Unanimous NA move on power crisis

ISLAMABAD: After a six-day debate, the National Assembly unanimously decided on Monday to set up a special house committee to examine the causes of power shortages and recommend remedies even though the government said there were hardly any outages now after it tackled the recent crisis that provoked nationwide protests.

A motion adopted by the house on a proposal from the PML-N, to which the PPP agreed, authorised Speaker Fehmida Mirza to name the committee soon in a consensus that came despite bitter uproars over two unrelated matters and in a marked contrast to daily PML-N walkouts during the previous fives days of the debate and sit-in outside the presidency to protest against intense power cuts, or loadshedding, in the past week.

The day’s uproars were a controversial political role adopted by former Sindh home minister Zulfikar Ali Mirza over the affairs of Sindh province and allegations by the government-allied Muttahida Qaumi Movement of persecution of an estranged wife of a PML-N lawmaker and son of Punjab Chief Minister Shahbaz Sharif.

The speaker, who chaired the proceedings for the first time after absence for the past few days due to an official visit to Malaysia, kept her usual poise in the face of some highly critical remarks of two MQM members against Dr Mirza, her husband, who got support for his challenge to the MQM over the affairs of Sindh despite last week’s return of the party to the PPP-led coalition.

After Water and Power Minister Naveed Qamar, who asked for an early cut-off date for the recommendations of the special committee while winding up the debate with an explanation of a turnaround in power generation within days to over 14,000MW from a suddenly dropped level of 7,000MW and the government’s future plans, the speaker asked all parties in the house to give her names of their nominees for the body so it could present its report at the start of the next session of the house due to begin on Nov 14.

“Today we can say there is none (of), or hardly any power outages anywhere in the country,” the minister remarked while explaining the government’s handling of the situation blamed on a combination of problems that he said had been tackled with improvement in river inflows to hydro-electric dams, a partial payment of arrears worth Rs11 billion to two private power companies to ensure oil supplies to them and restart of two nuclear plants, one of which had tripped and other closed for refuelling.

But he made it clear the present relief was temporary and said there was still need to enhance capacity because the demand would rise to between 17,000-19,000MW in summer.

“All our problems have not gone away,” he said while warning against complacency, and noted what he called “lack of governance” within the power distribution companies, which he would have to fend for themselves with reformed managements after the planned dissolution of the Pakistan Electric Power Company in the next 10 to 15 days.

Among projects for the future, he cited the Diamer-Bhasha dam on the river Indus, whose foundation stone is due to be laid on Oct 18, encouragement of privately-run wind power projects, some of which he said should start generation within 18 months before the present government runs out its five-year term in 2013, and coal-fired projects to be run initially with imported coal and later with coal extracted from the Thar area in Sindh.

The implementation of all these projects and the ideas that the new house committee might come up with, he said, would help the country not only to close the present gap between supply and demand but also go beyond to see national growth “in leaps and bounds”.

Earlier, the MQM marked its return to the house after the absence of some days it took for a reconciliation with the PPP by sparking the first uproar of the day when its member Asif Hasnain accused the PML-N’s provincial government in Punjab of punishing what he described as an estranged wife of PML-N lawmaker Mohammad Hamza Shahbaz Sharif by instituting criminal proceedings against her and influencing an anti-terrorism court.

MQM parliamentary leader and Minister for Overseas Pakistanis Farooq Sattar added fuel to the fire by taking up the issue even more vociferously, and inviting more PML-N shouts, despite an advice from PPP chief whip and Religious Affairs Minister Khurshid Ahmed Shah to avoid raising members’ personal matters, before the speaker adjourned the house for Maghreb prayers.

PML-N parliamentary leader Sardar Mehtab, who led the protests from his party, was once heard saying “we don’t want to hear this ‘bakwas’ (foolish talk)” as he asked the chair to switch off Mr Sattar’s mike, which was done more than once.

Tempers on both sides seemed to have cooled down when the house reassembled after the break for prayers, but more was to come at the fag end of the sitting after a PML-N member, Shirin Arshad, asked why the government was not taking action on some charges made by Dr Mirza with an oath of the holy Quran, only to provoke an angry outburst from MQM’s Waseem Akhtar, who said the former minister should be arrested under the Maintenance of Public Order ordinance for allegedly threatening law and order in Karachi.

And after a member of the government-allied Awami National Party, Bushra Gohar, used some words of praise for Dr Mirza by saying he had substantiated his charges with some proofs and another PML-N member, Ms Qudsia Arshad, said “I salute Zulfikar Mirza”, another retort came from MQM back-bencher, Sajid Ahmed, who said “all those who tried to liquidate the MQM themselves perished and the MQM is still there”.

From the PPP benches, only veteran party parliamentarian Zafar Ali Shah expressed support for Dr Mirza by advising members against making allegations against persons who cannot respond in the house.

No remarks from either side were expunged before the house was adjourned until 5pm on Tuesday.

Source: http://www.dawn.com/2011/10/11/unanimous-na-move-on-power-crisis.html

ved) � h t � hb� rs, a Coptic priest said, while an AFP correspondent saw bodies with gunshot wounds at the hospital.

The grand imam of Al-Azhar, Ahmed Tayyeb, the Sunni religious head, called for crisis talks between Muslim and Christian leaders “in a bid to contain the crisis”, state television said.

Some commentators warned of civil religious strife, but others said the clashes were fuelled not only by sectarian strife but also by anger towards the security services and the military council which succeeded Mubarak.

Government-backed provocation was also blamed.

Users of social networking sites such as Twitter said the initial clashes outside the state television building on the Nile were provoked by “thugs” at the scene, while the broadcaster was accused of fanning anti-Coptic sentiment.

On Monday, the authorities announced the hanging of a man sentenced to death for shooting six Copts last year.

Copts complain of systematic discrimination, but since Mubarak’s fall, tensions have also mounted between the military – initially hailed for not siding with Mubarak – and groups which spearheaded the revolt.

Source: http://www.dawn.com/2011/10/11/egypt-probes-deadly-sectarian-clashes-first-victims-buried.html

An electrifying failure

An electrifying failure

THE acute power crisis gripping Pakistan’s cities, towns and villages is a colossal failure of governance. Given that it is estimated to cost three to four per cent of GDP a year in direct costs alone (such as output loss), larger than the estimated losses from terrorism, the power crisis is by far the biggest constraint facing the economy — and has been for three years, if not more.

However, its pernicious effects have spread far beyond the economy, as it tears into the social fabric and the daily routine of 20 million Pakistani households each and every unrelenting day (and night).

Despite delivering such massive suffering and exacting such a huge cost over a prolonged period, the inertia and criminal negligence displayed by the ‘awam dost’ government (the PPP and its allies) on an existential issue for millions of households beggars belief.

Scale
Different estimates of the economic loss caused by the energy crisis are fairly similar in magnitude — around three per cent of GDP per annum. Having being involved in the first of these (for the Economic Survey 2009-10), it was clear that we were operating with a conservative estimate since it was based on reported economic activity. Adjusting for the estimated size of the undocumented economy, the total economic loss is closer to four per cent of GDP a year — or, roughly a staggering Rs800bn every year. Following from this, the cumulative loss to the economy in terms of foregone value addition since 2008 amounts to a colossal Rs3tr.

The impact on jobs has been severe. Using the employment elasticity calculated by the Planning Commission, the ‘foregone’ GDP (the value of goods and services the economy would have otherwise generated) of almost 15 percentage points since 2008 translates into ‘lost jobs and employment opportunity equal to 4.1 million — equivalent to roughly 7.5 per cent of the labour force.

In addition to these direct and visible costs, the lingering and unaddressed energy crisis has introduced systemic risks for the budget, for the banking system — and for foreign investors. Having been associated with the board of one of the largest foreign investments in the country in the energy sector, I have seen first-hand the level of angst and frustration the circular debt has caused to leading foreign companies — and how it has not just put off new investment, but jeopardised existing investment.

Causes
While a number of factors have conspired to trip up the power sector in the past few days — the water situation, shutdown of Chashma, higher mean temperature, an intensification of circular debt — its basic and recurring cause is structural in nature.

A progressively heavier reliance on thermal generation, at a time of declining gas and water availability, has exposed power-generation companies to a huge shock to their cost structure — the price of imported fuel oil has rocketed from around Rs21,000 in 2008 to over Rs72,000 per metric ton currently. With electricity tariffs not keeping pace, and line losses rising, Pepco’s ability to pay fuel suppliers has been severely compromised. This shock has been transmitted along the line (PepcoÕIPPs, SSGC, SNGPLÕrefineries, OGDCL, PPL).

Power-sector experts had begun warning the previous government since 2003 of a looming energy crisis by around 2007 — to no avail. Not only was new generation capacity not added to the system — despite pursuing a professed ‘growth model’ of promoting consumerism in the country — new investment in upgrading the transmission and distribution network was also not accorded priority.

In fact, the economic team of the Musharraf government (Messrs Shaukat Aziz, Salman Shah and Ashfaque Hassan Khan) were so sold on consumerism as Pakistan’s deliverance that they diverted a precious and declining resource — natural gas — from the power sector to fuel private cars as CNG. In addition, to win popularity, the government froze power tariffs between 2003 and 2007, sounding the death knell for the financial viability of the sector.

Remedies
Howsoever intractable it may seem, the energy crisis has remedies, including solutions that will mitigate the suffering of electricity consumers in the very short run. Broadly, these fall under four categories:

1)    Making power generation cheaper — in the short run, making additional gas available by diversion from CNG, fertiliser and the domestic sector will be required;
2) Implementing a credible ‘energy conservation’ strategy (already prepared);
3) Improving governance:

a. Ensuring system losses on account of outright theft are reduced from current 15-17 per cent (Karachi’s MQM strongholds are reportedly top of the pile in non-payment, matching Fata);

b. Ensuring recovery of past dues (with the revival of the federal adjustor’s office that was set up in the Ministry of Finance to net off budget releases to non-paying government entities);

c. Expediting the corporate restructuring of the power sector (with the PM being the biggest stumbling block to bringing ‘clean boards’ since March 2010);

4) Moving towards a cost-recovery tariff

Such an approach was tabled by the prime minister’s Economic Advisory Council (EAC) in 2008, and again by experts in the ‘energy summit’ in April 2010. In both cases, the government has not followed up on recommendations of its own committees for over two years, compounding the severity of the problem. One reason is that implementing these recommendations have painful trade-offs, some of which could be politically difficult.

In conclusion, over two months ago, when I wrote in this newspaper that “the energy chain is close to collapse” due to the unresolved circular debt, a leading apologist of the government wrote in response that a sense of crisis was deliberately being manufactured. Hopefully, this idiotic and blinkered attitude will now be put to rest, and a sense of realism and urgency introduced in providing a modicum of electricity — if not governance.

The writer heads a macroeconomic consultancy based in Islamabad.

Source: http://www.dawn.com/2011/10/07/an-electrifying-failure.html