Economic cost of power shortage

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Economic cost of power shortage


By Mansoor Alam
IT is all too apparent that human existence is dependent on electricity in this day and age. Hence even a few hours of load-shedding causes enormous hardship and loss to the people and the country.

Man’s dependence on electricity has assumed such critical proportions that a day’s shutdown of power would cause any country to plunge into not only darkness but the dark ages.

However, while the nation is gasping for electricity, just as an asthmatic gasps for breath, the government bigwigs, who have never had to suffer load-shedding, are busy calculating the cost of producing additional energy. They do not seem to understand that in situations as dire as this the cost becomes irrelevant. “A horse, a horse, my kingdom for a horse,” cried King Richard III when faced with death. Who can deny that no price is too high when the choice is between life and death?

And we are exactly in such a situation. Our industries and agriculture are dying because of shortage of power. Our exports are declining because we cannot meet our commitments. Our people are suffering from diseases and dying untimely deaths because load-shedding shuts down hospitals and clinics for hours. Recently, two children in Karachi fell to their deaths in a manhole because of load-shedding that caused total and sudden darkness to envelop the footpath on which they were walking.

So let us not worry about the cost. It simply needs to be done and done now no matter what the cost. One need not be an economic expert to know that even an hour’s load-shedding costs us billions in terms of lost production and productivity. Hence, the investment of billions in power-generation will be worth every penny.

Some may say that we did that once before and paid a high a price to the independent power producers (IPP) for building power plants which are now costing us an arm and a leg. Some may ask, in any case where is the money to build new power plants?

These are, however, false arguments. Firstly, shortsightedness always imposes a heavy penalty on the shortsighted. That is what has happened to us. Since the construction of the Mangla and Tarbela dams all our governments thought that we had become self-sufficient in power forever. They seemed to have completely ignored the fact that the population was growing at three per cent (before this figure was brought down somewhat) per annum and its per capita consumption of power at a higher rate. Hence, unless at least six per cent per annum is added to our existing capacity, we were bound to run into serious difficulties as is happening today.

Secondly, it is wrong to think that we paid too high a price to the IPPs. It is a law of economics that the price of a commodity depends on its demand and supply. Thus we had to agree to IPP terms because our need for energy was causing economic, political and social havoc. Our shortsighted and selfish leaders had brought us to a pass where we had to choose between the devil and the deep sea. Hence we had to pay the price demanded by the IPPs or else descend into chaos, anarchy and bloodshed.

We are once again in a similar situation. Therefore, one must reiterate that it is not the time to worry about the cost. Let us get the best deal possible and end the load-shedding rather than worry about its cost and endanger our very existence. The high cost of today will be compensated for by the high dividends of tomorrow. But any further delay would amount to being “penny wise and pound foolish”.

Some may ask how this can be done in days and weeks while ministers talk about months and years? The answer is simple; know the value rather than the price of things. That being the case, make existing power plants fully operational at any cost. Two, hire power-producing ships and meet the shortfall. Three, minimise the line losses and power theft. Four, end the inter-agency cycle of debts by giving one-time interest-free loans to the debtors to clear their debts to the power producers, then institute a system to prevent its recurrence. Five, buy power from neighbouring countries which may have excess power to sell.

These may cost us dearly but we have no choice. It has to be done. One way would be to reduce to the bare minimum all non-productive expenditures be it defence, administration, junket foreign trips, luxury cars or anything else. These must be curtailed and even stopped until uninterrupted power supply to our industries, agriculture, hospitals, educational institutions etc has been restored. Once it is done we should start working on long-term solutions; hydroelectricity, solar energy, wind power, dams, fossil fuel and nuclear-based power plants.

So the problem is not lack of solutions or funds but lack of common sense and priority objectives on the part of our leaders. They need to understand that they will have to solve the nation’s problem of power shortages or the country will go up in flames. They do not have to be geniuses to understand this simple fact that unless load-shedding ends, jobs cannot be created, poverty cannot be alleviated, crimes cannot be controlled, Moreover, public unrest will persist, extremism will prosper, investment will disappear, tourism will die and our economy will come to a standstill. Very soon, in the words of Hobbes, “life will become nasty, brutish and short”.