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Power fumble

2014-10-23
ESS than six months into their second fiscal year, the government is already fumbling its response to the power crisis. This is a government that campaigned on ending loadshedding and whose senior leadership, when in opposition, skewered the previous government for its many mistakes in the power sector.

This is a government that borrowed an epic half a trillion rupees in a matter of days to settle the circular debt as one of its earliest actions, promising us that this problem would not be allowed to return as it did after every other such settlement in previous years. This time it would be different, we were told last summer. This time reforms would be introduced to bring about efficiency, lower losses and raise recoveries, with minimal impact on tariffs for end-consumers. All these promises appeared to be enshrined in a single line in the last budget: the massively reduced allocation for power tariff subsidies for fiscal year 2014-15. The government meant business it appeared, because with reduced allocation for subsidies, there would be no choice but to raise recoveries and efficiencies.

Since then, we have had an overbilling scandal, which cost a veteran bureaucrat her job, and now the ramshackle attempt to sneak through a power tariff increase, apparently in the hope that nobody would notice. But somebody did notice, and the whistle was indeed blown, and now we have a hasty withdrawal from that decision from an authority no less than the prime minister himself, signalling a wavering and weak-kneed commitment at the top levels of government to follow through on their own decisions. Fact of the matter is that the government is struggling to formulate a response to the power crisis in the same manner as its predecessor. The current political difficulties are no excuse; after all, Pakistan`s politics have almost always been tumultuous. Did the PML-N not know at the time of making its campaign promise that the party would be required to deliver on its pledges in the midst of a stormy political environment? Without underlying reforms that alter the incentive structure the bureaucracy operates under, top-line measures such as tariff increases and raw pressure to raise recoveries will only generate more problems and provoke a powerful backlash. In the second year of its rule, we are entitled to see a more coherent response from the government towards delivering on its principal campaign promise regarding the power crisis.