Taking stock of the privitisation option
Rupees 500 billion is the amount dangling as a noose around the head of the Pakistan Muslim League-Nawaz (PML-N) government in waiting. With the PML-N chiefs Nawaz and Shahbaz aware that their ability to play politics around the power crisis was the reason for dislodging the Pakistan Peoples Party (PPP) from power, the Sharifs know that their ability to deliver an answer to the power crisis will define their term. With Khawaja Asif appointed the new Water and Power Minister, the PML-N’s much contested plan of action is now in action.
Plan A appears to be raising roughly Rs 500 billion in the short run. The plan is to raise as much money as possible from banks and print the rest. The money is thought to be enough to eliminate circular debt – and getting existing power plants to operate full-steam ahead. Plan A appears to be a stop-gap solution before moving on to a far-reaching transformation of the power sector which, as per PML-N’s plan of action, seems to be complete privitisation of the sector. Some industry insiders claim that government-owned power plants operate at efficiency levels of less than 10 percent, meaning than more than 90 percent of fuel burned is wasted. With Khwaja Asif declaring, “You’ll see advertisements for positions of chief executive for PEPCO, all the distribution companies, and for NTDC in the first few days of the new government,” the power sector is all set for the Sharifs completing the agenda they were set to implement in the 1990s. The way the PML-N shall go about this is to reduce the government’s share in state-owned energy companies to around 51 percent to raise around Rs 485 billion, an amount almost equal to the circular debt in the system.
However, the move appears a toning down of what its manifesto promises: complete privitisation. The move in itself, while set to be unpopular amongst power sector workers and left wing political parties, is set to go unopposed through the National Assembly, with the biggest two opposition groups, Pakistan Tehreek-i-Insaf (PTI) and Pakistan Peoples Party (PPP), more or less committed to the same agenda. The trouble is that the word is still out on the effects of the PML-N’s last privitisation bout, selling three public sector banks. While the banks have been fast to adopt new technologies, the material performance has not improved much. The fear is that the privitisation of the power sector, if it fails, would leave it at the point of no return. Both PML-N plans, printing money in the short-term, and selling power companies in the long-term, are contested to say the least. But with the unpopularity of the PPP’s crony-run attempt to save the power sector still in the memory, on ground opposition to the PML-N’s plan will be little.
