While businesses and domestic consumers have been hit hard by the worsening power crisis in Sindh, its solar, coal and wind power projects are unable to dispatch their entire output to the national grid for want of adequate transmission facilities.

The energy crisis has remained unabated though the province is blessed with abundant wind, solar and coal resources with cost-effective access through air, land and sea routes.

The situation has induced Sindh Cabinet to take what is described as a landmark decision to initiate power generation, transmission and distribution within the province. The move aims to provide electricity to consumers at cheaper rates, improve energy equity and eliminate energy poverty in the province.

Sindh Electric Power Regulatory Authority (Sepra) will be set up to end the province’s dependence on the centre for fixing tariffs and managing loadshedding as provided under 7(4) of the National Electric Power Regulatory Authority(Nepra) Act. The draft Sepra law will be presented in the next session of the Sindh Assembly for enactment.

Sindh had earlier decided to form a provincial transmission and distribution company, and a transmission licence was obtained from Nepra on November 5, 2019. For unknown reasons, the initiative remained dormant.

Fresh private sector investment needs to be mobilised for new power generation, transmission and distribution projects

Now the inability to convert rupees into dollars by Sindh Engro Coal Mining and Engineering Company (SECMC) has reportedly created a backlog of non-payment worth $60 million to a Chinese mining operator. The company’s output feeds coal power plants in Thar, generating 1,360 megawatts of electricity. China Machinery Engineering Corporation has reportedly cut its output by half and informed SECMC that it might halt production in a month.

SECMC sources said in 2022, the company had made a profit of Rs8.47 billion and its cash and other assets — which can be converted into cash within a year — stood at Rs104.4bn, up 38 per cent from 2021.

Sindh’s move to set up Sepra follows the federal government’s decision to devolve ex-Wapda distribution companies (Discos) to the provinces. Punjab has already completed feasibility studies of a power firm — Punjab Provincial Grid Company — and another for managing solar power supply for district and session courts.

Subject to necessary due diligence by its finance department, Punjab may reportedly consider giving its consent to the centre’s proposal to take over Discos located in the province only to the extent of transfer of assets, and not liabilities, along with management control.

The devolution of Discos posting enormous transmission and distribution losses is no less challenging than the stuck-up strategic privatisation of other loss-making state-owned enterprises (SOEs) surviving on oxygen tanks.

Almost two-thirds of the power plants are operating at less than 20pc utilisation

Almost two-thirds of the power plants are operating at less than 20pc of the utilisation factor. A World Bank report has estimated the government’s support to the 14 largest loss-making SoEs at 0.8pc of GDP and support to all SOEs at 1.4pc of GDP for FY21.

It is time for fresh private sector investment to be mobilised for new power generation, transmission and distribution projects. The professionals and skilled workers in sick units can find jobs and pursue better careers in new enterprises with a future.

The solution to the poly-crisis lies in a bottom-up approach. What can be best managed at the provincial level should be outside the ambit of the federal government. Similarly, what can be managed by district governments should not be in the provincial domain. And the three tiers of autonomous government must cooperate to promote the common good while being responsible to each other. This calls for a new charter of rights and responsibilities.

In an article titled ‘Stresses on the Federation, ’ Dr Hafiz Pasha says there is a strong need to strictly adhere to constitutional provisions in inter-governmental relations to strengthen the federation.

To quote a World Bank economist, the cash-strapped centre continues to spend every year Rs710bn or nearly 1.7pc of the country’s GDP by running 17 devolved ministries and financing development projects in areas that, as provided by the constitution, fall under the provincial domain.

And the huge duplicate spending is contributing to higher fiscal deficits and public debts besides keeping many federation initiatives underfunded.

Citing fiscal constraints, the federal government has slashed its Public Sector Development Programme to Rs600n from Rs800b budgeted for the current fiscal year.

“The socio-political-economic structure is highly concentrated in a tiny elite, where mobility for the majority is nearly impossible,” states the book ‘Big Capital in an Unequal World: The Micro-politics of Wealth in Pakistan’ authored by political scientist Rosia Armytage. The tickle-down mantra has turned out to be fiction.

And one may add that when capital crosses national boundaries, it losses its links with national social progress. So does centralisation not based on democracy.

The separation of two aspects of democracy, autonomy and majority, makes democracy dysfunctional, according to a social scientist. This leaves the governments tinkering at the margins, with a much-reduced capacity to address the fundamental structural imbalances.

Published in Dawn, The Business and Finance Weekly, April 25th, 2023