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Pakistan Faces Tough Choices with Energy Crisis

By Daniel J. Graeber | Wed, 29 May 2013 22:06 | 0

The incoming administration in Pakistan wants to pay off enough debt to finance a rebound in electricity. Most Pakistanis cope with blackouts that can last most of the day and the temperature is already hovering in the triple digits. Poor infrastructure and theft means nearly a quarter of the electricity generated in the country is simply lost. Corruption and mismanagement makes the rest unreliable. Pakistan generates about half of the electricity it needs, leaving most of the population increasingly frustrated. Prime Minister-elect Nawaz Sharif pledged to move quickly on electricity reforms but U.S. President Barack Obama's counter-terrorism speech last week suggests al-Qaida isn't the only thing running away from the region. Who finances Sharif's electricity overhaul may dictate the future of Pakistan as much as the man himself.

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Power shortages in Pakistan typically last most of the day, fueling demonstrations in a country with a history of violence. Demonstrators in mid-May burned tires in Lahore and pelted electricity authorities with stones. Last week, the temperature in the eastern city topped out at about 118 degrees Fahrenheit. When the incoming prime minister said he can't sleep at night, it was likely the heat keeping him up as much as it was the energy crisis.

Sharif's government said it would try to tackle the issue over the next 100 days. He needs to figure out a way to pay off the $5 billion in debt that's left electricity providers without the cash needed to pay for fuel. On top of that is the rampant corruption. Existing power plants in Pakistan could in theory generate the 15,000 megawatts of electricity needed to keep the lights on if their operators could pay for the fuel. A 2011 audit of the power sector, however, found that the government committed to about $1.7 billion in contracts, but got just 62 MW in return on its investment.

Without cash to pay the bills, Pakistan's energy production operates at about 50 percent capacity during the hot summer months. That spills into production in general, retarding a Pakistani economy that's already posted slower growth. The government said it would be able to add thousands of megawatts to the national grid within the first three months of taking office by collecting the bills. The rest of the money would come from foreign funds.

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Sharif came to power in part by promising to bring the Pakistani people in from the dark. When he takes office June 5, he'll likely call on allies in Saudi Arabia to help with emergency oil supplies. From his friends in China, he might get help with building a civilian nuclear power facility. Then there's the elusive "Peace Pipeline" that would send natural gas from offshore Iran or the Western-backed rival project from Turkmenistan. Already, the United States has thrown at least $225 million at the renewable energy sector in Pakistan, adding 900 MW to the grid. Last week, however, President Obama said the main focus of his policy on Pakistan, the Taliban, was "on the path to defeat." That means Pakistan's best friend, and worst enemy, may be tilting toward other windmills. Sharif may be looking to foreign shores for help with much-needed reforms, but with world attention starting to shift elsewhere, his administration at best remains adrift at sea, or at worst, falls victim to its own maladies.

By. Daniel J. Graeber

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