It is almost writing on the wall now that the reasons behind the endemic power outages in Pakistan broadly fall into two categories: firstly, non-payment of dues to power houses which incapacitates them to procure fuel and secondly, the absence of a mechanism to finance these payments.
The reasons seem simple enough so the question remains: why hasn’t anyone been able to do anything about it? And why Prime Minister Khaqan Abbasi has what it takes to finally do something about it?
In order to understand the debilitating inaction and ineffectiveness of governments in the last 10 years to address this chronic issue, we have to delve deep in to the psyche and motivation of the individuals tasked with the responsibility of curing this ill and investigate why they have not been able to identify underlying issues and take decisive and corrective action. First of all, a historical perspective can help lay a foundation for further enquiry.
Expensive delays in mega projects (case in point Nandipur Power Project) and corrupt and fraudulent practices in the public sector (Metro Multan etcetera) are prime examples of such behaviour. Where the people involved in the decision making are driven by a misdirected set of incentives: often geared towards self-interest; and often at odds with the responsibilities they are expected to deliver on.
So now that we have a fair background of where it all goes wrong, it needs to be enquired as to how PM Abbasi would be able to achieve an almost impossible feat.
The power sector is made up of ailing utilities which are regulated by a paralysing regulator and governed by out-dated laws. Instead of addressing individual issues of power sector minutely, let us first examine what has been happening quietly in the gas sector under the leadership of PM Abbasi.
It was at this juncture that PM Abbasi managed an overhauling of not only the senior management at SNGPL but the general culture of the organisation. It was made very clear that this time around, LNG was to be inducted in the grid for good and unlike local gas – which is considered a free for all- payments would have to be ensured, failing which there would be real consequences in the form of penalties backed by Stand-by LC(s).
This key structural change meant that the unimaginative and fixed mind-set prevalent in the SNGPL gave way to an attitude geared towards efficiency and growth. For the first time in 10 years, distribution losses which were at a debilitating 11-12% came down to a manageable 7%-8%. Share prices which averaged Rs20/share in 2014 rose seven-fold to more than Rs140/share.
Let us put this remarkable change into perspective. Organisations – be it public utilities or governments- are organic systems and work like gardens. There is a place called ‘Death Valley’ in the US. It is the hottest and driest place in the whole of North America and nothing grows there because there is no rain.
In the winter of 2004, almost 7 inches of rain (which is a lot) fell in a very short period of time. In the following spring, the Death Valley sprung to life; the whole floor of the valley was carpeted with flowers for a short while.
The lesson from the story is this: the ‘death valley’ is not dead. It is dormant. Right beneath the surface are these seeds of possibility waiting for the right conditions to sprout. The actual role of leadership thus is not ‘command and control’ but ‘climate control’. If the conditions are right, the wheel of progress moves inevitably.
What PM Abbasi has demonstrated as the Minister for Petroleum and Natural Resources is his unique set of skills: his ability to create the right ‘climate’ for a progressive and thriving gas sector in the country and a risk-taking attitude whereby he has put himself on the line whenever the progress of the projects under his supervision was at stake. It is thus inevitable that he will be able to cure the incorrigible state of the power sector.
Hassan Rasheed Tribune
pk.shafaqna.com