SELLING HOUSEHOLD SILVER
Pakistan’s household silver is up for sale to highest bidders. While one party mortgages the future of Pakistan’s resources, the other sells the silver. The Charter of Democracy provides a perfect camouflage to conceal corruptions in mutual back scratching. The slogan of Supremacy of Parliament is beyond what the eye can see and the most analytical mind can imagine. The plan to convert East India Company to West Pakistan Corporate is in full swing (Colonialism continues to rule Nation 9 May 2010). Government experts maintain that it is necessitated for both short and long term interests of the country. Is it?
How compromises on economic sovereignty, cost escalations and lack of value addition add to national wellbeing is indigestible. Economic and technical experts question high cost investments with specifically amended Public Procurement Regulatory Authority Rules (PPRAR) and Tariffs.
Take the so called proposed investment of $34 Billion from China. It is actually a hard loan carrying a return of 7%; much higher than the usual 2-4% Asian Development Bank and World Bank. NEPRA has approved exclusively escalated tariffs and revised the ‘Rate of Return’ on investment from 17% to 27%. This means a very high cost of electricity for consumers. Given the IPP policy, Pakistan and its future generations are mortgaged.
The Chinese Consortium and Banks insisted there will be NO BIDDING for the project under PPRAR. The government is bound to award the contract directly to Chinese or its affiliated companies. Rather than Pak-China Friendship, this is a reflection of the growing corporate China shop.
The government is willing to violate transparency and amend the PPRAR. Curiously, a similar violation forced Prime Minister Pervez Ashraf of PPP to repeatedly appear before the Supreme Court on Rental Power. In case of Metro Bus Lahore, the Punjab Government refused to cooperate with NAB over violations of PPRAR and had the Chairman packing through Supreme Court. Mysteriously the Lahore Development Authority office with all records was gutted. Chaudary Iftikhar deliberately stalled power projects of the PPP so that subsequently the new power generation mafia from Punjab could get a form hold on the energy sector.
The pricing mechanism for awarding the contracts to Chinese is opaque. It will remain this way to conceal hidden profits that will be ultimately siphoned off. NEPRA has already accepted against rules a time barred Tarriff Review petition. The presence of Khawaja Muhammad Naeem the brother in law of Khawaja Asif, the Minister for Water and Power as member Punjab NEPRA is not without purpose. With an already exorbitant cost of contract, the logic of soaring rate of return defies logic. As against US$ 0.55 Million per megawatt in India, NEPRA has approved $1.7 million per megawatt in Pakistan. This means an escalation of 209%. Where will the extra cost of $1.15 Million per megawatt of electricity go is anybody’s guess?
Another question mark on these projects is third rate technology going extinct in the international market. China is under immense international pressure to close such plants. Due to environmental hazards the carbon credits for hydro based power projects in Pakistan will be compromised. The coal will be imported from Indonesia. It is expected that the entire supply chain logistics will be managed by front companies at successive stages. Special rolling stock and railway lines will have to be laid from Port Qasim to Punjab to ensure uninterrupted supply of imported coal.
USA produces 56% of its needs from coal (mostly lignite) estimated at 267 Billion Metric Tons (BMT). Thar Coal estimated at over 184 BMTs produces zero. The PPP government in Sindh sits over the world seconds largest lignite based coal reserves with strange technical inefficiency and administrative callousness. The type of projects being awarded with clumsy execution methods will never see the light of day. There is no urgency to exploit these massive reserves towards Pakistan’s energy needs.
The Sindh Engro Coal Mining Company Project has yet to take off in five years. As reported in media, no important infrastructure has achieved any significant physical progress despite spending Rs50 billion in the past five years. For technical reasons, these petty projects are doomed to failure. It is a very high cost project to treat lignite for its volatile and combustible nature for transportation to sites by rail and roads and then reverse it. This will also entail extra logistical of transportation by rail and road. The government of Sindh refuses to look in the right direction. Rather than deal with Thar Reservoirs as a national asset, they have divided the area into 12 blocks, to award contracts on give and choose basis. The advantage is kickbacks on feasibility studies and multiple project awards going nowhere. Litigations maintain the inertia.
Due to the volatile nature of lignite it is inadvisable to transport it. It is more feasible and economical to convert Lignite into gas and liquid petroleum products onsite. This has the added advantage for providing jobs, schools, hospitals, water for agriculture and communication infrastructure to local people. According to international estimates, specially designed plants and refineries have to be set up close to the excavation sites to process lignite into electricity, natural gas, liquefied petroleum gas, jet fuel, petrol, diesel, fertilizer, water for irrigation and algae based ethanol plants for domestic fuel. The technology to install such onsite refineries is only with United States of America. According to one feasibility study by a Joint Pak-American Consortium, such a project has the potential to slash Pakistan’s import bills of oil by 27% within 18 months of commissioning in bloc 7. Incrementally expanded, it can meet Pakistan’s total energy needs for the next 100 years including production of over 300,000 Mega Watts of cheap electricity. But despite the low cost, huge gains and revolutionary socio-economic spinoffs, the government is bent on ignoring it.
By 2018, Pakistan will have no gas. No attention is being paid to the presence of over 9.1 billion barrels of oil and 107 trillion cu ft of gas in the shale. Thar coal in Sindh and Thal Bloc in KPK hold the future of Pakistan’s energy needs. Both are neglected.
There is other family silver being contemplated for sale too. It includes massive reserves of copper, gold, chromite, iron and precious stones. The belt runs from Chitral through Waziristan to Balochistan. The need is to convert every speck of dust to value addition. Pakistanis must rise against this daylight robbery.