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Pakistan’s Power Woes

By Huma Imtiaz for Foreign Policy

Pakistan’s power crisis has become a catastrophe. Power cuts of up to 14 hours a day have become the norm in Pakistan. In Karachi, four patients admitted in the largest public hospital died when the hospital’s backup generator failed after prolonged cuts. Riots have engulfed Punjab, and other major cities across the country, as the government wrings its hands and tries to get the situation under control. Allegations have flown between the leaders of the two major political parties — the Pakistan Muslim League (Nawaz) and the ruling Pakistan People’s Party (PPP). The PML (N) — has accused the PPP of being responsible for the crisis. In turn, the PPP has accused the PML-N of instigating the violence.

Riots over power cuts in the country, known as “load shedding,” have now become a matter of routine. In neighborhoods and cities across Pakistan, hundreds have taken to the streets to vent their anger at the frequent load shedding. This time around though, the PML-N, perhaps to apply more pressure as a political tactic against its rival PPP, has stepped in, and is supporting the protestors.

But as the flurry of allegations continues, the problem at hand grows more serious. Dubbed the circular debt issue, power companies have racked up billions in unpaid dues to petroleum companies, which supply them oil to run their powerhouses. On Sunday, Pakistan State Oil (PSO), tired of waiting for the dues long promised to them, decided to stop the petroleum supply to the power companies, leading to an increase in the already inhumane cuts.

While the Government of Pakistan (GoP) has now released some funds to appease PSO, this is not a long-term solution. The Federal Minister for Water and Power Naveed Qamar responded to the most recent protests by saying that there were no quick fixes, and then turned around and announced that the situation would improve in 24-36 hours. Last week in Washington DC, the Finance Minister of Pakistan Hafeez Sheikh solemnly announced that the government understood the severity of the circular debt issue, and would resolve it in the weeks to come. But with a growing fiscal deficit, and a refusal of the Asian Development Bank to fund programs in Pakistan after the GoP decided to end their International Monetary Fund (IMF) loan program, how Pakistan plans to resolve the circular debt issue is anyone’s guess.

One solution, according to Prime Minister Yousaf Raza Gilani, was that the United States “should help Pakistan solve its energy crisis if it wanted better ties.” The United States has previously said that it is investing in dams in Pakistan to help add to the power grid, and has helped in the reconstruction of existing dams in the country.

However, Pakistan needs to stop looking towards the West for a solution (or a scapegoat), and perhaps redirect its attention to how to fix its problems internally first — perhaps by collecting payment of unpaid bills, or cracking down against those stealing electricity. First, though, it has to deal with the political ramifications of these protests. The PML-N has played its cards right; by blaming the political center of which it is no longer part, it has easily scored political points while the PPP becomes the fall guy — and to an extent, perhaps deservedly so. Pakistan’s government, in turn, can only do so much. Strapped for cash, it barely has the funds to invest in power generation, and in cases where it has, such investments have barely led to a meaningful increase in the electricity grid.

Additionally, in the face of all of these problems, if Pakistan raises power tariffs on those that have been suffering for the last many years, the law and order situation could become even more perilous.

Meanwhile, the Pakistani population continue to take to the streets, hoping that it might eventually lead to the light bulbs burning bright again.

Huma Imtiaz works as a correspondent for Express News and is based in Washington, DC.

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Pakistan Power Shortages Keep Growth Prospects Dim

By Alex Rodriguez The Los Angeles Times

The machine operators lean back lazily on rolls of cotton fabric, shooing flies from their sweat-soaked tunics as their boss, Abdul Latif, paces between rows of silent electric looms covered in lint.

The textile plant owner knows it’s just one of several rolling blackouts that will darken his plant today, as they have every day for four years. Along his street, other textile plants have either closed or begun selling their looms for scrap. Latif scrapes by, but the outages have cut his plant’s output in half.

“The situation is very bad,” Latif says. “We’re losing contracts because of these outages. We can’t deliver on time. If it continues like this, we may have to shut down.”

One of Pakistan’s biggest scourges has nothing to do with suicide bombers or militants wielding Kalashnikov assault rifles. Because the country cannot produce the electricity needed to support a population of 177 million, the government intentionally shuts down power in staggered intervals, often for hours at a time.

The rolling blackouts are most frequent during the summer, when the whir of air conditioners in 100-plus-degree heat boosts demand for power. Apart from districts with top government and military offices, virtually every neighborhood and village suffers.

The stopgap policy prevents the country’s moribund economy from getting off the ground. And as long as the economy sputters, millions of Pakistanis remain mired in poverty and joblessness, leaving the country’s disaffected youth vulnerable to recruitment by Islamist militant groups.

President Asif Ali Zardari’s government has given Pakistanis little reason to hope for a solution anytime soon. This summer, government officials said that it would take at least seven years to build up the electricity generation capacity needed to eliminate the blackouts.

Various factors explain Pakistan’s power woes. During Gen. Pervez Musharraf’s rule from 1999 to 2008, strong economic growth fueled an upsurge in consumer spending that had Pakistanis flocking to stores to buy air conditioners, refrigerators and other appliances. But Musharraf failed to pump money into boosting generation capacity to keep up with demand and the country’s booming population.

Zardari inherited the massive gap between supply and demand, but his cash-strapped administration hasn’t moved fast enough on hydroelectric dam projects and has yet to shore up the country’s aging distribution network.

Other factors make the situation even worse. About 15% of the electricity generated is lost to theft, says Ejaz Qureshi, a spokesman for the state-owned Pakistan Electric Power Co. In addition, the government often fails to pay its bills to private power producers, which means those companies can’t buy sufficient fuel for their plants. At times, they cut off electricity to the offices of government agencies that owe them money.

The havoc wrought by the shortfall is particularly acute in the country’s textile industry, a pillar of Pakistan’s fragile economy.

Faisalabad, Pakistan’s third-largest city and home to its textile sector, has seen 200 of its 4,000 textile plants close in the last three years because of the blackouts, says Wahid Raamay, chairman of the city’s Council of Loom Owners and a plant owner.

During that period, 100,000 workers have been laid off, about 10% of the city’s textile work force, Raamay says.

Plant owners forced out of business face a grim future. In a country where many people distrust banks, many plant owners sell their personal property — gold, jewelry, cars — to buy the machinery needed to start the business. If their plants close, they may find themselves at rock bottom.

“They all used to have good cars, good homes, and now everything has disappeared,” Raamay says. “Now they ride motorcycles to get around.”

Five months ago, Malik Mohammed Kashif was forced to shut down his plant, lay off 80 workers and sell his 66 looms to scrap dealers.

On a sun-baked afternoon, Kashif strolls through his darkened, empty building and winces as he speaks of the future.

“As for me, I’m finished,” says Kashif, a 30-year-old father of four. “With the shutdown, we lost $350,000, nearly everything we had. We’re at the bottom now because of this.”

This summer, public anger over ceaseless power outages boiled over. In Mianwali, in Punjab province, throngs of demonstrators calling for a stop to the outages clashed with baton-wielding police in early July. Two people were killed and 22 were injured. In Karachi, four people were killed during protests and work stoppages in early June that brought sections of Pakistan’s largest city to a standstill.

In Faisalabad, the extent of blackout-induced layoffs in the textile industry has reached the point that plant owners often work the looms alongside their laborers.

At Latif’s plant, workers paid by the hour say the outages cut their already meager wages in half. Machine operator Mehmood Hussain makes $4.65 a day when the blackouts don’t occur and $2.32 when they do. For a family of seven reliant on his income, the difference is huge.

“It’s a critical situation now,” Hussain says. “We can’t buy decent food or buy clothes for ourselves. And there’s no way out. Looms are all we know.”

One group, however, prospers from the textile industry’s misery: the scrap dealers. Their stalls on the edge of the city are filled with grease-covered gears and flywheels stacked next to piles of wooden rollers and spool holders.

Dealer Mohammed Sharif says he sometimes buys up to 100 looms a day, paying just $290 for machines that cost plant owners $1,500.

“When the textile plants suffer, our business booms,” Sharif says. At the same time, he knows the scavenging can’t last indefinitely.

“If looms continue to shut down at this rate, a day will come when we won’t have any business at all. What will we do then?”

Noting that three in four terror suspects are acquitted in Pakistan, the United States has doubts its key ally would make any headway in prosecuting key plotters of 2008 Mumbai terror attacks.

“The accused in numerous high-profile terrorism incidents involving US victims had all been acquitted by the Pakistani legal system,” US State Department noted in its 2010 Country Reports on Terrorism, published last week.

“The Federal Bureau of Investigation has assisted with the respective prosecutions,” the report said. FBI had assisted India in the investigation of the Mumbai terrorist attack as six Americans were among the 166 victims.

The report found that while Pakistan maintained it was committed to prosecuting those accused of terrorism, a study of its Anti-Terrorism Court’s rulings last year disclosed “that Pakistan remained plagued by an acquittal rate of approximately 75 per cent”, and a legal system “almost incapable of prosecuting suspected terrorists”.

It complained that a new anti-terror bill, which would allow its security agencies to hold suspects for 90 days before bringing them to court and give them a freer hand to use electronic surveillance had not progressed in the country’s National Assembly.

Although Islamabad had increased pressure on money-launders and unofficial ‘hawala’ money transfer agents, “deficiencies remained,” the report found.

“Notably, the criminalisation of the financing of terrorist acts committed against foreign governments and international organisations was ambiguous, as was the criminalisation of financing groups that have not been explicitly banned by the government or designated by the UN,” it stated.

Pakistan’s “weak implementation” of a UN Security Council resolution which lists banned terrorist organisations remained a concern.

The report also criticises Islamabad’s failure to outlaw militant Islamic terror groups which escape bans by changing their names.

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