Pakistan’s Biggest Challenge Is Not the Taliban — It’s Electricity

The new government faces all sorts of challenges, but its most immediate task is to bring an end to crippling power outages that are costing the nation billions of dollars in productivity

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Muhammed Muheisen / AP

Silhouetted against vehicles' lights, people walk on a street darkened by power cuts on the outskirts of Islamabad on June 4, 2013

For Pakistan’s new government, the biggest challenge isn’t taming the many militant groups that mount near daily attacks across the country. “Our No. 1 challenge is energy,” Khawaja Muhammad Asif, Pakistan’s new Minister for Water and Power, tells TIME. “It’s a bigger challenge than even terrorism.” While Taliban attacks have claimed the lives of tens of thousands, and destroyed the livelihoods of many more, Pakistan’s notorious power outages that last up to 22 hours a day directly affect over 180 million people. “Their personal lives, their work lives, the lives of their children,” adds Khawaja. “Everything is affected.” At the moment, Pakistan is only able to produce around half of the electricity it requires. And the economic cost each year is over $10 billion, shaving around a third off the growth rate.

In the May general elections, electricity was the top voting issue. The government of President Asif Ali Zardari was punished for failing to resolve the problem. Prime Minister Nawaz Sharif’s party successfully rode a wave of popular anger at the power cuts, vowing to create a “bright Pakistan.” Since the election, voters have demonstrated their undimmed rage as a rash of violent riots broke out across the country. In the industrial town of Faisalabad, where the crisis has shut down several factories, a group of young boys was seen attacking the local electricity company’s offices with sticks and bricks. In retaliation, the police raided their homes, tearing down doors and beating terrified occupants inside.

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Only the wealthiest are inured from the crisis. Generators are now a status symbol in Pakistan. They groan loudly, like a small plane struggling to take flight. To operate multiple air conditioners for over 12 hours a day can cost as much as rent. Those with some means opt for a battery that charges while the power is on and stores enough electricity to run a slowly whirring fan. When the power is on, the hour is fleeting. In the heat, time passes agonizingly slowly. Productivity plunges. Mobile phones shut down. Laptop computers swiftly slow down and overheat. (I’ve had to put the laptop in the fridge to cool down a few times.) It is advisable to shower regularly, though the water is usually hot and one sweats at the same time, causing a confusing sensation. Other survival techniques include wearing as little clothing as possible, though this has the unfortunate effect of attracting mosquitoes to graze over more acreage.

Like many other problems that afflict Pakistan, the energy crisis is a product of years of steady neglect in a country of scarce resources, a growing population, poor management decisions and a conveyor belt of corruption. Earlier this month, Sharif despaired that a nuclear-armed country can’t generate enough electricity to meet its needs. For decades, Pakistan has relied on pricey oil imports. “Instead of going for hydroelectric power or coal, we went for oil,” says Khawaja, the minister. “But we don’t produce oil. We don’t produce much gas, either.” As the price of oil rose and the Pakistani rupee weakened against the dollar, the cost of keeping the lights on spiraled upward.

Even as its electricity bills grew bigger, Pakistan failed to collect payments. One of the biggest issues confronting the country right now is a so-called circular debt of $5 billion. The importers of oil are owed money by the companies that generate the electricity, which in turn are owed money by the distribution companies, which are then owed cash by consumers who don’t pay up, from the government and the private sector. In recent years, defaulters have included the presidential palace, the Supreme Court, the top intelligence agency and the Sharif family’s steel business.

Another constant problem is theft. It starts off small, with the manipulation of street meters. In a short story titled Nawabdin Electrician, the Pakistani-American writer Daniyal Mueenuddin noted the practice, “so cunningly done that his customers could specify to the hundred-rupee note the desired monthly savings.” At the top end of the scale, private entrepreneurs received advance payment for more than double the electricity they provided. The Supreme Court eventually shut down the lucrative wheeze. The government estimates that $2 billion is lost each year through graft in the energy sector.

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Pakistan also pursues a ruinous policy of selling electricity at a rate below cost. This is done across the board. “They’re effectively subsidizing the rich, who can afford to pay,” says a U.S. official. “It’s messed up.” The new government, says Khawaja, will attempt to pay down the debt within two months, keep it at that level and phase out the subsidies. The move would please the International Monetary Fund, which is currently in talks with Pakistan about issuing a fresh loan. Other plans include privatizing large chunks of the sector and luring foreign investment.

Pakistan’s energy crisis could also end up guiding the country’s foreign policy. Since being elected, Sharif has turned to every foreign visitor — from the Chinese Premier to a visiting Indian delegation — to ask for their help. Sharif’s government is keen to normalize relations with neighboring India through stronger trade ties. “The Indian government is offering us 500MW of electricity through a system that will be installed over the next two years,” says Khawaja. The Indian private sector is making a cheaper offer that could see fruition in six months’ time.

The Sharif government had hoped that its Saudi allies, sensing Pakistan’s desperate needs, would come through with an oil deferred-payments package. “I don’t think that will happen,” says Khawaja. “At least not yet. It could take place ultimately, but we are trying to live within our means.” But when it comes to the supply of gas, Pakistan may end up following through with a pipeline with Iran that would not only offend Riyadh, but also trigger sanctions from Washington.

President Zardari signed the pipeline deal with Tehran earlier this year, and Sharif’s government is prepared to honor it. “If there’s a contractual obligation,” says Khawaja, “then we’ll fulfill it.” The minister is unfazed by the prospect of U.S. sanctions. “The U.S. must consider that we’re going through a very tough time,” he adds. “We do not have choices. If the international community doesn’t want us to deal with the Iranians then they should have given us some alternatives.”

As he spoke at his parliamentary residence, the television screen lit up with an ad from USAID, eagerly publicizing the modest investments that Washington has made in Pakistan’s energy sector. The U.S. has spent nearly $250 million on hiring expert consultants and enhancing infrastructure. The improvements, including new turbines for a major dam, are said to have added 900 MW. But it won’t be enough to alter Islamabad’s thinking. “At the end of the day, we have to live with them,” says Khawaja of the prospect of striking energy deals with India and Iran. “It makes good economic sense, and it makes for good regional diplomacy.”

If Khawaja and the government succeed in easing the energy crisis, they may end up hailed as heroes. If they fail, they will likely meet the fate of their predecessors. Raja Pervez Ashraf, a former Minister for Water and Power, lost the last election by a wide margin, despite having poured millions of dollars of development funds into his district. Fittingly, his election posters loosely hung from lampposts that never glowed. After a campaign of breathless promises, the new government has been trying to moderate expectations. But voters have less patience. “It’s a question of our political survival,” says Khawaja. “We have to succeed. Failure is not an option.”

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