Gilani payout fails to stop power riots
By Syed Fazl-e-Haider
KARACHI - Emergency payments by Pakistani Prime Minister Yousuf Raza Gilani
have failed to halt riots and protests demanding an end to power outages that
have extended to as much as 20 hours a day due in large part to the
government's failure to pay its bills.
Rioters attacked public and private properties particularly in Punjab, the
country's most heavily populated province, in a second day of protests after
Gilani on Monday ordered an immediate release of 11 billion rupees (US$125
million) so that two leading independent power producers (IPPs) could continue
to receive fuel supplies.
Power generated by IPPs Hub Power Co and Kot-Addu Power Co dropped to 500
megawatts last week from their combined
production capacity of 2,500MW (in the West, considered enough to power 600,000
homes). The country's overall electricity shortfall has soared to more than
half of demand, bringing much of industry to a stuttering halt.
Local experts say that the major cause of the energy crisis is rising circular
debt, with low payment collection and rising power generation costs.
Oil-operated power generating units do not run at full capacity due to
insufficient oil supply, aggravated by the finance ministry not making agreed
payments to IPPs and state-run fuel supplier Pakistan State Oil (PSO).
PSO is on the verge of
default on international letters of credit, owing
120 billion rupees to international fuel
suppliers, according to The Express Tribune.
Meanwhile it is waiting to receive 133 billion
rupees from clients, including those in the power
Pakistan Electric Power Company (Pepco),
which made a loss of 170 billion rupees last year, owes IPPs 210 billion rupees.
Gul Ahmed Energy has been shut down because of non-payment of about 3 billion
rupees by Karachi Electric Supply Co.
The power generation system has virtually collapsed, according to Dawn
newspaper. "With hydel [hydroelectric power] generation receding further, the
oil squeeze worsening and two nuclear power plants stalled because of technical
faults, the electricity deficit has shot up by over 8,000MW - almost 50% of
demand," it reported.
Anti-government feeling is growing in a country where up to 40% of the 170
million population live below the poverty line, and the ruling Pakistan Peoples
Party appears after three-and-a-half years in office to have forgotten its
popular slogan of giving roti (food), kapra (cloth), and makan
(house) to the poor. Mobs burnt six electricity company offices in the
industrial hub of Gujranwala, Punjab province, on Monday, the Financial Times
The country's electricity generation mix comprises 65% thermal and 33%
hydro-electric power. The leading oil companies recently disrupted oil supplies
to thermal power generation units because their bills were not paid, further
aggravating overall electricity production
The power riots that have rocked Punjab since the
weekend and threaten to spread to other provinces, as "loadshedding" is in
effect for up to 18 hours a day in parts of the country, have their roots in
mismanagement of the power sector over the last decade, exacerbated by the lack
of a coherent power policy by the present government.
For a country which has an installed capacity of more than 18,000 MW, producing
less than 10,000 MW at a time when demand is nearly 17,000 MW is a dire
indictment of the state of the power sector ... At a time when the economy is
already struggling with low growth, high inflation and a sagging job market,
the power crisis is estimated to add up to between 1 and 2% of lost GDP each
The chronic energy crisis has forced many textile
manufacturers in Faisalabad, the country's textile hub, to move manufacturing
to Bangladesh. Cosy International, a composite textile manufacturer, Masood
Textile Mills, a knitwear exporting firm and Tauseef Enterprises have
reportedly set up textile factories in Bangladesh, while K&M Textile a
composite manufacturer plans to move abroad.
"If the energy crisis remains the same, industrialists would take not much time
to ... shift their industrial units to Bangladesh and other countries where the
industrial sector is the top most priority," The Nation newspaper reported,
citing a statement by business community leaders in Lahore, the capital of
Repeated breakdowns in electricity and gas supplies to the textile plants
reportedly caused production losses of 30% in the 12 months to June. The
textile industry accounts for 38% of workers in the manufacturing sector.
Syed Fazl-e-Haider (http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author of many books, including
The Economic Development of Balochistan (2004). He can be contacted at email@example.com.
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