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Is There Any Economic Agenda for Elections-2018?

The preparations for general elections-2018 in Pakistan are in full swing. Yet, there is absolutely no debate about the critical issues which the nation is facing and the modus operandai to tackle them. The country’s main political parties, barring an odd, have not even announced their manifesto and there is no economic agenda to discuss.

Common Pakistani are troubled by power outages, scarcity of the water and mis-governance. However, political parties and mainstream media of Pakistan are busy on the discussions over non-issues and conspiracy theories.  Regrettably, these elections appear to be more like a tussle within an oligarchy or political dynasty.

To generate economic growth and end poverty many countries are succeeding in bringing power to more and more people. However, in these efforts, Pakistan has barely kept pace with rest of the world.

Pakistani households is spending approximately Rs 50 billion on UPS and battery chargers alone. Around 60% of Pakistani households have some form of UPS as a backup for selected appliances during power cuts/ load shedding.  Backup power sources are a makeshift arrangement, both wasteful and inefficient.

The government of Nawaz Sharif, immediately after assuming power, came up with policy decisions to pay around half a trillion rupees (exactly $3 billion) to energy companies to end this problem once and for all. Pakistan’s government paid Rs 330 billion in cash to independent power plants (IPPs) to clear outstanding debt. It also issued bonds to pay off liabilities pertaining to state-owned companies such as exploration and production firms and oil and gas marketing entities.

Although the previous government has been making tall claims of overcoming energy crisis, persistent power shortage continue to haunt Pakistan.  The situation has rather worsen for circular debt. Now energy sector’s circular debt is estimated to have gone beyond a record Rs 922 billion mark by December 2017.

Experts blame many of Pakistan’s problems on the “circular debt,” which mainly arises because of the poor recovery of receivables by the distribution companies. It is estimated that for every 100 units of electricity provided by a distribution company, it gets paid for 30. Of the remaining 70 units, nearly 40 are thieved and wasted out and the bills for the remaining 30 go to long-term receivables.

Corrupt utility executives and workers contribute to this dismal state. It is a classic case of misgovernance, corruption and lack of political will to recover the cost of power provided to industries and masses.

According to World Energy Outlook (Survey-2017), 1/3 of total Pakistan’s population, either live without access to electricity or has to suffer over 12 hours of daily load-shedding. Similarly, 2/3 of the population is without natural gas and rely on wood, crop waste, dung, and other biomass to cook and heat their homes. Fatih Birol, the chief economist at the International Energy Agency, says lack of access to electricity affects “health, well-being and income.”

The World Bank opines that unless any country addresses the problem of ‘energy poverty’, other efforts at economic development are bound to fail. A 2011 article in TIME magazine called energy poverty “the worst kind of poverty”. In 2013, World Bank Vice President Rachel Kyte said,

“Access to energy is absolutely fundamental in the struggle against poverty,” “It is energy that lights the lamp that lets you do your homework, that keeps the heat on in a hospital, that lights the small businesses where most people work. Without energy, there is no economic growth, there is no dynamism, and there is no opportunity.”

As per Dawn the leading newspaper of Pakistan, the average shortfall in the electricity sector in Pakistan was 7000 Mega Watts in May 2018, and in the same period deficiency of natural gas was nearly four billion cubic feet per day (BCFD). It is obvious that not only the household but the Pakistan industries are in real crisis.

Power outages are slowing down the pace of economic activity and causing public unrest with prolonged outages of electricity and gas. Few academicians view a direct link between energy crisis to extreme poverty and intolerant attitudes of the people.

The production in some key industries has fallen to nearly 50 per cent and so is the wages of its employees. Worst affected is the fertilizer industry, which faces interruptions to its gas supply and forced closures. Pakistan has the capacity to produce more than one million tons in exportable surplus urea, yet the country has imported 5 million metric ton fertilizer worth $ 2.2 billion in last three years. This is constantly eroding the country’s foreign exchange reserves.

Pakistan urgently needs to make some strategic decisions and change the national energy strategy. To overcome the power shortage, as first step power theft be checked and recovery of bills improved. Since the department is in the loss; free use of electricity should be immediately discontinued for all legislators and WAPDA officials/employees. This will immediately and substantially boost payments.

As a medium-term policy, old transmission lines need to be replaced and distribution system improved.  And in the long term focus should be to generate inexpensive and cleaner energy from hydro power, wind and solar resources. Where the cost of generation is still Rs 5/unit, compared to the bulk power purchase tariff of Rs70/unit being paid to IPPs, mostly being run on furnace oil.

Experts say Pakistan should focus on hydro generation as the country has the potential to produce 40,000MW by constructing small and midsize dams and run-of-the-river projects.

The China Pakistan Economic Corridor is another opportunity, Pakistan could turn to cleaner forms of energy.  China is a world leader in wind and solar installed renewable energy and therefore, be pursued to invest in modern and cleaner industries rather coal powered less efficient plants in Pakistan.

Political workers aside, People of Pakistan are tired of rhetoric and empty slogans. I am sure, this time will vote for their true representatives honest and competent people. Political parties should carefully workout their economic agenda and debate it at all forums less they are surprised on Election Day, 25th    July 2018.

Read More: Water Scarcity in Pakistan needs to be securitized

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