Pakistan opposition take aim at energy crisis ahead of elections

Pakistan is struggling with a worsening energy crisis that will be top of mind for many Pakistanis as they head to the polls later this year.

Right now the opposition is slamming the government on this point, claiming there's an easy solution: Pakistan is sitting on the world’s sixth-largest coal deposit, the Thar Coalfields in Sindh Province, but since the reserves were discovered 22 years ago, little has been done to develop them.

But negotiating the complex political web that has kept Pakistan in the energy dark ages is not as simple as opposition leaders suggest, say analysts. What should be a mere technical challenge has escalated as the government has become paralyzed.

“It is not a lack of political will to address the energy crisis,” says Adil Najam, vice chancellor of the Lahore University of Management Sciences and a leading Pakistani expert on environment and development policy. “It is a lack of political ability.” 

For the past 22 years, plans to develop the Thar Coalfield have been stuck in limbo because of disagreements between the provincial and federal governments. The federal government wants a majority stake in any mining ventures, and has suggested a 80/20 split with the province. Though it has accepted investment from the federal government, the Sindh provincial government wants absolute control over the coalfields and has been adamant in insisting that Sindh alone should benefit from its natural resources.

So the two are in a bind: The ruling Pakistan People’s Party (PPP) government is unwilling to force development plans for fear of splitting what has traditionally been its strongest support base. Fear of creating a surge of Sindhi nationalism in the country’s second-most populous province tempered even former President Pervez Musharraf's attempt to develop the coalfields during Pakistan’s nine-year military rule.

For any candidate to campaign on the promise of quick fixes is to ignore the reality of Pakistan’s political system, says Hasan Askari Rizvi, an independent political analyst in Pakistan. “It is an attractive slogan,” says Mr. Rizvi, “But it is overly ambitious and unrealistic.”

The next Pakistan government will be a coalition made up of diverse forces and their first priority will be figuring out how to pull together and move in one direction, Rizvi says.

Pakistan generates 38 percent of its electricity using imported oil, according to the International Energy Agency. Gas and hydro make up another third, a figure that would be higher if investment in both areas wasn’t marred by political brinkmanship. Energy from coal makes up a tiny 0.1 percent of the country’s energy mix.

Despite a history of gridlock, cricketer-turned-candidate for prime minister Imran Khan has made developing the coalfields the central piece of his energy policy in his campaign manifesto. He has claimed that his party, Pakistan Tehreek-e-Insaf (PTI, Pakistan Movement for Justice), can transform Pakistan from an energy importer to an energy exporter by 2016.

The main opposition party, the Pakistan Muslim League Narwaz (PML-N) has similarly made vague promises to “provide the full energy needs of an expanding industrial sector through maximum exploitation of domestic sources of energy, namely coal.”

A web of more than 20 different provincial and federal entities are involved in powering Pakistan. This has created an energy sector devoid of any long-term integrated planning, headed up by a government that is caught in a debt trap by its own unsustainable subsidies.

The tariffs for final consumers, which are set by government regulators, are also insufficient to cover production costs. This has led to a liquidity crunch throughout the supply chain, and investment in the sector is weak, while overall demand for power has grown.

There is on average a 30 percent gap between demand for electricity and generation, according to the National Electric Power Regulatory Authority. This figure rose to 64 percent during in June and July 2012, leaving people without power for up to 20 hours a day during the sweltering summer months.

In flash of blinding honesty earlier this month, President Zardari told a group of industrialists that they could not rely on the state for energy. He instructed them to harness an entrepreneurial spirit and address the problem themselves.

But Pakistanis are already relying on a shadow energy economy for the majority of their energy needs. Most people pay more for power from unstable sources – generators and battery backups – than they do for power from the grid.

In general, rolling blackouts, also known as “load shedding,” happen on a schedule and Pakistanis plan their days around it. But unscheduled load shedding often tips people onto the streets. On Tuesday, residents in Rawalpindi blocked the thoroughfare in protest after three days of unscheduled blackouts. 

Pakistan’s energy shortages weigh heavily on the country’s main industry, textiles.

Mill owners are increasingly struggling to meet seasonal clothing orders because of the energy shortages, says Yasin Siddik, executive director of Premium Textile Mills, a garment and yarn manufacturer, and regional chairman of the All Pakistan Textile Mills Association.

Most factory owners have built their own small power plants to ensure that they have a continuous source of electricity. These run on compressed natural gas (CNG) but at the moment there is a shortage of gas, so mill owners are being forced to use expensive diesel or furnace oil as an alternative.

“Buyers now think twice before placing an order in Pakistan,” says Mr. Siddik. In 2011-2012, energy shortages cost the country 3 to 4 percent of GDP, according to the Planning Commission of Pakistan.