Making use of US energy assistance

The reopening of NATO supply routes through Pakistan is already paying dividend for Pakistan, quite literally. The US has released $280 million assistance for Pakistans energy sector, just days after the supply routes were re-opened and the spy masters of the two countries met after a stretch of icy relations. The funding released has put to an end a period of more than two years during which time US funding to Pakistans energy sector remained suspended since the previous instalment of funding amounting to $143.8 million, in this regard was received back in FY10. Recent media reports have contended that US funding shall add close to 900MW to the national grid by as early as 2013. However, given the fact that these funds are mostly meant for improvement and rehabilitation of the Mangla Dam and hydro-power stations, the addition of 900MW appears to be a tall claim. A more realistic tally appears in the latest Quarterly Progress and Oversight Report on the Civilian Assistance Programme in Pakistan, which relates that as on June 30, 2012, nearly 500MW had been added to or saved in the countrys national grid. Of the nine ongoing energy projects backed by the US finding, eight have a completion time beyond June 2013. The rehabilitation of a hydro-power station at Tarbela Dam, initiated in April 2010, is still ongoing and is expected to be completed by December 2012. Industry sources suggest that the Mangla Dam project would take another three years if it starts immediately and would bring efficiency of 80-100MW to hydro-power generation. Regardless of the megawatt quantum to be added or saved, it is the technical assistance and training that is of more importance and has aided the government institutions. The USAID power distribution project that is aimed at improving management capacity, financial systems and billing collection of power distribution companies has reaped more benefits than the small 10-20 MW generation projects. While the US assistance is welcome, the authorities should not be complacent in implementing the reform process that has slowed down considerably in the past year, mainly due to non-availability of funds, restrained by the US administration during FY11 and FY12. The Progress Report itself highlights issues such as political interference, high subsidies, low tariff collection and distorted prices as the key factors impeding private companies investing in energy projects. Soon Pakistan may be entering an IMF programme once again for which a lot of prerequisites will have to be met. Rest assured these will include addressing inefficiencies, subsidies in the power sector. More reasons why the funding made available should be graciously accepted and effectively used to address glaring inefficiencies in the power sector.