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Archive for August, 1990

Privately energizing the power sector-II

(This is the SECOND and CONCLUDING article of the series).

Economic recession looms like a Sword of Damocles over Third World countries because of increased fuel prices due to the Iraq-Kuwait situation. Successive governments have taken up the expansion of our electricity sector on a priority basis. Private sector was invited, in a sea change of heart, to invest in the sacred cow domain of power projects, then Junejo government hoping to bring in financial equity and expertise, foreign and local, to develop the country’s energy potential. The projects envisaged being (1) outside the ambit of public utilities e.g being too small (2) co-generation, combined generation electricity and thermal resources and (3) use of cheaper indigenous sources like low heating value gas, household garbage, low grade coal, etc. According to Syed Shaban Alam (THE NATION, Aug 19, 1990), our electricity consumption is extremely meagre, 300 kw per year per capita in comparison to 12,000 kw in the US and 6,000 kw in Europe and Japan. Intended to attract investment, the US AID-funded Private Power Cell (PPC) functions as a one-window operation to assist potential investors in modulating their proposals to fit in with the requirements of the country, e.g costs may be widely different in installation of the same project in USA or Europe. Attempted over-invoicing can be given a short shrift by competitive bidding in material procurement stage, stipulated mandatory by all international finance institutions working through the energy window in the NDFC, manned by very credible financial and engineering personnel. Credible foreign companies will hardly come forward with half-serious proposals. Numerous officials roam the world to invite foreign investment, seminars are held in London and New York, an FPCCI delegation is on its way to Tokyo shortly, a very rosy picture being painted about prospects in Pakistan. When the potential investors come to Pakistan, they are wined and dined, led through the official channels and invited to risk their money in Pakistan but once the entrepreneurs take that decision, bureaucracy goes into the second stage of its Dr Jekyl and Mr Hyde-act, officials are usually found travelling (1) abroad (2) to Karachi and/or (3) elsewhere in the country, if available in Islamabad, then they are “too” busy for a meeting. Investors from as far away as New York are left kicking their heels in sheer frustration. When a meeting is arranged with the intercession of the Embassy of the investor concerned, the bureaucracy is a study in sheer obduracy. Punctuated by lip-service exhortations of welcoming investment, the fear of God is driven into the potential investors by the raising of numerous inane Catch-22 objections. Documentation is scornfully sneered at, local sponsor/representatives are either studiously ignored or looked down upon as if they are the scum of the earth. The situation is turned on its head, the entrepreneurs who were invited to come, even enticed to come, now become the supplicants to a “monarch”. They persist with fading hope, drawn deeper into the web of the bureaucrats. This drama is usually staged to set them up to part with money and favours, sometimes it is just sheer cussedness to satisfy their egos without corrupt expectations. And we expect Pakistan to be a haven for foreign investment? The potential entrepreneur has to have a thick hide and no self-respect.

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Privately energizing the power sector

The country is facing a serious crisis with respect to perennial shortages of electricity, no respite in the near future likely. While the common man’s life may be disrupted by frequent loadshedding, of greater importance is the adverse impact on agriculture and industry, an unfortunate cycle leading to economic despair. Though the government is committed to increasing the power output, the development of this crucial sector is not keeping pace with our socio-economic needs. It is ridiculous to speak about foreign or private investment in any sector of agriculture or industry unless we can give a reasonable assurance of uninterrupted provision of energy, therefore it stands to reason that the maximum attention of the government should be directed towards increasing electricity generation on a priority basis concentrating on hydel power and those based on fossil fuels available locally. In the long-term nuclear power stations as well as solar and wind energy must be brought into the power mainstream.

Water and Power Development Authority (WAPDA) was conceived and brilliantly modelled on the Tennessee Valley Authority (TVA). Whatever else may be said about errant bureaucracy, by the building of the two massive earth-filled Dams, Mangla and Tarbela, not only are large caches of water saved for use by agriculture at the right time but cheap electricity (Hydel Power) is made available to the national economy without recurring cost of fossil fuels inherent in other forms. At the same time a massive Transmission and Distribution network has spread over the country’s grid, given the fact that the vast WAPDA bureaucracy actually works is remarkable by itself.

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Farewell to Camelot

With her first speech to the nation as Prime Minister, Ms Benazir struck a combative discordant note, not in keeping with the realities of the split mandate given by the electorate, in the euphoria of her ascent to power, all was quickly forgotten. With a confidence belying her inexperience in the corridors of administration, the new Prime Minister moved quickly to establish her authority. In the hope that manna from Heaven was to be distributed, hundreds and thousands of the party faithfuls trekked into Islamabad, many were accommodated, many more were disappointed, most took it well, some took it ill. Youth and loyalty to the Party were the hallmarks for selection, symbolized by Ms Benazir herself, some wags even started calling her Cabinet the Under-19 team. Very few of her father’s original stalwarts made it into the corridors of power, some had been defeated in the elections, most were found sinecures as Advisors, expected to be seen, not heard (or heard of). As is usual with youthful exuberance, the air was pregnant with excitement, Camelot had come to Islamabad, the wide world beckoned in front of PPP, wide-ranging reformation was the idealistic cry of the hour.

Ms Benazir’s reign can be divided into two periods, each lasting 300 days or so. In the first period, Ms Benazir tried to come to grips with the various national problems, she turned her attention to the economy on a priority basis, her scorecard reflects B Plus for effort, B for actual performance, not bad given the circumstances. Her economic handlers operated a tight fiscal policy, kept strict monetary control, inflation was kept generally within respectable limits. Her newly incepted Board of Investment (BOI) spurred investment, foreign entrepreneurs still remained somewhat shy with domestic credit not really available, sanctions may have outstripped reality but no matter, the willingness to encourage private investment was refreshing, reflected in the reversal of the cornerstone of PPP philosophy, nationalisation, to that of privatisation. The business community was by and large satisfied with her rhetoric, liberal policies reinforced her promises positively. Till very late in her incumbency, business persevered with the love-fest vis-a-vis the Federal Government.

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Structuring grass-roots democracy

Most problems affecting humanity today have economic overtones of some kind. Military power of the western nations ensured control of the world’s raw material reserves and transportation thereof through sealanes to their industrial cities, education and technology sustained their economic supremacy. The free enterprise system has contributed to unfettered development, Adam Smith rediscovered, two centuries after death, as the new found rave idol of the Soviets in the face of their disintegrating Soviet model, in shambles mainly because of economic inadequacies.

Pakistan is one of few among third world countries having all the necessary ingredients for economic boom, abundant raw material, self-autarky in food production and rich in human resources. Instead of the level of economic prosperity enjoyed by some of the other countries of Asia, notably Japan and the four Tigers, South Korea, Taiwan, Hong Kong and Singapore, even countries like Malaysia, Indonesia, Philippines, Thailand have left us far behind. One can understand the oil-boosted prosperity of the countries of the Middle East, but failure in accomplishing economic amelioration of the lot of our masses is a sorry commentary on the commitment of our political hierarchy in establishing sound economic priorities and/or seeing them through into implementation, their performance truly atrocious because of an inadequate and inefficient administration structure at the grass-roots level.

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Iraq makes its move: A clear and present danger

“Clear and Present Danger” is the title used by Tom Clancy for his techno-thriller about Colombia and drug trafficking, actually it is a phrase borrowed from an eminent judge of the United States Supreme Court, Oliver Wendell Holmes, Jr. With its unprovoked and swift military takeover of Kuwait, Iraq’s display of military muscle for its economic and hegemonistic ambitions indicates a clear and present danger to regional and world peace. Given that Kuwait had bankrolled Iraq upto US$ 15 billion in grants and easy credits in its war against Iran, this is the stuff of rank ingratitude and outright greed. With the Iraqi track record what it is since the Baath Party first came to power three decades or so ago, the move was not entirely unexpected, only the timing was a surprise, the pretext, stealing of oil by Kuwait was as believable as the “attack” on Germany by Poland, providing for the “reason” for swift German retaliation, net result World War II.

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