http://www.economist.com/news/asia/21596554-slowly-lights-may-be-coming-again-urdu-rate-growth
This article describes the current state of the economy of Pakistan. Electricity shortages, among other problems, is one issue that Nawaz Sharif, the Prime Minister of Pakistan, has promised to fix. The article says that the electricity shortages are caused by a "circular debt." In this circular debt, private power firms do not produce as much as they could because the state purchaser does not always pay the firms. The state purchaser does not always pay the private firms because electricity consumers do not always pay the state purchaser. The privatization minister of Pakistan suggests private investors being allowed to take over these state-run energy firms that are criticized for being overstaffed and poor financial control.
The article goes on to say that an even bigger problem for the Pakistani economy is the source of energy. As of now, Pakistan is heavily reliant on imports of oil and natural gas. Pakistan spends $14 billion a year on oil imports. The Pakistani government plans to bring in natural gas from Iran, but this plan will most likely not come into fruition if the U.S., the largest donor to Pakistan does not support the move. Is the U.S.'s ability to effectively prevent trade between Iran and Pakistan justifiable?
2 comments:
I think the idea to privatize electricity firms in Pakistan is a good one because clearly the system they have now is not working. If consumers pay the private firms directly, they can produce what is demanded and there will not be any shortages.
The idea state pays for power that the consumer will eventually pay for seems that it does not work for Pakistan. I question why Pakistan is not able to get consumers to pay the state-purchaser. I agree that privatization of electricity might do well in this situation, though it may cause more harm than good to the people if none can afford electricity because the imports of fossil fuels is too expensive
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