Privatization to save Pakistan’s power sector, says Miftah Ismail

KARACHI: Former finance minister Miftah Ismail said the power sector in Pakistan should move towards the privatisation in order to solve its long-standing issues.

Mr Ismail said this during a webinar titled: “Pakistan’s Power Policies—Ensuring Access and Affordability” on Wednesday. When asked if it would be difficult to do so, the former finance minister said it was a challenge but needed to be done nonetheless. He highlighted how there has been a governance failure for the past 30 years or so in Pakistan.

“We keep repeating the same things and hoping for better results but it won’t happen. So I believe we should move towards a multiple buyer and multiple seller system,” he said.

He pointed out that in 2014-15, NEPRA estimated the cost of installation of a gas plant at $700,000. “However, when we [the previous government] opened it up for bidding, the real figure came to around $550,000,” he said.

Mr Ismail spoke about how the government was incapable of handing problems of the power sector, saying that 12% of the electricity consumers in Pakistan were not even paying their bills and then the tribal areas had their own set of problems when it came to power accessibility.

Executive Director Aptma and former Member Energy at the Planning Commission, Shahid Sattar, referred to the Competitive Trading Bilateral Contracts Market  (CTBCM) initiative as a ‘façade’, saying that it will never encourage competition as it doesn’t have answers to improve power generation.

He slammed the revenue-based loadshedding model as well, which entails more loadshedding in areas where less revenues are collected from.

“I believe that is against the very spirit of the constitution,” he said, adding that the government must work and bring about measures to recover money rather than resort to loadshedding in areas where predominantly poor people lived.

“You should install prepaid meters and any subsidies you give must be passed on to the consumer similar to the Benazir Income Support Programme system,” he said, adding that there is no other way than to solve the power problems of the country.

He said that Pakistan’s products were no longer globally competitive, adding that the country’s exports were suffering and as a result, Pakistan’s “growth engine” was also stagnant.

Sattar also said that the government should “get out of” the power sector, adding that it is running a ‘façade’ when it creates boards in power institutions and falsely claims it is empowering them to make their own decisions.

“Take a look at Pepco or any other power institution, they are completely controlled by the government,” he said.

Sattar said that the government has, on more than one occasion, proven that it does not have the capability to deal with the intricacies of the power sector. “And as far as the CTBCM is concerned, it does not provide a solution to affordability or availability,” he said.

Saadia Qayyum, Energy Specialist at the World Bank, said that Pakistan’s coal plants were quite expensive compared to India which made affordability an issue. She said that the overreaching influence of the government and the ministry was creating problems for institutions such as NEPRA.

“We need to strengthen NEPRA’s capability,” she said, adding that at times governments do not notify NEPRA’s changes in tariffs due to political and other reasons.

Shahid Sattar said that NEPRA and OGRA have been unable to solve the country’s power and energy issues, adding that ever since NEPRA has been formed, Pakistan’s circular debt has worsened whereas OGRA never came up with measures that solved our energy crisis.

“People say the power sector is a ticking time bomb,” said Shahid Sattar. “It isn’t. It is a ticking atom bomb,” he added.

Hina Aslam, Associate Research Fellow at the SDPI Pakistan, stressed on the need for reforms in institutions to bring about much-needed changes in the way the power sector operates.