Elusive dream: Five-hour-a-day blackouts to stay for next five years

ISLAMABAD: In spite of an investment of $10 billion and an addition of 12,000 megawatts to national grid, Pakistan will still be facing five-hours-a-day load shedding five years down the line, reveals a draft of Country-Partnership Strategy (CPS) that the World Bank Group will approve next week. The CPS carries the bonanza of $11 billion loans to Pakistan in next five years (2015-19) and places the inefficient energy sector on top of its priority list. The strategy that the WB will approve on May 1 sets three outcomes against its investment in the energy sector. The WB has set the goal to reduce power outages from an average eight-hour a day to five-hour a day by 2019 –a year after Pakistan Muslim League-Nawaz’s (PML-N) government will have completed its five year constitutional term. The revelation suggests that despite claims of bringing an end to load shedding, the PML-N will too leave the legacy of power outages – a slogan that its opponents could exploit in 2018 general elections. The other two main goals in the energy sector are reducing cost of generation by over one-fifth to average Rs7.7 per unit from an average of Rs10 per unit and complete withdrawal of electricity subsidies except for lifeline consumers. These goals are also consistent with the government’s policies, although challenging. The Diamer Basha dam does not figure in the draft CPS. The CPS is structured around four pillars, recognising the extraordinary economic, political and security challenges facing Pakistan. The three main arms of the WB Group plan to extend $11 billion, with International Development Association (IDA) contributing $6 billion, International Bank for Reconstruction and Development (IBRD) $2 billion and International Finance Corporation (IFC) $3 billion. But the draft CPS states in clear terms that ‘these levels ($11 billion) are notional’, as lot will depend upon the government’s ability to deliver on reforms that the CPS outlines. For the first time, the WB does not identify planned projects against the notional loans aimed at keeping leverage in its hand that it maneuvers to use at the time of annual reviews. According to the WB, Pakistan’s energy sector is highly inefficient and unsustainable. Pakistan ranks 166 of 183 economies on the ease of getting electricity, worse than the average for South Asia. The WB strategy aims at mobilising over $10 billion to support new generation, a significant part of this amount will be offered by the WB. The new investment will be both public and private projects. But for complete overhaul of the energy sector, Pakistan needs at least $3 billion to $4 billion in funding annually. The new investment is expected to increase the total generation capacity from present 21,000MW to 33,000MW. The WB says it will focus on hydropower development along the Indus River Cascade. “The key monitorable outcome from WB activities will be to reduce load shedding from 8 hours to 5 hours per day,” the draft strategy notes. However, the key to additional power is the WB’s plan to shift additional 500 million cubic feet of gas per day for power generation to add additional 6,000MW. Published in The Express Tribune, April 26th, 2014.