The PML-N government was swept to power in 2013 after successfully highlighting the PPP-led coalition government's appalling performance in terms of provision of basic utilities particularly electricity and the numerous multi-billion dollar scams associated with the party's top leadership that surfaced during 2008-13. In addition, PML-N strengthened the general perception that Nawaz Sharif had an experienced team with the capacity to resolve all outstanding issues.
Perhaps the most apparent failure of the PPP government in its five-year term, which was successfully exploited by the PML-N during the run up to elections 2013, was the double whammy in the party's handling of severe electricity shortages or so it was perceived by the general public: (i) raising electricity tariff, which partly reflected an unprecedented rise in the international price of oil (peaking at over 140 dollars per barrel) coupled with the decision to go an International Monetary Fund (IMF) programme (a necessity given the inherited unsustainable deficit) that disabled the government from extending high subsidies required to keep prices low. Poor governance of the sector as indicated by around 500 billion rupee circular debt also contributed to high prices; and; (ii) allegations of flawed contracts at best or massive corruption at worst in the award of the rental power projects. The man who has since rejoined the Peoples Party namely Faisal Saleh Hayat popularised the epithet Raja Rental for Raja Parvez Ashraf the then Minister for Water and Power. And what sealed the public impression that all was not well with the rental power projects was the third party audit report that was carried out on the insistence of the then Finance Minister Shaukat Tarin. This report noted that Pakistan's capacity generation is near 21000 MW, however actual supply is less than half (especially during the summer months when demand rises) and that the transmission capacity is limited to 15000MW at best. The state run generation companies (Gencos) are old with extremely low efficiency rates and are fully mobilised only when street protests get violent; the Independent Power Producers (IPPs) use furnace oil to generate electricity which implies that a rise in its international price would make our electricity price prohibitive. Hydel generation, the cheapest, fluctuates based on availability of water.
So what has the Sharif administration done so far to resolve the energy crisis? Instead of getting sector experts to determine the best and the cheapest way to resolve the crisis which would have required a revisit of several good studies gathering dust in the Ministry of Water and Power the party stalwarts, with preconceived notions of the best way forward, decided that increasing generation through mega projects, irrespective of the borrowing cost, would resolve the crisis once and for all. Hydel, the cheapest energy source, became the focus of the Sharif administration and ignored were two disturbing but well-known facts. First, as per an IMF report, Pakistan's capita annual water availability has dropped alarmingly and against a dismal supply of 191 million acre feet (MAF), the demand for water is projected to escalate to 274 MAF by 2025, leading to a deficit of 83 MAF; the report ranked Pakistan as the world's fourth highest rate of water user and the third most water-stressed country. And in this context it is relevant to note that as per the Economic Survey 2016-17 "during July-March fiscal year 2017 although installed capacity increased to 25100MW from 22900MW during the corresponding period of last year, however there was a decline in generation as it remained 85,206 GW/h during July-March fiscal year 2017 compared to 101,970 GW/h during July-March fiscal year 2016." The decline the Survey points out was due to a reduction in hydel share of total generation - from 34 to 30 percent - due to weather conditions and less flow in rivers - factors that would unfortunately become even more relevant with time. Additionally, Narendra Modi's India has already made some veiled and some not so veiled threats that the World Bank-brokered Indus Water Treaty would be used to the fullest extent, which allows India a percentage of water from the Western rivers; there is a danger of the treaty being eventually violated by Modi if his biased version of events/facts is considered credible by the international community - a version that is gathering prominence as India emerges as an economic power in its own right. In this context it is relevant to be reminded of the cable by the US Ambassador to India revealed in WikiLeaks a decade or so ago that India and Pakistan may go to war on water.
And second, there has been no improvement in power sector governance - a claim substantiated by the fact that load shedding hours during the PPP-tenure peaked at between 6500MW to 7000MW and in recent days, reports indicate a shortfall of 7000MW. The circular debt is slightly higher than during the PPP government though the price of electricity is much cheaper - a reflection of external factors notably the lower oil price in the international market which incidentally has not once been fully passed onto consumers during the past four years and taxes on these imports remain the major source of revenue for the government. Be that as it may, the setting of electricity price to ensure full cost recovery is a standard normal IMF condition and the PPP and PML-N administrations were both bound by this as the two went on a Fund programme the same year that they took over power - 2008 and 2013.
The initial focus of the Sharif administration was to embarrass the Zardari-led government's performance, which accounts for the disastrous focus on Nandipur. Strengthening the transmission network continues to not be the focus - it was not for the PPP and it is not for the PML-N. The Matiari-Lahore transmission line, being constructed under the China Pakistan Economic Corridor (CPEC) envisaging 550.65 kilometres in Punjab province, and 314.9 kilometres in Sindh to transmit energy from the coal power plants still under construction, is expected to be completed between 36 and 42 months, and is unlikely to be completed before the next elections.
Ishaq Dar was misinformed when he claimed that an oil price rise this year accounted for a billion dollar rise in the oil import bill; however, the Economic Survey reveals that the rise is mainly due to a rise in quantity of petroleum products imported with a 38 percent rise in crude oil imports alone.
The Sharif brothers were also extremely successful in highlighting the Swiss case and the footage of the cigar smoking then Pakistan Ambassador to Switzerland waiting for the files to be loaded in the boot of his car reinforced the general perception that the then President Zardari misused state organs to suppress all evidence of his Swiss accounts. The Panama case involves a lot more money than the Swiss cases did and the Sharif defense that the family was rich, a claim that Bhutto family can also make, may certainly disenchant thousands who voted for him in 2013.
The begging bowl will be broken was yet another mantra of the PML-N before the 2013 elections. Dar has increased borrowing from multilaterals mainly at market rates, concessional lending is limited as it is linked to performance and Pakistan's performance in utilisation of loans is poor. However what is extremely disturbing is the fact that Dar has engaged heavily in borrowing from the foreign commercial banking sector (the total borrowed this year to date is over 2 billion dollars) and issues Eurobonds and sukuk at rates well above the market rates that he terms equity and fails to mention it as debt equity. The lower debt service payments compared to previous years are through (i) an overvalued rupee; and (ii) reducing the interest on products of national savings centre which are procured by the pensioners, the middle to lower middle income earners.
To conclude, the Sharif administration has clearly not delivered on its promises but what is relevant in Pakistan's political context is whether there is another contender for power in the centre. And it is here that Panama papers take an importance as few believe that other than in Sindh the PPP will win enough seats to form a government. The daily verbal abuse heaped on Imran Khan by select federal ministers as well as the Prime Minister's media team and, in recent months, by the Sharifs themselves indicate that the party stalwarts consider the Pakistan Tehreek-e-Insaf (PTI) as the major political threat for 2018 elections with the battleground in Punjab. Whether PTI will come up to their expectations, time will tell, but the PML-N's four years in government have given the electorate, especially in cities, a desire for change just as this desire was manifest in 2008 and 2013 elections and seized by savvy politicians.