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Correcting Wapda’s Mechanism

First of all let us accept that Water and Power Development Authority (WAPDA) is in a holy mess, its running expenditures running far more than its receivables, its future commitments far exceeding its expectations. As far back as 1990 I had written in THE NATION, in “ENERGISING THE PRIVATE SECTOR”, quote “Over the years disparate fiefdoms have been carved out within WAPDA, down the line malfeasance of varying degree has become routine, from kickbacks in big projects at the higher levels to the connivance of the linemen in the stealing of electricity, residential or commercial. The revenue loss has ensured that WAPDA gives the impression in the public mind of an unmanageable loss-making colossus”. Unquote. While WAPDA has many ills, prime among them being corruption and inefficiency, the proverbial straw that broke the camel’s back were the rather one-sided agreements in favour of the Independent Power Producers (IPPs) that were concluded during the last PPP regime. However, all the governments since 1985 are to blame to some extent for one reason or the other. The present Nawaz Sharif government inherited the cumulative mess of the Benazir era. After months of wrangling, the Government of Pakistan (GOP) had come to an arrangement about reduction of tariffs, it transpired later that we would end up paying far more than the agreement we were scrapping, the IPPs were laughing themselves sick to the bank. Faced with such a situation Lt Gen Zulfikar, on deputation from the Pakistan Army’s Corps of Engineers, is believed to have prepared a Summary for the PM opposing the deal which was mid-wifed by the Ehtesab Bureau and then forced down the throat of the Ministry of Water and Power.

Why is WAPDA today in this increasing morass? Even ten years ago there were enough wrong signals to caution against HUBCO publicly in THE NATION, quote “Case history of the ambitious Hub River Xenel Project, proposed as a 1200 MW plant fired by furnace oil, to be based in Hub in Balochistan, adjacent to Karachi, is taken as a sorry example. A brilliant theoretical conception by some former employees (Kappal and Menandez making up the initials K&M) of Bechtel Corporation, the large US origin multi-national construction conglomerate (a nation within a nation) that gave the Reagan Administration two of its employees as senior Administration officials) Secretary of State George Schultz and Secretary of Defence Caspar Weinberger), the company has great political clout with countries of the Third World through excellent contacts in the World Bank, IMF and other international credit institutions. The practicality of the Xenel Project has been seriously eroded by (1) its sheer size (2) the changing faces of Principals in the Consortium (3) an extremely wrong choice of location and (4) the fact of the project being totally dependent upon imported furnace oil.” Unquote. In the process of proposing a refuse-derived fuel power-cum-desalination plant, my Principals in the USA had also engaged K&M Engineering who were also Consultants for the massive Hub River Project. My Principals did this on “advice” from contacts within the World Bank about their experience and expertise, both with the World Bank and the concerned bureaucracy in Pakistan in the Ministry of Water and Power. During the course of the association with K&M, it soon became apparent that their request for a US 6.2 cents per Kwhr benchmark for the first few years, reverting in stages to about US 4.7 cents per Kwhr after that period, was simply a camouflaged scam for exorbitant profits. In our case, that benchmark in the face of negligible fuel cost was designed to get us windfall profits. It also became apparent that this was not due to any great love for us but in order to keep the Hub River Project benchmark they were not going to allow us to opt for a lower tariff per kwhr. Obviously the profit was too much for anyone to stomach so our project was reduced to a “filibuster” delay after delay on one pretext or the other, it fits in why it was ultimately cancelled by the “powers that be”. If our benchmark of lower tariff had been registered, the scam being prepared for Pakistan in the future would have been discovered.
While the Ehtesab Bureau has done an excellent job in going after corruption with respect to Benazir Bhutto and spouse, they are way out of their mandate — and depth — in coercing the IPPs to sign new agreements. The Ehtesab Bureau (EB) should have simply established the corrupt practices by which the IPPs got sweetheart deals and having the evidence they could have been prosecuted under the laws of the land. Facing prosecution and, therefore, termination of contracts, the IPPs would have been conciliatory. However, by publicly asking the IPPs to lower the tariff or else face termination and closure, the EB has gone way past its mandate and opened up Pakistan to “blackmail” charges when the same could have been done by keeping quiet and simply completing their own investigation independently of WAPDA. On the other hand WAPDA and the Private Power Board should have looked at the agreement clause by clause and investigated the implementation on the ground. Obviously this would have many holes in it and that would have given GOP another weapon to deal with the concerned IPP. The end result would have been the same, the manner and the route used was faulty.

One cannot blame the decades of WAPDA’s inefficiency and corruption on the IPPs alone. A long time ago, WAPDA should have been broken up into smaller companies as is being done now with the Water Wing, the Power and Distribution Wings separated and these also broken up into independent companies under the Provinces with the Federal Government retaining an adequate equity. Inefficiency and corruption was inherent in WAPDA’s white elephant structure and composition, the only way to bring efficiency into such a monopoly is to decentralize, to control corruption one must make the units accountable. While reading of the domestic energy meters by soldiers is going to be an enormous exercise, the major pilferage of electricity is done by the industrial and commercial units and it is relatively easy to work out from the manufacturing costs backwards the consumption of electricity. If such an exercise is carried out honestly which is the objective of inducting the Army, the revenues may well double. However, the Army’s teams cannot be used forever and it is better to bring private sector innovation and expertise into the meter reading exercise. All the private companies presently involved in meter reading are simply fronts for WAPDA/KESC’s employees and as such are part of the mafia fostering corruption in this field. If the Army’s teams are not turned over soon, they will be no different from WAPDA/KESC’s meter readers in due course.

The Army’s use has to be rational and focused. Professor Stephen Leacock often wrote about “a hero who jumped on his horse and galloped off in all directions”. The PM is quite adept at this but he has to exercise restraint in frittering away a national resource, the Army’s inherent potential and effectiveness. The Army has to define its aim precisely, to go only for vital ground in the national cause. Given that WAPDA can be classified as vital ground, the Army’s hierarchy must work out how best to use the Army’s effectiveness without compromising their quality. By economising and concentrating effort where it can be a dominant factor in effecting change, not by getting involved in the mundane and the routine but to supervise WAPDA’s men in doing so, the Army can hold them accountable for inefficiency and corruption. WAPDA today is an imperfect mechanism, it can only be corrected by correcting the people responsible for running it and then running them effectively.


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