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Power purchase agreements haunt Pakistan

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THE failure of Pakistan’s ruling elite to choose the right man, on merit, with no conflicts of interest, has created multiple crises. We live in a world, where rapid technological advances have made it mandatory for every nation to have services of their own qualified specialists in relevant fields, and not “Jacks of All Trades”. The civil bureaucracy, we inherited from Colonial Raj, was trained to serve British interests and not the people of undivided India. They were moulded and trained to serve an occupying colonial power, which needed locals trained to administer policies, made in Britain. On 11 August 1947, while addressing First Constituent Assembly, the Quaid stated, “One of the biggest curses from which India is suffering – is bribery and corruption. That really is a poison. We must put that down with an iron hand”.

The Raj facing shortage of white British manpower, raised a group from amongst the natives, willing to serve them. They bought their loyalties with allotment of land and titles. India embarked on restructuring and reforming this Raj legacy, as soon as they adopted their constitution in 1950 and were no longer a dominion of HM government. Unfortunately, we remained a Dominion of HM until 1956, when we adopted our constitution and were no longer governed under Govt of India Act 1935. The political process, which was the basis for creation of Pakistan was disrupted and the country became hostage to bonapartistes and ambitious remnants of Raj trained civil and uniformed paid elite. MAJ had warned on 14 June 1948 that paid civil or uniformed bureaucracy had no role in politics and running affairs of the state, reminding them of the significance of oath they administered.

Pakistan has qualified and talented specialists in relevant fields, but the egoistic greedy mindset of the mediocrity, that has been at helm has landed this country in a royal mess. Pakistan’s ruling elite which emerged since 1954, instead of seeking solutions to problems, through collective wisdom of its own skilled and qualified economists, scientists, engineers etc., looked up to foreign international agencies like World Bank etc., to plan their long-term economic strategy. These agencies were created to achieve global strategic interests of super powers. The poorly negotiated, 1960 Indus Water Basin Treaty, and the conflicts of interest of those at helm, has created a quagmire. In the summer of 2006, Karachi had no power for almost 36 hours. Similar power outages ravaged the rest of the country, which triggered street riots and protests. Pakistan faced shortages of Gigawatts at peak time.

A crisis of such a magnitude required a combination of short and long-term strategy to be worked by qualified and experienced engineers, instead of men, captive to their greed to make quick bucks. Musharraf was at helm, and he looked to his junta and favourite bureaucrats to provide a solution. Short term solutions to resolve power shortages have been resorted to meet temporary requirements, such as events like Olympics etc., but are not a solution to meet long term energy needs of a country, which plans to boost its export-oriented industries and meet demands of a rising population. When unlimited power vests with an individual, who lacks capability of self-evaluation, (likes of Musharraf, Ayub etc.), they rely on individuals close to them, instead of merit. Rental Power Projects are a short-term solution to give reprieve for 3 to 4 years, during which a country should embark on plans to generate electricity based on its own indigenous resources.

Musharraf and Shaukat Aziz’s choice was the Associated Group, headed by IZA. It was an opportunity that Ahmed, or any other businessmen could not resist. Ad-hoc solutions to problems had always been a recipe for disaster. Associated Group had an American business partner David Walters, former governor of Oklahoma, who owned Walters Power International. Within 72 hours, Walter was in Pakistan to meet Musharraf. A company was set up in Oklahoma called Pakistan Power Resources. The Musharraf government guaranteed payment of $102Million and uninterrupted natural gas supply. A 136-megawatt gas fired plant was set up in Lahore, using second hand refurbished equipment bought in the USA, on a subsidized 6 acre site, using 3 gas turbines, which could be easily dismantled and relocated elsewhere. This was the beginning of Pakistan’s reliance on what are generally considered as short-term solutions.

There followed a series of RPPs, which continued even after Musharraf’s exit, based on guaranteed payment. The IPP’s followed suit and every government has been party to this mindless adoption of short-term solutions. The Guaranteed Capacity based PPA agreements and circular debt suited investors and their beneficiaries, who facilitated these projects, but Pakistan and its 240 Million citizens are victims. The 17Year PPA agreements of four such IPPs were renewed by the PTI government, whose Petroleum Advisor Nadeem Babar, owned power plants. Almost 10 more PPAs have been renewed by the present government. They all blame each other, but none has bothered to renegotiate or cancel these agreements after expiry of their 17year contract.

It was no coincidence that a systematic disinformation campaign was launched against every major Hydro Electric Power Generation plan. Few within the media and bureaucracy were party to it. Poisonous lies were spread and it was part of the political campaign of few political parties. Even a dictator like Musharraf, who had no qualms about suspending the 1973 Constitution, did not embark on a long- term solution to meet Pakistan’s energy requirements. He also chose to make “Hay While the Sun Shines”. The PPP and PMLN governments followed suit and when the PTI came to power in 2018, they also preferred to let status quo prevail. Today, Pakistan’s economy has become hostage to 40 IPP units and their powerful owners. If this Status Quo persists, in all likelihood, this technically insolvent country goes bankrupt. The IMF bailout packages can only provide breathing space and temporary relief. Bold steps must be taken for the benefit of 240Million Pakistanis. Time is running out.

—The writer is contributing columnist, based in Lahore.

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