Editorial: The Express Tribune - 30 June 2013

Resolving the energy crisis

When it comes to the energy sector reforms, the Nawaz Administration appears to be making relatively sensible choices. What makes the administration’s plan particularly impressive is that it seeks to balance what is politically possible with what is technically and financially necessary. So, for instance, the government is seeking to pay off the energy sector’s circular debt in one go in order to significantly reduce power cuts and win the public’s confidence before tackling the harder bits of the problem, like raising tariffs and forcing electricity thieves to pay their bills. We also admire the government’s commitment to reduce the weighted average cost of producing electricity for the national grid by moving towards cheaper fuel sources. We worry, however, that some of these moves are being made without a more thorough analysis of the future costs.
Take, for instance, the government’s agreement with the independent power producers (IPPs) to switch their expensive oil-fired power plants to a cheaper fuel source, coal. This apparently seems like a sensible policy. Coal-fired power generation costs approximately Rs10 per kilowatt-hour, even when running on imported coal, compared with the Rs18 a unit or higher that oil-fired power plants cost. A sensible saving that would have the added advantage of reducing the cost of power generation to just under the upper limit set by the prime minister for how high the government is willing to let retail electricity tariffs rise to.
We applaud the effort, but we would encourage the government to take a little more time to study the long-term implications of converting from oil to coal. According to the National Electric Power Regulatory Authority’s 2012 state of industry report, oil-fired power plants account for over 8,000 megawatts of installed capacity. Converting all of those to coal is an effort likely to cost several billion dollars. The government of Pakistan has a tendency to make energy policy by simply going for the latest fads. That is how we got into the trouble of having too many oil-fired power plants in the first place. We set them up in the mid to late-1990s, when oil prices were at historic lows in inflation-adjusted terms, and it seemed to make all the sense in the world to build power plants for something that we could fuel either through our own indigenous resources or through imports from friendly regional countries. As we now know, that turned out to be a disastrous idea.
When in the mid-2000s, the prices of oil started going up, we started converting many power plants to natural gas, under the assumption that the country had abundant gas reserves, not realising that much of those had been depleted due to a half-century policy of horribly mispricing the commodity and incentivising its waste. And so, just under a decade later, we are once again talking about changing the fuel source for our power plants.
The government would do well to realise that a thermal power plant has an operating life of about 30 years. That means that any plan that only takes into account fuel prices this year, and not how they might fluctuate over, at least, the next decade is likely to come up short-sighted. Pakistan has tried several different iterations of this strategy at least twice now and is looking set to repeat the same mistake a third time. Have we learnt nothing from our mistakes?
We are not opposed to the idea of switching to coal-fired power plants, though there is something to be said for the environmental hazards of doing so. However, we do urge the government to take the trouble to figure out whether or not the mathematics that currently make the option so attractive are likely to hold true for the next few years. Otherwise, we will be back to square one in another decade.
Pakistan cannot afford another lost decade. We understand the prime minister’s urgency to get things done. But taking just a little more time to get them right is likely to be an investment worth making.

Butt’s admission of guilt

After vehemently denying his involvement, disgraced Pakistan cricketer and former captain Salman Butt admitted to and apologised for his role in the spot-fixing scandal that brought much shame to the country. Two years after the International Cricket Council (ICC) found him, as well as fast-bowlers Mohammad Asif and Mohammad Amir guilty of taking money in exchange for deliberately contriving no-balls during the fourth Test against England, during the 2010 tour of the country, Butt was “apologetic” for the pain he caused to fans and the country. He was banned from all cricketing activity for at least five years and also put behind bars in the UK.
Butt’s admission of guilt comes after he has done time in jail, appealed to the ICC, as well as to the Swiss-based Court of Arbitration for Sport, only for his appeals to be dismissed each time. Only last year, after being released from jail and returning to the country, he insisted that he was innocent. However, delving deeper into his statement, given on June 28, we clearly get the impression that after using up all the cards in the deck, the former opener is now looking to take the opportunity of a new chairman at the helm, namely Najam Sethi, and find a way that would enable him to make his comeback. Mr Sethi recently stated that he would make a plea to the ICC to reduce the duration of Amir’s ban. This statement seems to have alerted Butt and he appears to now look to earn a similar favour through a manipulative, apologetic press conference.
Is this what our country has been reduced to? Do the supporters of the national team want to give a chance to a corrupt player, who not only committed corruption himself but also led one of the brightest stars in Pakistan cricket on the same dreaded path? His manipulation aside, Butt, the “orchestrator” of the spot-fixing saga, needs to spend time off the field and made to regret his actions — actions that let down the fans and the country after raising their hopes when he was made captain.