Power failure and politics
THE transformational role of energy generally, and of electricity in particular, in the modern world was first articulated by Lenin with the dictum, “Communism is Soviet plus the electrification of the whole country”.
Reconfigured a century later, the formula should perhaps read ‘prosperity is democracy plus information technology’. The variables in the new equation are not as well-defined as in that of Lenin and lend themselves to varying interpretations.
Nevertheless, the importance of electricity — its downstream uses as well as the political economy of its distribution and the efficiency of its generation — is beyond doubt in determining the well-being of a modern nation. Even in the international arena, power (including coal, oil and gas) continues to be the crux of strategic and geopolitical power politics.
The availability of electricity is one of the main constraints to the acceleration of economic growth in developing countries, particularly South Asia. The deceleration of India’s near double-digit growth to below six per cent in recent years and Pakistan’s slowdown from above six per cent to about half that level is in part attributable to the shortfall in electricity production and its availability. China’s much more stable and higher growth path stems not surprisingly from its higher power production — five times as large as India’s in 2011.
The shortfall in the production of electric power in South Asia results not just in shortages in households but also for running factories and workshops which provide employment and produce exports. Meanwhile, the demand continually rises.
Resultantly, democratic governments in major South Asian countries, in particular Pakistan, are unable to make good on their populist promises. The democratic dispensation provides a powerful stimulus to the demand for power; political power often guarantees electrical power. However, ultimately the government has to face the fiscal budget constraint and is unable to provide the resources to keep expanding power supplies.
Currently, Pakistan’s electricity needs exceed available supplies from all sources by a third or more. If loadshedding were applied uniformly, it would mean eight hours in a single day or one hour of loadshedding for every two hours of usage. In reality, the outage distribution ranges from 18-22 hours in many far-flung areas to hardly any in posh urban localities.
As evidenced by the sudden 72-hour blackout in almost half of our neighbouring country recently, even prolonged periods of loadshedding can be tolerated by the citizenry if they are not expected to recur and the fault is attributable to technical issues alone.
While an equitable sharing of the shortfall would, perhaps, have been willingly borne by the population at large here in Pakistan too, the skewed manner in which it is being imposed provokes extreme resistance. It has resulted in street violence, some of which has been unprecedented in scale and intensity.
It is a pity that the wrath of the people against those responsible for such hardships can’t be harnessed — even by those whose electoral stakes depend on the youth vote — to usher in an Arab-style ‘spring’ in Pakistan and bring change that would allow us to measure up to the current challenges.
Harnessing and husbanding resources to match the demand for power commensurate with the economy’s needs is not such a difficult problem either, technically or financially.
At the heart of Pakistan’s power crisis is a struggle for power between rival political and economic vested interests, which has paralysed the government in terms of taking decisive managerial steps and led it to defer the reforms and investment that need to be made to solve the crisis.
The chronic power shortages that force many businesses, industries, hospitals, airports and homes to rely on expensive and
inefficient backup generators are arguably the biggest obstacle stifling the country’s economic growth. They add to the deprivation of those who can’t exercise the market option.
The issue of circular debt continues to hang fire, as the government continues to bail out delinquent enterprises, both public and private, with the help of an obeisant central bank — only nominally autonomous — that is willing to increase government borrowing beyond permissible or prudent limits. Such borrowing would have been defensible if it was directed towards investment, instead of current consumption.
Unfortunately the fiscal deficit, now estimated at almost 10 per cent of GDP, is being used largely to finance current government expenditures, to bail out failing state enterprises by subsidising then, and to let favoured interest groups in industry and agriculture escape the tax net.
As former State Bank governor among others has been saying, this is likely to lead to disastrous macroeconomic consequences that include raging inflation, increasing external debt, falling value of the rupee, rising external deficits and shrinking foreign exchange reserves. The rate cut announced recent by the central bank in an attempt to stimulate the economy is likely to add fuel to the inflationary fire.
The failure in the power sector, which translates into power failures for the public on an hourly basis in many parts of the country, is inextricably linked to the failure of the political class to set its house in order. It needs to concentrate on a workable economic agenda which would alleviate the immediate miseries of the people, of which loadshedding is presently the foremost.
Rather than playing the blame game, they need to do some honest soul-searching as to whether they deserve the vote to govern.
The writer is a former professor of economics at the Quaid-i-Azam University, Islamabad.