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2010-2020: Pakistan's Lost Decade

VCheng

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@RiazHaq

Brof sb,

In 2009, Pakistan's installed generating capacity was about 20,000 MW. It exceeded demand of 17,000 MW and actual supply of just 10,000 MW.

You are missing the finer point. Most of this 20GW capacity was fuel oil based, which is way too expensive for consumers of a developing country- that too during the peak of the oil cycle. Mushy never invested substantially in coal or hydro power during his tenure which could have avoided this peril.

Perhaps Niaz sb @niaz or SAH sb @VCheng can shed some light on this.

Regards
I can only observe that the power sector circular debt keeps on climbing, even now.
 

RiazHaq

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#Pakistan's Lost Decade 2010-20: Pak #manufacturing output tripled from $7 billion in 2000 to $21 billion in 2010. Then it rose just 60% to $34 billion in 2019. The nation's #industrial output declined as percent of #GDP from 14% to 12% in the last decade https://www.southasiainvestor.com/2021/04/2010-2020-pakistans-lost-decade.html


I can only observe that the power sector circular debt keeps on climbing, even now.
Power sector debt is rising mainly because of capacity charges as more and more new underutilized capacity is coming online.
 

Myth_buster_1

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I see you are a very pro military rules, just be wise here, just look on the condition on Myanmar, just dont make any attempt to bring military rules again and you are living in US now, you will not face any consequences if that thing ever happen in Pakistan.....

And I see many Pakistani members here saying Pakistani military who lead many Pakistani institution and SOE is the main problem of mismanagement.....

Better see the cause and fix it, just dont try to seduce both Pak military and its supporters to make any coup again

And there are also unsuccessful authorian rule like North Korea, Myanmar, Venezuela, Cambodia, Laos
PAKISTAN military rule is not like myanmar venezuela etc. Ayub khan did what all of combined pakistani civil could do in 50+ years rule.
 

SoulSpokesman

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@VCheng @RiazHaq

SAH sb/ Brof sb,

I can only observe that the power sector circular debt keeps on climbing, even now.

The circular debt is rising because the revenues of the discoms is not equal to the total costs incurred by them. Capacity charges of unutilised power plants is only a part of the story.

(By the way, circular debt is a problem in India too and requires periodical clean up by state govts. Inspite of capacity charges not being a major issue in India.)

The solution is to cut down on power theft.

Regards
 

Solidify

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Pakistan has lost 10 years in every field to knowledge gap within younger generations on invisible issues that will impact Pakistan in coming years for blunders of corruption of Zardari + Nawaz for not educating the masses!
 

Meengla

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The lost decades! First, between 1988-1999 due to the great political upheavals between PMLN and PPP. And the second was roughly between 2007-2016 due to the Mullah violence, the so-called Judges Movement, and of course the scourge of terrorism all over Pakistan.

The financial numbers may not show these but in my opinion the State of Pakistan's attention was greatly diverted to the internal strife then to focus on the economy and development.

Otherwise, Pakistan's numbers were often ahead of India from 1947 till 1988, even under Zulfi Bhutto's so-called 'Socialism'. India took off in 1991/92 while Pakistan lost two decades. And hence we see the difference. As to Bangladesh-- they are deservedly enjoying the fruits of relative political stability AND peaceful international borders. Good for them.

I have often said in this forum--Pakistan's problems are not particularly due to a 'corrupt' political class or inapt bureaucracy . Such problems exist in most countries of the world and sometimes to worse degrees than in Pakistan. Just look at Latin America! They have no major wars going on and are a fringe location in geopolitics. But Pakistan is part of a VERY hostile and challenging neighborhood and that has certainly caused Pakistan much grief and added to Pakistan's problems decisively!

In short, the path to progress in Pakistan goes through peace--both internally and externally. Then you will see the potentials of Pakistan realized on amazing levels.
 

niaz

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@RiazHaq

Brof sb,

In 2009, Pakistan's installed generating capacity was about 20,000 MW. It exceeded demand of 17,000 MW and actual supply of just 10,000 MW.

You are missing the finer point. Most of this 20GW capacity was fuel oil based, which is way too expensive for consumers of a developing country- that too during the peak of the oil cycle. Mushy never invested substantially in coal or hydro power during his tenure which could have avoided this peril.

Perhaps Niaz sb @niaz or SAH sb @VCheng can shed some light on this.

Regards

It was more than 10 years ago. However, since I had been working for a company that supplied a lot of fuel oil to PSO I was well aware of the reasons for power shortages despite surplus capacity and I will endeavor to reply to the best of my knowledge.

Most of the earlier IPP’s were installed under the 1994 Power Policy. Under this policy, the bulk power tariff was calculated assuming a 60% capacity factor and had 2 elements. The capacity payment had to be paid by WAPDA every month; whether or not it actually receives any electricity from the IPP that month (this included the fixed costs such as operations and maintenance, insurances, administrative, and debt servicing, and the return on equity). And the energy payment which was calculated on the amount of electricity purchased (It was for the variable costs, namely the usage of fuel, variable operations, and maintenance costs). Tariff adjustments could be made when necessary, for example, to changing fuel prices. These rates were offered to every IPP irrespective of technology or fuel used.

The policy when formulated had assumed a rate of PKR 2,843/tonne prevailing at the time; the price has grown almost 10 folds since 1994 because of increase in the international price of fuel oil and the increase in the taxes and duties imposed by the GOP coupled with the Rupee devaluation against the US dollar.

The tariff rate which was about 6.5 cents per KWH in 1994 however does not reflect the true cost of power purchased from IPPs’ to WAPDA (PEPCO was not formed until 2007) and the public. Firstly, the capacity payment, which guaranteed the investors a good return on equity (for attracting investment) gave IPPs no incentive to be cost-effective. Secondly, due to the theft, line losses due to poor condition of the transmission lines, and non-payment of power bills even by the Gov’t organizations, the real cost of the power produced by the IPP’s was much higher than the income received by WAPDA. Therefore WAPDA often purchased less electricity from the IPPs because it translated into a less overall loss.

It is okay to blame the power shortages and the corruption in Pakistan as the reason why the other countries such as Bangla Dash left Pakistan behind in the economic growth. But why are we ignoring religious militancy?

The target killing of the Shia and the minorities, the aftermath of the Lal Masjid affair which increased suicide attacks, and the bombing of the Shrines, is also a major factor in stunting Pakistan's economic growth. Bangla Dash had no such problem. Who would want to invest in a country where law & order is so bad that even visiting cricket team is attacked?

Since most of us have very short memories, the 2017 Faizabad Dharna by TLP was because of the removal of a clause cursing Mirza Ghulam Ahmad by those who declared themselves Muslim in the Passport Application. This clause had not existed until the time of the bigot Zia even though Qadianis were declared non-Muslims a few years earlier and the removal of the clause did not imply an explicit insult to our Holy Prophet (PBH). French President remarks on the other hand were undoubtedly offensive. Even though the dharna caused hardship to the public and disruption in the running of the day-to-day government; Imran Khan exploited the situation because he was in Opposition. Now that he is in power he says just the opposite.

Quote

“PTI chairman Imran Khan on Wednesday said his party workers were willing to join the Faizabad sit-in as "the matter had left the realm of politics".

Addressing a press conference in Islamabad, Khan said, "The government should know that whenever a question is raised on the finality of prophethood, there's always a reaction of great proportions because of the religious history attached with the matter."

"The whole nation should be grateful that the matter was wrapped up in two days, otherwise there would have been a catastrophe of great magnitude and these people [the government] would have hidden out of sight leaving the nation to bear the brunt of the disaster," Khan said.

"The government has no idea what would have happened if this matter had escalated; they should thank the army for stepping in and diffusing the situation, he added.” Unquote

https://www.dawn.com/news/1373626

The bitter truth is that no political gov’t has the spine to tackle the religious militancy and is ever ready to acquiesce to the religious militants. It is unlikely that 'Zarbe -Azb' would have started had the Taliban not made the error of attacking Army Public School.

If Pakistan is to progress economically, all militant elements have to be dealt with an iron fist. Else 10 years from now people will be writing about the lost decade of 2020-2030.
 
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Indos

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PAKISTAN military rule is not like myanmar venezuela etc. Ayub khan did what all of combined pakistani civil could do in 50+ years rule.
As far as I know despite Pak civilian government rules, military is still quite dominants, which I read from here that so many institution are under military and they can have business empire as well

PAKISTAN military rule is not like myanmar venezuela etc. Ayub khan did what all of combined pakistani civil could do in 50+ years rule.
Different environment Today where other countries are more stable Today thus more competition to get FDI. Any way Ayub Khan only rules about 10 years, just wait until 32 years and you will likely end up with corruption and supression in which in the end can cause major economic and political crisis like happening in Indonesia within 1997-2002.

Authorian rule without check and balance will create very corrupt government in the long run and please dont compare military rule with China and Vietnam. Both China and Vietnam adopt communist political system where the powers are divided and there are also politbiro, very different with militaristic rule with one strong man control every thing, this is why China and Vietnam can still be able to produce good government policy within long period of time. Even for Vietnam their communist parties also have internal election. @Viet

Indonesian history can be a good example where political stability under military rule create huge corruption that led to economic crisis. Actually the start of our financial mess comes when our finance minister in 1988 make Pakto 88 that liberate the banking system and make people can make a bank without much capital. Limited of public discussion and debate due to undemocratic system make this flaw policy can pass, and it is also in the very corrupt environment. My father refused to be CEO of Japanese company in Indonesia during Soeharto rule because he knows as CEO he must do bribery, just an example....

 

That Guy

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I've said it before, and I'll say it again, BD's economy is only artificially higher than its supposed to be. Eventually, this will come back to bite BD.

Meanwhile, once the war on Pakistan's western border dies down, Pakistan will experience great growth once again.
 

SoulSpokesman

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@niaz

Niaz sb,

Thanks for your inputs.

As a matter of fact, I am myself professionally connected with the Indian power sector and many of the things you say sounds a case of deja vu.

India too had a similar number of oil fired plants set up in the 1990s. Mercifully, they didn't create havoc for two reasons. One, in terms of sheer percentages they were dwarfed by coal fired capacities. Second, most of these oil fired plants had a power purchase agreement (PPA) of 15 years. They produced power till about 2005 when oil prices were reasonable and by mid 2010s, the PPAs had expired and they were shut down and stopped draining the discoms any more.

Now, I have a Q for you. Do Pak's oil fired plants have fixed tenure PPAs or the govt has to pay them capacity charges till Judgement Day?

Regards
 

khansaheeb

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The 2010 floods and the administrations by the PPP and PML-N, along with the spill over of the war from the west didn't help things. You can can me a PTI supporter all you want (rhetorical statement, not directed at anyone) but macroeconomic reforms and regaining the public’s trust are key to getting the political capital to make the tough changes that will be unpalatable. If the Afghan war ends and some stability is achieved in Afghanistan, PM Khan could claim a hand in his advocacy of dialogue, and may gain the political capital in certain parts of society to make more reforms.

One thing that PML-N did, which was a double edged sword, but on the whole their greatest legacy was getting China interested enough in Pakistan via CPEC. Managing the debt (from CPEC and past borrowing) is part of what’s creating a drag on the economy. The double edge sword of this debt is that financing may be hard to come by in the near future, and a bird in hand is worth two in the bush.

the forty years of war next door doesn’t help economic growth, and unless global support can be assured to create a soft landing after western forces withdraw, Afghanistan will be a basket case on Pakistan’s door and a pull on our resources if Pakistan is forced to deal with the subsequent spillover.

Pakistan has had a lot of challenges over the past ten years, it’s was inevitable Bangladesh would surpass Pakistan and India on a GDP per capita basis and Pakistan in raw exports.

The 2020s will have to be the decade Pakistan caught up.
The main cause of Pakistan's drag economy is the Pakistani business model:-

1618728303049.png
 

Viet

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As far as I know despite Pak civilian government rules, military is still quite dominants, which I read from here that so many institution are under military and they can have business empire as well



Different environment Today where other countries are more stable Today thus more competition to get FDI. Any way Ayub Khan only rules about 10 years, just wait until 32 years and you will likely end up with corruption and supression in which in the end can cause major economic and political crisis like happening in Indonesia within 1997-2002.

Authorian rule without check and balance will create very corrupt government in the long run and please dont compare military rule with China and Vietnam. Both China and Vietnam adopt communist political system where the powers are divided and there are also politbiro, very different with militaristic rule with one strong man control every thing, this is why China and Vietnam can still be able to produce good government policy within long period of time. Even for Vietnam their communist parties also have internal election. @Viet

Indonesian history can be a good example where political stability under military rule create huge corruption that led to economic crisis. Actually the start of our financial mess comes when our finance minister in 1988 make Pakto 88 that liberate the banking system and make people can make a bank without much capital. Limited of public discussion and debate due to undemocratic system make this flaw policy can pass, and it is also in the very corrupt environment. My father refused to be CEO of Japanese company in Indonesia during Soeharto rule because he knows as CEO he must do bribery, just an example....

VN has a very different political system than CN despite sharing the communism in name.
There is very strict check and balance in place. There is no one man rule.
 

FuturePAF

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The main cause of Pakistan's drag economy is the Pakistani business model:-

View attachment 735153
If that’s the business model, then obviously “sending money overseas” is the problem. Profit taking is normal for a private company, but if this is a government run company then it’s bound to fail. Even a private company should be re-investing more into their company (like the German “mittlestand” businesses) to become more competitive.

upon reflection, the problem is actually “seek Pak gov money”. If private companies seek government money the. They should be prepared to have a government appointed administrator running their business, and deciding how entire company’s money is spent. Until they pay back the government what they have “borrowed”, that is the only way it can be done and not have the bailout turn into a handout.
 

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