There was very little new the Minister of Water and Power, Musadik Malik, proposed in his presentation to the Federal Cabinet. His Caretaker Cabinet colleagues - new to the job - may have been astonished but we are not. For last five years: there has been very little progress on the power front. All that the previous government did was raise tariff and force Ministry of Finance to release funds to maximise flow of furnace oil and domestically produced natural gas to the power sector. What all this amounted to, was burning rupees (and dollars) to keep the riots off-the-street.
The brief overview, presented to the caretaker cabinet, of water and power sector is all old wine in a new bottle. It appears to be plugging of fresh numbers in a power point presentation by the Secretary Water and Power - unfortunately the rules of business debar the minister, no matter how knowledgeable the minister is on the subject - from articulating an argument through a presentation. In case of Malik, a well known consultant, the analysis expected of him would have been vastly different provided the minister had the time to research the causes and then come up with solutions. Therefore, the presentation is almost the same as was made by Nargis Sethi (the former Secretary in Water and Power and now Cabinet Secretary) to the cabinet in the previous government - improve liquidity, raise the tariff and lower the losses in Gencos and Pepcos. But the question that begs an answer from inquiring minds is how to do it.
It has been repeatedly stressed that there is a phenomenal loss in growth due to power shortages. A principled decision was taken when Dr Hafeez Sheikh joined the cabinet as Federal Advisor on Finance by President Zardari and PM Gilani to corporatize the power sector companies. Pakistan Business Council also offered to help out. An offer was made to President Zardari to induct directors from private sector on the boards of the power holding company owning the Gencos with the objective to prepare these Gencos for privatisation. However, the Directors from the private sector, inducted on the board - one by one - had to resign when they found that they were absolutely powerless with Managing Director Naveed Ismail 'calling the shots' at the behest of then Minister of Water and Power Naveed Qamar. Later, Naveed Ismail realised that Naveed Qamar was not the right person for the job. Therefore, he briefed the Defence Minister Ahmad Mukhtar who made a power point presentation to the President at Bilawal House, Karachi, promising to overcome the obstacles and improve the power situation. This resulted in swapping of portfolios. Mukhtar proved to be worse than Qamar and PPP workers ransacked his office when their requests could not be accommodated. Once the government finished its tenure, the bureaucrats wanted to recoup their powers and got chairman Wapda Syed Raghib Abbas to become the power sector boss. However, they quickly beat a hasty retreat when creditors like the ADP and the World Bank threatened to recall their loans given to restructure the power sector - as giving control back to Wapda boss amounted to rolling back the promised reforms. The loud protest from Wapda Unions is the proof of the pudding.
An elected government will have to face the ugly situation when it is in office and has to deal with the labour unions. KESC's private sector had to follow the 'two steps forward and one step back' approach and still is not out of the woods. We expected Minister Malik (with his experience of consulting in the Middle East) to take a look at the tariff structure prevailing in Pakistan. An across-the-board subsidy in domestic tariff also provides help to the rich households who do not deserve it. Isolating areas which do not pay their bills on time is needed. Giving natural gas to captive power plants as well as to poorly-run government-owned Gencos at the cost of fertiliser does not make any greater sense. The approach towards ensuring continuation of gas supply to CNG stations at the cost the export industry suffers, does not make any sense either.
Nothing is expected to change under the caretakers with an ex-judge prime minister. Malik should not be shocked at indecision after the presentation, except to obtain release of more funds. Judges write judgements and do not give decisions. Cabinet ministers in the caretaker Cabinet, with the couple of exceptions, come from the same tribal culture as do their predecessors. Both Malik and Petroleum Minister Sohail Wajahat face the same dilemma. Their ministerial colleagues, as well as mafias which benefit from theft and are used to patronage will continue to press for CNG supply to their owner/relatives due to tribal attitudes. Unless we start penalising theft sternly and run Gencos and Discos as businesses there will be no material change. Same applies to government-managed companies under the Ministry of Petroleum and Natural Resources. Government-managed businesses which have been traditionally used as employment exchanges for political patronage have to be restructured beginning with their right-sizing. They need to be manned by experienced professionals with the authority to hire and fire. A Board of Directors chosen from reputed professionals like lawyers, chartered accountants and business savvy individuals need to be placed at the helm to set targets and hold the management accountable. These government entities need to get their line ministries off their backs and placed under the privatisation division. The Board of Directors needs to give a clear mandate to managements under them to take all steps that are needed to get their balance sheet into black from red within a given timeframe. Funds to restructure and right-size them with golden handshake for surplus staff needs to be provided as was done in the case of government-owned banks. The way of governance of this sector has to change. For this to happen requires the right kind of political mindset. Both PML (N) and PTI are promising this, while PPP is laying the blame on the part for short-circuiting the Benazir government plan with some element of truth in it. Let us hope the election results would significantly lead to lessen our power woes.