Have the people risen?
Rashed Rahman
Arriving on the back of backbreaking inflation across the board, the increased tariff in electricity bills has proved the proverbial last straw. Citizens, joined if not led by traders, have been protesting the inflated electricity bills through the length and breadth of the country. Fortunately, despite the seething anger in the protestors’ hearts, barring one or two incidents of DISCOs offices and personnel being subjected to rough treatment, the protests have been peaceful. And impressive. One has only to glance at the pictures in the media of city after city resembling the quiet of a graveyard as far as its usually bustling, bursting at the seams markets are concerned.
The protesters’ demands make eminent sense. Electricity tariffs have gone through the roof, taxes imposed through electricity bills now constitute 40 percent of the total, and the popular perception is, backed by expert studies, that consumers are being made to pay through the nose for long standing misgovernance, inefficiency (exorbitant line losses, electricity theft, etc), and, the crowning glory – installed capacity payments to the Independent Power Producers (IPPs) enshrined in their contracts irrespective of how much electricity is actually generated and bought from them. Those railing against free electricity quotas for power workers and other privileged sections should reflect on the matter to gain some perspective. Even if all the free electricity quotas are withdrawn (through monetisation, etc), this will only result in a relatively paltry saving of Rs 24 billion per annum. Contrast this with the estimated capacity charges expected for 2024 of Rs two trillion (Rs 1.3 trillion of this earmarked for idle power plants), and the true nature of the crisis will become apparent.
The power sector too has fallen prey (as has the industrial sector) post-1977 to the clamour for privatisation under our embrace (along with the world at large) of the neoliberal paradigm that militates against the public sector as inefficient, riddled with corruption, etc, as opposed to the new knight in shining armour: the invisible hand of the market. In Pakistan’s case though, the ‘invisible’ part does not apply since the results of this new fundamentalism in economic thought are transparently before us. Wholesale privatisation from General Ziaul Haq’s military regime onwards has resulted (with only a handful of exceptions) in the privatised industries being disposed off by selling the plant and machinery as scrap and using the land to develop real estate. This de-industrialisation process has continued since 1977, to the detriment of industrial progress since not a single large industry has come up in all these years.
The privatisation mantra has not spared the power sector either. WAPDA was reduced to managing hydel power and the distribution of electricity was handed over to DISCOs (Karachi Electric was privatised wholly). In the early 1990s, during the second Benazir Bhutto government, the undeniable power supply deficit, reflected in extensive load shedding, was sought to be overcome by inviting private power producers to set up generation plants with guaranteed capacity payments irrespective of the actual offtake of electricity. Critics who tried to draw attention to the adverse consequences of such guaranteed capacity payments irrespective of electricity offtake were fobbed off with the contention that Pakistan not being an investment destination of choice because of our internal and regional instability, there was no other way to attract private capital for the power sector. By 2007, because of the neglect of the changing supply and demand equation in the power sector by the General Pervez Musharraf military regime, load shedding returned with a vengeance. The solution, till 2015, was sought in a wholesale garage sale to IPPs, seemingly without any clear idea of likely demand over the mid- to long term. The result today is that installed capacity is at 40,000 MWs while the decrepit, rundown, neglected transmission system cannot handle more than 22,000 MWs at its peak. No effort followed the second IPPs surge with upgrading of the transmission network. Hence we are in the unenviable position today of having almost double excess installed capacity.
Ironically, as the ideas of environmental care and the replacement of fossil fuels by renewable energy sources took hold in the world in recent years, Pakistan too began (haltingly) to develop such alternative energy resources. We were already familiar with hydel, but now wind and, even perhaps more importantly, solar power began to excite the imagination of the powers that be. So much so that private solar power producers (including domestic) were incentivised by allowing them to sell their excess solar power generated to their respective DISCO through reverse metering. While on paper and as a concept the idea is very appealing (especially for a sun drenched country like ours), it had an unanticipated effect in our circumstances. For every unit of solar power sold to a DISCO by a private source, its demand from the IPPs is reduced. This means in effect that reverse metering solar power adds to the loss being incurred by the unjust capacity payments clause in the IPPs’ contracts. This cannot be described as anything but cutting off your nose to spite your face. Of such anomalies and contradictions is our governance chockful.
Citizens and traders have cried ‘Enough!’ and taken to the streets amidst strikes in the markets all over the country. The caretaker government now finds itself between a rock and a hard place. Its good intention to offer relief to consumers is dependent on the IMF’s go ahead. At the time of writing these lines, that go ahead was still awaited. Optimism on this score needs to be tempered by the track record and thinking of the IMF. If no relief (apart from the suggested staggering of charges) is available, will the people’s anger transform into civil disobedience or more according to some pundits? It is difficult to say but the lack of a political leadership for the protest movement, with a wider programme of necessary change, suggests the protests may not be sustainable. But, the jury is still out.
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