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Behold a Trojan Horse

As far back as 1989 it was clear Hubco would be an albatross around Pakistan’s neck but we are a glutton for punishment and we persisted with this scam. When eventually confronted, Hubco countered with an extremely effective propaganda campaign, holding the country’s financial liquidity hostage and virtually putting all future investment in Pakistan under jeopardy. In this no-win situation we should be thankful we managed to cut our losses and accept, however unpalatable, Hubco’s terms for surrender. With a Trojan Horse or two as a trump card up their sleeve, Hubco’s investors can be excused for laughing all the way to their private banks. Someone someday will do an exhaustive case study to include those who, viz (1) conceived this monstrosity both in (a) Pakistan and (b) abroad, to include government and non-government functionaries, international financial technocrats, consultants, etc (3) nurtured the project, engineers of all kind, bureaucrats, politicians etc (4) were the investors, Japanese (later replaced by Saudis), British, Singaporean, US, etc (5) built it, mainly construction companies, equipment manufacturers, etc (6) then profited by it, mainly almost all of the aforementioned (7) took part in the cover-up and sustaining of the scam, including WAPDA personnel (8) acted as accessories to a combination of media and diplomatic blackmail designed to force us to swallow the bitter pill and (9) lastly, whose children’s grandchildren will continue paying through their nose for the next millennium, long after Hubco is a pile of rubble and rusted scrap?

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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.

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De-energising Power Rates

Over the past few months it has become quite apparent that Water & Power Development Authority (WAPDA) and Karachi Electric Supply Corporation Ltd. (KESC) are in a serious debt crisis. This was brought into sharp focus by the brutal murder of MD KESC Shahid Hamid several months ago by what seems clear was a professional hit team, the reason being that the late MD was delving deeper into the various irregularities that would have exposed quite a number of people. The explicit warning inherent in the gangland-type assassination was thus made quite apparent to others in similar situations. Needless to say the warning has been heeded to the detriment to the interests of the people of Pakistan even by the small dedicated band of people determined to eradicate corruption. The government has been concentrating on the Independent Power Projects (IPPs) as the major reason for the power rate crisis, that in fact was the final straw that broke the camel’s back.

Let us take the straws that count and list them under two heads, viz. (1) generation and (2) distribution of electricity and then work our way back to some of the more scandalous IPPs. Whether the generation-mode is hydel or hydrocarbon, the machinery has been over-priced. While it did not make much of a difference in hydel-generated electricity, the price padding in hydrocarbon fuel – generation machinery has kept on escalating along with the price of fuel. At least 2 or 3 WAPDA chiefs made enough money to live out lives far in excess of their basic known means, to add to this the power plants are being run quite inefficiently thereby giving us unfavourable power to price ratio. With transmission losses quite high, the basic cost of bringing electricity to the doorstep of the consumer is quite high. At the consumer’s bus-bar a completely different mafia takes over, the meter readers and inspectors. The categories of consumers are (1) industrial (2) commercial (3) domestic urban (4) agriculture (5) government departments and (6) domestic rural. Without almost any exception almost all industrial and domestic consumers cheat. One simple litmus test are the ice factories where it is comparatively easy to calculate possible consumption against the product made. For the ice presently coming out of each factory, four to five times or more greater voltage has to be used. Obviously the ice factory owner would sell at a profit which means that at least 90% of the electricity is not paid for. On a lesser scale so do commercial users since it is easy to calculate the load factor because of the air conditioners and other appliances against the energy that is paid for, the same is true on a commensurately lesser scale for domestic urban users! Government departments do not cheat, they simply do not pay their bills, at least on time. The agricultural consumer not only cheat, they hardly pay their electricity bills whether it be for tubewells or domestic use. Some areas do not pay electricity bills at all e.g. the rural areas of Balochistan and the Tribal Territories, protesting vociferously any attempt to make them do so.

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World bank and the Corruption Stakes

President James Wolfensohn is visiting Pakistan, his mission is to evaluate personally the whole gamut of Pakistan’s economic situation as well as examine WB assistance and cooperation in the health, education and other sectors.

In a recent report WB has noted with satisfaction the progress made in Pakistan’s power sector “where private investment of $5 billion has been committed.” On the other hand, the report simultaneously identifies areas of corruption, inefficiency, bureaucracy and politicization, with the Government and public sector organizations as the major hurdles. While James Wolfensohn is a welcome activist against corruption, the question one would like to ask is what has been the role of World Bank in the recent past in this regard? Or to be put more bluntly, have they effectively played a somewhat similar role as have the Pakistani functionaries engaged in lining their pockets or even being supportive of the acts of some of the so-called investors/contractors?

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A season of devastation

The recent floods in Pakistan were reported to be the most devastating in the country’s history. It was preceded by a few weeks by unprecedented rains in Sindh, rendering the Province a disaster area even before the later calamity. The brunt of human and material cost for the season’s havoc and mayhem was thus borne both by the Punjab and Sindh, the only silver lining of sorts being that Sindh, to an extent, escaped the full brunt of the later floods and thus from double jeopardy. The overall collateral damage has been a grievous blow to the economy of the country, while the short-term residual effects will retard the progress of the economy.

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