The pertinent need is not just to “restructure the power sector”, but in fact re-design the entire economic & governance system.
A vast majority of what you term as “zombie firms” (in almost every sector) are either owned/managed by the govt/state or its patronised entities (political, military & private-sector).
Hence, the decision-making & policy priorities are not to run economically sustainable sectors (& firms, zombies or otherwise), but to perpetuate their existence to ensure extraction.
The systemic sin here is the absence of any competitive internal markets (in almost all sectors) & the insistence on using the Govt as the single purchaser thus nullifying the process of price discovery.
Therefore, the govt isn’t falling into the ‘Concorde fallacy’, the fallacy is a policy tool to ensure continued extraction (from the people) & redistribution (to the patronised entities).
You should definitely write in more detail on this sector - especially your thoughts on how to deal with the issue of sovereign guarantees. No one in Pakistan seems to know how to go about it.
Atif sb, the whole nomenclature of power sector needs a major surgery. IPPs is just one piece of the puzzle. DISCOS, public sector gencos, transmission system and then wapda itself, there is a haemorrhage in every artery. Theft, short recovery, over-billing, transmission losses etc. we have installed capacity of 48k mw whereas we can’t transmit more than 23k mw. The demand is also not above 26k mw then the whole fixed portion of the entire capacity has to be absorbed by the available consumer base.
I think majority of the people in Pakistan are wondering what to do about the issue of "Sovereign Guarantees" . Is there any legal way of getting rid of those? I would request you to write in greater detail about it and provide different options for the government to deal with it. Is there a lack of will, strong vested interests or is the government actually so badly stuck that it cannot get out of it, even if it wants to?
Thanks Dr Mian! I am an old fan of yours. I too would request you to write on what is in your mind on how to cope with sovereign guarantees issue. Paying separately from public funds as you suggest is an obvious way but the public would still be paying indirectly to the ‘seths’.
As always insightful. I am wondering if the state prove criminal nature of the whole process for the award of these power contracts, no arbitration court or any other legal forum will invoke sovereign guarantees. Out of court settlement would be the only alternative. Otherwise it will bleed the economy either one way or another but I agree let it bleed at the right place instead of bleeding Pakistan right at the jugular vein
Pakistan as a whole has become a Zombie. It seems that no one is thinking about the future at all. I’m surprised that even those companies who do businesses with other countries are not planning and strategising as if they’ve closed their eyes as well, but for what?
The pertinent need is not just to “restructure the power sector”, but in fact re-design the entire economic & governance system.
A vast majority of what you term as “zombie firms” (in almost every sector) are either owned/managed by the govt/state or its patronised entities (political, military & private-sector).
Hence, the decision-making & policy priorities are not to run economically sustainable sectors (& firms, zombies or otherwise), but to perpetuate their existence to ensure extraction.
The systemic sin here is the absence of any competitive internal markets (in almost all sectors) & the insistence on using the Govt as the single purchaser thus nullifying the process of price discovery.
Therefore, the govt isn’t falling into the ‘Concorde fallacy’, the fallacy is a policy tool to ensure continued extraction (from the people) & redistribution (to the patronised entities).
You should definitely write in more detail on this sector - especially your thoughts on how to deal with the issue of sovereign guarantees. No one in Pakistan seems to know how to go about it.
Atif sb, the whole nomenclature of power sector needs a major surgery. IPPs is just one piece of the puzzle. DISCOS, public sector gencos, transmission system and then wapda itself, there is a haemorrhage in every artery. Theft, short recovery, over-billing, transmission losses etc. we have installed capacity of 48k mw whereas we can’t transmit more than 23k mw. The demand is also not above 26k mw then the whole fixed portion of the entire capacity has to be absorbed by the available consumer base.
Great analysis
I think majority of the people in Pakistan are wondering what to do about the issue of "Sovereign Guarantees" . Is there any legal way of getting rid of those? I would request you to write in greater detail about it and provide different options for the government to deal with it. Is there a lack of will, strong vested interests or is the government actually so badly stuck that it cannot get out of it, even if it wants to?
Thanks Dr Mian! I am an old fan of yours. I too would request you to write on what is in your mind on how to cope with sovereign guarantees issue. Paying separately from public funds as you suggest is an obvious way but the public would still be paying indirectly to the ‘seths’.
As always insightful. I am wondering if the state prove criminal nature of the whole process for the award of these power contracts, no arbitration court or any other legal forum will invoke sovereign guarantees. Out of court settlement would be the only alternative. Otherwise it will bleed the economy either one way or another but I agree let it bleed at the right place instead of bleeding Pakistan right at the jugular vein
Pakistan as a whole has become a Zombie. It seems that no one is thinking about the future at all. I’m surprised that even those companies who do businesses with other countries are not planning and strategising as if they’ve closed their eyes as well, but for what?
Sir it's irony,but true picture is depicted above.