From bloodbaths to blueprints: Roadmap to recovery
24 January 2024
Published in: Pakistan Observer
The government’s campaign against power theft successfully yielded a recovery of Rupees 34 billion. According to the Power Division, a total of 197 government employees and 25,142 individuals were apprehended in the nationwide crackdown on power theft. Ongoing initiatives to curb illegal forex trading and foreign currency smuggling have resulted in the deposit of approximately $1 billion in banks.
The government is still losing Rs1.5 billion a day, every day of the year in the power sector. In just one financial year, the Transmission & Distribution (T&D) losses in the power sector amounted to Rupees 520.3 billion. Among the ten distribution companies, the Peshawar Electric Power Supply Company incurred a loss of Rupees 153 billion in that same financial year. The government needs a roadmap, administrative measures alone won’t do.
To be certain, the persistently low natural gas prices, which defy rationality, have been a longstanding burden on the Pakistani economy for decades. The interim government has judiciously undertaken the task of rationalizing gas prices. But the government is still losing Rupees 1 billion a day, every day of the year in the gas sector. The circular debt within the gas sector now exceeds Rupees 3 trillion. In Pakistan, the Unaccounted-for-Gas (UFG), representing the variance between the metered volume of gas entering the T&D network at the point of dispatch or delivery and the metered volume received by end consumers at their metering stations, is alarmingly 700% higher than international benchmarks. The government needs a roadmap. Public Sector Enterprises (PSEs) are accumulating an additional Rupees 2 billion in debt each day, every day of the year. There is a bloodbath going on in our so-called PSEs. These entities are accruing an annual supplementary debt of approximately Rupees 700 billion. Furthermore, the government allocates Rupees 1,400 billion in what is referred to as ‘grants’. This bloodbath must end because no one is willing to finance this bloodbath anymore. The government needs a roadmap.
The government is losing Rupees 500 million a day, every day of the year in its so-called ‘Commodity Operations’. The ‘Commodity Operations Debt’ now stands at Rs1 trillion. The government remains adamant to fix the ‘procurement price’ of wheat and sugarcane. This model has failed-failed miserably. The ‘incidentals’ and ‘corruption’ in this sector is estimated to be around Rupees 200 billion a year, every year. We must end this bloodbath as well because no one is willing to finance this bloodbath anymore. The government needs a roadmap.
In the power and natural gas sector, the government should formulate a roadmap for transitioning from a ‘single-buyer model’ to a ‘multiple-buyer-multiple-seller model’. The sooner the better. Privatizing all Public Sector Enterprises is imperative. The sooner the better. In the commodities sector, the government should establish a roadmap encompassing three key components: allowing market forces to determine prices, dismantling the Pakistan Agricultural Storage & Services Corporation, and adopting a direct ‘farmer-to-miller’ model.
The staggering daily losses and the escalating circular debts demand immediate attention and strategic planning. The government must chart a course towards a sustainable and efficient future. Without a clear roadmap, we risk perpetuating the losses and challenges that currently plague our economic landscape. The time is now to set a defined course, ensuring that every effort leads us toward a more prosperous and resilient future.
