Development Goal (MDG) which focused on social sectors development identified and approved by all 189 members of the United Nations, including Pakistan, though it certainly remains a major issue in Pakistan with energy shortages not only continuing to have major negative implications on national productivity and the rate of inflation but also on the quality of life of the general public. But the majority of the problems experienced by our energy sector are Pakistan-specific; this fact explains the detailed energy sector reform plans that are part of the 6.4 billion dollar Extended Fund Facility approved by the International Monetary Fund in August 2013. It is also relevant to note that the PPP-led coalition government's failure to implement energy reforms (as well as tax reforms) agreed under the 2008 Stand-By Arrangement with the IMF led to the suspension of the programme in 2010 with two tranches remaining undisbursed.
The question is what is the incumbent government doing to resolve our unique energy crisis? Federal Finance Minister Ishaq Dar cleared the inter-circular debt of around 300 billion rupees in June of last year, thereby enabling the generating companies to operate at an optimum level. However, reports indicate that the debt has resurfaced and is around 220 billion rupees. The government is also engaged in fast tracking energy projects that it inherited as well as new projects (Private Power Infrastructure Board recently approved 2630 MW projects) and is relying on donor support, particularly Chinese support, to increase generating capacity, which has inflationary implications. Critics argue that it would have been preferable for the government to retire half the circular debt and to use the remaining amount for infrastructure projects. And the government has identified LNG imports from Qatar and gas from Turkmenistan and Iran to meet the existing shortfall; however, imports from these potential sources remain hostage to geopolitics.
The government is committed to increasing receivables and has proposed cutting the amount due at source (with both Sindh and Khyber Pakhtunkhwa opposing the idea) and reducing supply to areas where receivables are poor. Reports indicate that bill collection has declined further during the first seven months of the current year to only 86.3 percent in comparison to 93.6 percent in the comparable period last year. This in total terms implies a rise in receivables of 80 billion rupees and it is private sector default which has risen by 44 billion rupees.
There are other major problems with the energy sector and the Finance Minister has committed to the IMF under the EFF to rationalise subsidies, sign performance contracts with discos, enhance the administrative capacity of Nepra by reducing the base tariff determination from 8 to 10 months to less than 5 months and commercialise and corporatize Wapda - a decision that accounts for strike action by Wapda staff. These are all politically challenging decisions and one can only hope that unlike its predecessors the incumbent government can deliver on its commitments.