Pakistan: Load shedding returns with a vengeance

By Lal Khan

Subsequent regimes had offered ‘generous’ concessions to these corporate vultures, lining their own pockets at the expense of the people of this beleaguered land

In the last few days, the Nawaz Sharif-led PML-N government announced the resumption of electricity outages. The spokesman claimed that it would be “one to two” hours in the big cities and “10 to 14” hours in the villages. The actual reality for the masses is 18 hours in the countryside and ‘about’ 10 hours in the cities, exposing the half-truths, ambiguity, hypocrisy and duplicity of the state and the ruling classes dominating every ethical, moral and social attribute of society.

In the initial few weeks, the regime paid the Independent (Private) Power Producers (IPPs), mostly owned by imperialist corporations, a total of $ five billion. This was financed by the dreaded IMF loan of more than $ seven billion with harsh conditions of austerity, cuts in subsidies and further attacks on the oppressed masses. Within months, a similar amount of ‘circular debt’ has mounted up again. From where will this be paid? More loans with greater debt servicing costs will incur an even ghastlier economic and fiscal scenario. The rulers are elusive and want to evade even talking about it.

The power shortages and rising cost of living were the main campaign issues of the PML-N. The PTI and other mainstream parties were everywhere and nowhere on real issues. Now the chickens have come home to roost. The electricity deficit is not going away any time soon. The economy and society cannot survive without electric power in the 21st century. In some ways, the situation was better in the last century. However, every subsequent regime faced a severe dilemma under the weak and decaying capitalist system drifting in a downward spiral, sucking up the resources with increasing debt servicing and the procurement of military equipment. Not to mention the country’s enigmatic nuclear programme, which squeezed the blood and sweat of the toiling masses with no real use possible.

With dwindling profits from industrial services and agricultural sectors, the ruling class seized upon the power production sector as it provided new contracts and investment deals, mainly with corporate capital, and exhorted hefty commissions and kickbacks. The other avenue was the accumulation of black money through crime, the drug trade and other extortions protected by the government you were in. Pakistan’s present power crisis is the product of these policies where all the infrastructural projects and developmental plans are subject to the share of the plunder of the ruling elite. The imperialists were not stupid and their investments were of an extremely exploitative nature where they could easily bribe the national leaders with small change.

The IPPs and the ‘DISCOS’ have made mammoth profits from these investments. According to some estimates, these companies have transferred to their home bases more than $ 27 billion since power generation was contracted in 1994 to the private sector. This policy attracted investments only in thermal power as it offered lucrative, quick and almost riskless means of minting profits. Subsequent regimes had offered ‘generous’ concessions to these corporate vultures, lining their own pockets at the expense of the people of this beleaguered land. The private sector was guaranteed a rate of return for a small portion of its own equity. All major risks were transferred to the state and more than 75 percent of the investments were financed by government-liable bank loans. The World Bank actively supported this policy. This shifted electricity generation to the most expensive source, thermal power production. In the 1960s, 60 percent of electricity generation was from hydropower, which came down to about 30 percent by the year 2005.

The costs have gone up horrendously. The cost of hydropower is Rs 0.16/kWh, nuclear is Rs 1.13/kWh, gas is Rs 4.24/kWh and diesel is Rs 18.89/kWh. A recent issue of Time magazine stated, “Pakistan’s government says the energy crisis is costing the economy up to five percent of the GDP a year, or about $ 10 billion...The energy deficit and the reliance on oil imports affect livelihoods, pull cash strapped governments into debt, and draw money away from basic services like healthcare and education, which particularly hurt the poor.” At the end of 2005, the inter-enterprise and corporate (circular) debt stood at Rs 84 billion. By the end of 2012 it grew to a staggering Rs 872 billion. The PPP government raised tariffs by 74 percent but, under the present regime, this has already spiralled at the behest of the IMF and will escalate much further. According to some observers, spending on the ‘payments’ to the IPPs will outstrip the total defence expenditure if it has not already done so.

Those who are arguing for privatisation as the cure of all economic ills do not really have to suffer from the cumbersome agony it imparts upon the vast majority of the population. In South Asia, the average consumption of electricity is 517 kilowatt-hours per year compared to 12,914 in the US. Yet its burden on the incomes of the toilers in Pakistan is manifold. Even from bourgeois perspectives the privatised KESC has experienced much higher loses (30 percent) in transmission and distribution. As compared to the public sector distribution companies, Pakistan’s energy resources are enormous — an estimated 186 billion tonnes of coal, over 100,000 megawatts of hydro potential and wind potential of up to 346,000 megawatts. However, the prevalent system cannot generate the technology and the investment to exploit these resources. Hence the imperialist corporations in collusion with the local bourgeoisie intervene and exploit the resources and the people.

This failure of Pakistani capitalism to develop an advanced and necessary power infrastructure, as its failure in other sectors, lays bare its historical redundancy. However, above all, the short term, makeshift and erratic planning and policies reflect the intrinsic weakness of the ruling classes and their utter lack of confidence in the long-term future of their system of rulership. And yet this system is being mercilessly imposed upon the already impoverished masses. From the media to the curriculum and from the pulpit to the liberal secular rostrums, it is being presented as the ultimate destiny of mankind. Only through expropriation without compensation of these IPPs and other power generating, distributing and transmitting companies under workers control and management can this daunting problem be put on the path to be addressed. For a complete resolution of the crisis of the economy and society as a whole, this process will have to be undertaken in all the commanding heights of the economy, domestic and foreign investment, all included. Those who have high stakes in these companies are in the present government and in the leaderships of the main parties. This class, replete with greed and lust for more, would never give up its plundered wealth and vested interests easily. To achieve salvation its rule has to be overthrown.