The energy policy of the new government, devised by the Water and Power Minister, Khawaja Asif, is one that seeks to be more open to solutions compared to past policies. Promises have been made, and the country anticipates its fulfilling.
According to the government, there are three main problems that require solutions before their claim to alleviating the energy crisis.
First, the amount of energy being produced is scarce compared to its demand. A shortfall of roughly 5,000 MW must be bridged, if supply and demand is to break even. To put this into perspective, Tarbela Dam's maximum power generating capability is 3,478 MW.
Secondly, inefficient distribution and theft are commonplace. Not only do we have one of the highest rates of line losses in the region, but whatever electricity manages to cling on to the transmission wires is ultimately consumed by your local 'kunda', instead of your bill-paying, taxman-fearing, salary-scrimping neighbour.
Lastly, the problem of affordability -- the cost being borne by the government in making the electricity, not the cost being borne by the final consumer -- is a pressing issue. Nearly half of our electricity is produced by the most costly method there is to production, i.e. thermal fuel powered production facilities. Since electricity is produced at a higher cost per unit than it is sold for, the government runs the system at a continuous loss.
For the time being, the government is attempting to pass the cost on to the average consumer, by hiking up electricity bills. But, as the government minimises its short-term losses, and the tolerance of the consumer approaches breaking point, it admits that the only long-term solution is to produce cheaper electricity. Our stock of carbon credits means we can take full advantage of our coal reserves; and the extremely low per unit cost of hydel-powered electricity has been fuelling dreams of another mega dam as a panacea, for some time now.
The administration realises at this point that with the current resources they possess, they cannot hope to restructure the power sector (from stages of production, all the way through to distribution), and in addition also put money into new projects on their own. This leads to the most important feature of the new policy, in short: privatise whatever can possibly be privatised. While reducing the government's role within the system, if successful, privatisation would also attract solid investment into Pakistan. The plan is to allow bidding on the contracts to set up and manage projects across Pakistan, with contracts awarded to companies which have the lowest cost of production.
The stagnation and government control that existed previously will, allegedly, be reoriented to facilitate private firms and push files out, instead of the usual trend of binding them carefully in red tape and letting them fester.
A new system of transparency and automation is also in the works, which will aim to provide complete information with regards to efficiency, fuel quotas, grid station output and a plethora of other issues, that an average consumer may or may not understand, but which will have the effect of improving confidence in the system as a whole.
The government keeps its fingers crossed to see if any willing investors approach, once these measures have been put in, because even if it does manage to fix everything, there will still be the problem of firms wanting profit; the demand for which might be more than what is currently offered in the Pakistani power sector even with the new sustainability measures that will be put into place. Furthermore, welcoming and maintaining a relationship with powerful multinational companies is something we have always struggled with (remember Reko Diq and the Turkish rental power ship owned by Karadeniz Holding). Given the current condition, potential investors will wait to assess the seriousness of the attempts of the government, before considering the possibility of putting huge amounts of capital into a project in Pakistan.
With regards to these initiatives, it remains to be seen whether the attempts of the PML-N to restructure the energy sector prove fruitful, and appease a population which increasingly believes that its own government is out to get them. Given that the newly elected government campaigned on the basis of the previous government's failure to tackle the energy crisis, and promised to display noticeable improvement in 100 days, they had best get cracking.
The writer is a member of staff and a student of political science.