Circular debt, accumulated in the power sector, is a handy excuse for the energy crisis. This debt piles up when downstream customers fail to pay their bills to upstream suppliers (or producers) in time.
By Amjed Jaaved
Pakistan’s Water-And-Energy Crisis : The Indus Water Treaty talks between India and Pakistan had been in limbo since India abrogated special status (Article 370) of the occupied Kashmir and usurped hereditary rights(Article 35-A) of its permanent citizens.
Following peace on the line of control, the two countries, water commissioners of the two countries held a meeting in March 2021 (though supposed to be held in 2019) to resolve outstanding issues.
The main focus was on Pakistan’s objections to design of Indian hydropower projects on the Chenab River. India is building the 1,000 MW Pakal Dul Hydro Electric Project on river Marusudar, a tributary of the Chenab. The project is located in Kishtwar district of Jammu & Kashmir. The second project, Lower Kalnai, is being developed on the Chenab River.
The meeting was delayed because of India’s pugnacious attitude (surgical strikes, cartographic aggression on Kashmir, etc.).
The Indus Waters Treaty is a water-sharing treaty between India and Pakistan, facilitated by the World Bank, to use the water available in the Indus River and its tributaries.
The treaty allocated the waters of the western rivers that are the Indus, Jhelum, and Chenab to Pakistan and those of the eastern rivers, namely the Ravi, Beas, and Sutlej, to India. According to provisions of the Indus Waters Treaty, all the waters of the Eastern Rivers (Sutlej, Beas, and Ravi), amounting to around 33 million acre feet (MAF) annually, is allocated to India for unrestricted use and the waters of the Western rivers (Indus, Jhelum, and Chenab) amounting to around 135 MAF annually largely to Pakistan.
Under the treaty, India has been given the right to generate hydroelectricity through run-of-the-river projects on the western rivers, subject to specific criteria for design and operation.
The treaty also envisaged funding and building of dams, link canals, barrages, and tube wells like the Tarbela Dam on the Indus River and the Mangla Dam on the Jhelum River.
Since time immemorial, the Indus-river system has been used for irrigation in undivided India. However modern irrigation- engineering work was initiated dating 1850s during the British rule. The treaty was necessitated by partition of India into the dominions of India and Pakistan in 1947.
The fruition of the treaty is attributed to David Lilienthal, former head of both the Tennessee Valley Authority and the U.S. Atomic Energy Commission.
After six years of talks, Indian Prime Minister Jawaharlal Nehru and Pakistani President Mohammad Ayub Khan signed the Indus Waters Treaty in September 1960.
The Indus-water treaty required the creation of a Permanent Indus Commission, with a commissioner from each country, to resolve e any difference of opinion on architecture, design, and other aspects of the dams that the two countries may build on the allocated rivers. Aside from bellicose statements to scrap the treaty, the Indus treaty remained intact though the two countries fought many wars.
In 2017, India completed the building of the Kishanganga dam in occupied Kashmir and continued work on the Ratle hydroelectric power station on the Chenab River despite Pakistan’s objections.
In post-Ayub era, Pakistan was not able to make progress on making new dams particularly the Kalabagh Dam. The construction of the dam was delayed owing to frivolous objections raised by the three provinces that are Sindh, Balochistan and Khyber Pakhtunkhwa.
Instead of trying to evolve consensus on the vital water projects, Pakistan’s politicians remained engrossed in pettifoggery or machinations to pull down whichever government happened to be in power.
Necessity of the Kalabagh Dam
This project was approved by the Technical Committee on Water Resources during 2003-2005. However, the feasibility report has not been implemented for over 15 years. Now three of the four provinces (excluding the Punjab) are at daggers drawn over it. The fact however remains that the inter-provincial committee was composed of eight technical experts, two from each province.
The Committee also looked into all aspects including the effect of dilution of seawater with fresh water, seawater intrusion into the groundwater, riverine irrigation, and forests fisheries (Pala fish, shrimp, kharif and rabi cultivation), besides growth of Mangrove forests.
The project had already been approved by the World Bank Indus Special Study Group in its report titled Development of Water and Power Resources of Pakistan: A Sectoral Analysis (1967). The estimated cost, then, was US$6.12 billion, over six years from 1977 to 1982.
After commissioning of Tarbela Dam in 1976, the dam could have been built in six years by 1982. The cost per unit of 12 billion units, the KBD hydel electricity was Rs1.5 as compared to Rs16.5 per unit from thermal sources.
The dam was to serve as a receptacle to store monsoon flows of the upper reaches of the mighty Indus.
Our power shortage then was 4000-5000 MW. The estimated cost of constructing the dam was US$6.12 billion, over six years from 1977 to 1982. After commissioning of Tarbela Dam in 1976, the dam could have been built in six years by 1982. The cost per unit of 12 billion units the hydel electricity was Rs.1.5 as compared to Rs. 16.5 per unit from thermal sources. We are losing Rs. 180 billion per year due to ten time costlier production (12billion xRs.15 billion).
Add to it loss of US$ 6.12 billion per annum from due to the superfluous flow of 30 million Acre Feet at of water from Kotri Barrage into the Arabian Sea (one MAF valued at US$1-1.5 billion).
Our water resources reserves have not risen pari passu with growth in population, 32.4 million in 1948 to 154.6 million in 2005, and 207.8 million in 2017. In kharif season, rivers flow at 84 percent while only 40 percent during the rabi season. The present water storage capacity in Pakistan is hardly 11.77million acres per feet (MAF) that is about only eight percent of the annual flow.
Factors of water crisis
Three provincial assemblies resolved against building the KBD. A politician alleged the dam would convert Sind into a desert. Apprehensions against the dam could be allayed by reviewing Water Apportionment Accord (as directed by Lahore High Court also vide its Order dated November 29, 2012, case no. WP 8777). No justification to kill the goose that lays the golden eggs.
Losses due to delay
The losses due to the delays in the project have soared up to Rs180 billion a year due to its 10-time costlier construction (1990 estimate). Added to it is the loss of $6.12 billion per annum due to superfluous flow of 30 million acre feet of water from Kotri Barrage into the Arabian Sea. In mangrove season, rivers flow at 84 per cent while only at 40 per cent during Rabi season. The present water storage capacity in Pakistan is hardly 11.77MAF that is only about eight per cent of the annual flow.
Legislative assemblies of three of our provinces, barring the Punjab province, have been bitterly opposing construction of the Kala Bagh Dam. Are they justified? To answer the question we have to look into various aspects of the construction of the dam, particularly feasibility and repercussions of constructing the dam. After enactment of the Eighteenth amendment, building of dams is now a provincial subject. The fact however remains that water security is more a national subject than a provincial one.
Debate about pros and cons
The construction of Kalabagh dam is predicted to supply over 4 million acre-feet additional water to Sindh. While explaining benefits of Kalabagh Dam, WAPDA engineer Shamsul Mulk stated that China would be generating around 30,000 megawatts of electricity from dams. “Even India has more than 4,000 dams,” he said. “We lose billions due to the non-construction of dams.”
Concluding remarks
The opposition to the Kalabagh Dam is whimsical rooted in political rhetoric. According to the United Nations’ forecast, water scarcity would be Pakistan’s greatest problem in current century.
The country has been in the grip of a severe energy crisis for several years. No one even talks about Kalabagh Dam. Towards the end of the 1980s, Pakistan met 70 percent of its energy needs from hydel (hydroelectric) power and 30 percent from thermal energy. By 2012-13, Pakistan became dependent on thermal energy generated from costly furnace oil and diesel by up to 44 percent, with the remaining 56 percent being generated from other, mainly thermal, sources. This change had a cascading effect on prices and the consumers’ bills skyrocketed.
Hydel energy remains largely neglected, despite its low production cost. Many public sector electricity generation plants have outlived their utility. Without cheaper electricity, circular debt will continue to mount.
Circular debt, accumulated in the power sector, is a handy excuse for the energy crisis. This debt piles up when downstream customers fail to pay their bills to upstream suppliers (or producers) in time. Who are the defaulters? They include not only ordinary citizens, but also the provinces, the public sector, influential corporations and powerful individuals (including political tycoons).
To continue supplying power, the thermal producer has to borrow (and later pay interest charges and repay the contracted loan) and find alternative financial sources, unless the government makes the bounteous payment. The solution is simple: power distribution companies should promptly pay their dues to the generation companies.
However, circular debt is only the tip of the iceberg. There are many other factors blighting the energy scenario. The government needs to evolve a policy in which the power sector is prioritized.
Originally published at Modern diplomacy