An Opportunity Wasted

[Samlee]

When PTI Minister Says That Power Crisis Is Due To Capacity Payments That Means That We Have To Pay For That Electricity That We Are Not Using.My Question Is That Why ARe We Not Using It????

How Were We To Use It???Simple Back In 2018 US President Trump Initiated A Trade War By Imposing Heavy Duties On Chinese Products.This Led To A Mass Exodus Of Industries

Many U.S. firms in China eyeing relocation as trade war bites: survey

More than 70 percent of U.S. firms operating in southern China are considering delaying further investment there and moving some or all of their manufacturing to other countries as the trade war bites into profits, a business survey showed on Monday.

www.reuters.com

More than 50 companies reportedly pull production out of China due to trade war

The pace of companies moving production out of China is accelerating, according to the Nikkei Asian review.

www.cnbc.com

Vietnam Turned Out The Main Beneficiary of This Relocation.But There Was A Limit As To How Much Vietnam Could Accomodate.There Were Limits To It's Infrastructure

As companies struggle to get going, is Vietnam throwing away trade war win?

More and more businesses are complaining about congested ports and roads, rocketing costs for land and labor, and regulations that aren't being loosened fast enough

www.business-standard.com

India to Vietnam, Asia's 'mini Chinas' struggle to benefit from trade war

Part of the problem is reproducing the kind of supply chains, marketing access and existing contacts that have been built up by small and medium-sized manufacturers in China's industrial cities.

www.business-standard.com

Long Story Short Vietnam's Infrastructure Just Could Not Accomodate Every Industry That Planned Relocation.This Is Where Pakistan Came In.CPEC Had Helped Resolve Many Infrastructure and Energy Issues.Also We Have Multiple Industrial Enclaves Ready For Colonization

1.Pakistan Textile City
2.Karachi Garment City
3.Karachi Export Processing Zone Phase 3
4.Port Qasim Industrial Zone
5.Bin Qasim Industrial Park
6.Korangi Creek Industrial Park
7.Uthal Industrial Estate
8.Hub Industrial Estate
9.WInder Industrial Estate
10. Nooriabad Industrial Estate
11.M3 Industrial City Faisalbad
12.Rahim Yar Khan Industrial Estate
13.Allama Iqbal Industrial City
14.Bahawalpur Business Park
15.Value Addition City Plus Faisalabad Garment City
16.Gwadar Industrial Estate

These Areas Are Practically Ready For Colonization.We Could Have Easily Accomodated Relocating Industries.So PTI Instead of Doing Randi Rona About Capacity Payments Should Have Arranged For Increased Consumption And This Was A Low Hanging Fruit.
But Alas We Can Only Bang Our Heads On The Wall

 

[Shah Khalid]

True brother not only did we have reasonable infrastructure but also and robust back end supply chain we supply yarn and grey cloth to the value added exporters of China,Bangladesh and Vietnam.We could easily have accomodated the garments industry

And I could not help but notice the name of Pakistan textile city limited.That was pretty much a plug and play facility ready to use that we just let that rot away


Another thing is that apart from the above industrial estates,if you just search property websites like Zameen.com and Lamudi You will find a large number of industrial properties that are available especially in Karachi.This article in DAWN is worth reading

It must, however, be remembered that industrial land is lying vacant in very large proportions in Karachi. This factor alone raises questions about the logic of promoting any further industrial location. Studies undertaken for the various city plans show more than half of the entire land allocated for industrial purposes has been lying unoccupied.

Industrial revival in Karachi

Studies show more than half of the entire land allocated for industrial purposes has been lying unoccupied in Karachi

www.dawn.com

 

[FuturePAF]

We could have given away the electricity for a fixed number of years if companies had signed a contract to produce textiles in Pakistan for an additional ten years. Yes, definitely an opportunity missed.

 

[Shah Khalid]

Jhot boltay hain zarorat sa ziada electricity ha to summers main itni ziada load shedding kyon thi?

Transmission capacity nahi hai bhai N league bijli Bana to di Pohanchane ka koi arrange nahi kiya

 

[Samlee]

Another thing is that apart from the above industrial estates,if you just search property websites like Zameen.com and Lamudi You will find a large number of industrial properties that are available especially in Karachi.

You Are Right.I Just Had A Cursory Look At Zameen.com There Were 400 Industrial Plots and Properties Available In Karachi

We could have given away the electricity for a fixed number of years if companies had signed a contract to produce textiles in Pakistan for an additional ten years. Yes, definitely an opportunity missed.

Imran Khan Did Not Have To Do Much Everything Was There.CPEC Early Harvest Projects Were Nearly Completed and Phase 2 of CPEC Which Meant Industrialization Was To Start And The Trade War Meant That Companies Having A Base in China Were Scrambling From Pillar To Post To Find Alternatives All Imran Khan Had To Do Was To Invite The Companies and Make SUre They Got Their Utilities and Paperwork Done Within Six Months.

But Alas One Can Only Be Disheartened After Reading This

The meeting was informed that due to non-resolution of many issues, over $900 million Chinese investment in Special Economic Zones could not materialise fully. For instance, the Easy Prefabricated Private Limited Company has paid for electricity and gas connections but the services have not been provided yet.

Similarly, the La He Trading International Private Limited has manufactured electrical bicycles and tricycles but their products cannot be brought on the road due to absence of road policy. The company was also facing issues in securing loans from the banks due to lack of land entitlement.

The Snow White Lavation Private Limited applied for allotment of land in Allama Iqbal Industrial City over four months ago but did not get any response from the government of Punjab. Other Chinese companies were facing problems in getting electricity and gas connections in these zones for months.

Deadlines for 5 projects extended | The Express Tribune

CPEC Schemes facing delays due to overall slowdown of work, Covid disruptions

tribune.com.pk

 

[FuturePAF]

You Are Right.I Just Had A Cursory Look At Zameen.com There Were 400 Industrial Plots and Properties Available In Karachi



Imran Khan Did Not Have To Do Much Everything Was There.CPEC Early Harvest Projects Were Nearly Completed and Phase 2 of CPEC Which Meant Industrialization Was To Start And The Trade War Meant That Companies Having A Base in China Were Scrambling From Pillar To Post To Find Alternatives All Imran Khan Had To Do Was To Invite The Companies and Make SUre They Got Their Utilities and Paperwork Done Within Six Months.

But Alas One Can Only Be Disheartened After Reading This

Deadlines for 5 projects extended | The Express Tribune

CPEC Schemes facing delays due to overall slowdown of work, Covid disruptions

tribune.com.pk

Perhaps it’s not too late, COVID really wasted a lot of time for many new projects globally anyway. So any investments promised in 2018/2019 might have been canceled or suspended due to the pandemic (for lack of global demand). In the mean time we did our best to get through the pandemic and fix our economic house to be able to attract FDI.

The difference now in 2022, with the war basically over in Afghanistan, our textile industry can receive Uzbek cotton at the best international prices without risk of highway banditry (if this supply is steady it can finance a rail link to Uzbekistan down the line and help build up other raw material shipment based industries like mining).

Secondly, there is still a slow push to move industries out of China by western companies at the behest of western governments. That process will take another 3-7 years as global supply chains realign. Pakistan should still make the push to attract western companies (especially now that Xinjiang cotton products are basically banned in the west, a most recent development)

This could incentivize Chinese investors to move their factories to Pakistan and for Pakistan to drive a harder bargain; not giving away as many incentivizes to maximize our workers pay or our tax revenue/profit. We should be looking at (really studying) how Chinese provinces compete with each other because we have Chinese investors coming with a similar mindset; this is business we need to be laser focus on getting the best terms of any deal, we can’t bear any more bad terms of any new deals. We have only ourselves to blame if we do. This is not a commentary on Chinese people, but my Chinese colleagues tell me that a deal is a deal and it’s up to how we negotiate it.

There are still opportunities, and we shouldn’t lose hope, but reassess and move on what’s out there today.

If we can’t supply foreign investors, yet, we should at least be giving a price break to our local producers to maximize output; it’s their tax money as well. When foreign investors see the profits be made, they will flock to our SEZ on their own. “Built it and they shall come” with our SEZ’s becoming their “field of dreams”. This way we are able to attract investors from all over the world and maximize the chances we get the best terms for any FDI that comes in.

 

[313ghazi]

We could have given away the electricity for a fixed number of years if companies had signed a contract to produce textiles in Pakistan for an additional ten years. Yes, definitely an opportunity missed.

Very good idea.

 

[Shah Khalid]

You Are Right.I Just Had A Cursory Look At Zameen.com There Were 400 Industrial Plots and Properties Available In Karachi



Imran Khan Did Not Have To Do Much Everything Was There.CPEC Early Harvest Projects Were Nearly Completed and Phase 2 of CPEC Which Meant Industrialization Was To Start And The Trade War Meant That Companies Having A Base in China Were Scrambling From Pillar To Post To Find Alternatives All Imran Khan Had To Do Was To Invite The Companies and Make SUre They Got Their Utilities and Paperwork Done Within Six Months.

But Alas One Can Only Be Disheartened After Reading This

Deadlines for 5 projects extended | The Express Tribune

CPEC Schemes facing delays due to overall slowdown of work, Covid disruptions

tribune.com.pk

That ET article is nothing just read this.Thanks to the bastards in our bureacracy more than 150 investors have applied for repayment for their down payments.That means we have lost 150 potential new industries and God knows how many potential jobs

Investors pulling out of Punjab SEZs on enterprise status holdup

LAHORE: Industrialisation in Punjab’s Special Economic Zones has ground to a halt as bureaucratic foot-dragging in granting these clusters ‘enterprise’ status spooked investors...

www.thenews.com.pk

 

[ziaulislam]

When PTI Minister Says That Power Crisis Is Due To Capacity Payments That Means That We Have To Pay For That Electricity That We Are Not Using.My Question Is That Why ARe We Not Using It????

How Were We To Use It???Simple Back In 2018 US President Trump Initiated A Trade War By Imposing Heavy Duties On Chinese Products.This Led To A Mass Exodus Of Industries

Many U.S. firms in China eyeing relocation as trade war bites: survey

More than 70 percent of U.S. firms operating in southern China are considering delaying further investment there and moving some or all of their manufacturing to other countries as the trade war bites into profits, a business survey showed on Monday.

www.reuters.com

More than 50 companies reportedly pull production out of China due to trade war

The pace of companies moving production out of China is accelerating, according to the Nikkei Asian review.

www.cnbc.com

Vietnam Turned Out The Main Beneficiary of This Relocation.But There Was A Limit As To How Much Vietnam Could Accomodate.There Were Limits To It's Infrastructure

As companies struggle to get going, is Vietnam throwing away trade war win?

More and more businesses are complaining about congested ports and roads, rocketing costs for land and labor, and regulations that aren't being loosened fast enough

www.business-standard.com

India to Vietnam, Asia's 'mini Chinas' struggle to benefit from trade war

Part of the problem is reproducing the kind of supply chains, marketing access and existing contacts that have been built up by small and medium-sized manufacturers in China's industrial cities.

www.business-standard.com

Long Story Short Vietnam's Infrastructure Just Could Not Accomodate Every Industry That Planned Relocation.This Is Where Pakistan Came In.CPEC Had Helped Resolve Many Infrastructure and Energy Issues.Also We Have Multiple Industrial Enclaves Ready For Colonization

1.Pakistan Textile City
2.Karachi Garment City
3.Karachi Export Processing Zone Phase 3
4.Port Qasim Industrial Zone
5.Bin Qasim Industrial Park
6.Korangi Creek Industrial Park
7.Uthal Industrial Estate
8.Hub Industrial Estate
9.WInder Industrial Estate
10. Nooriabad Industrial Estate
11.M3 Industrial City Faisalbad
12.Rahim Yar Khan Industrial Estate
13.Allama Iqbal Industrial City
14.Bahawalpur Business Park
15.Value Addition City Plus Faisalabad Garment City
16.Gwadar Industrial Estate

These Areas Are Practically Ready For Colonization.We Could Have Easily Accomodated Relocating Industries.So PTI Instead of Doing Randi Rona About Capacity Payments Should Have Arranged For Increased Consumption And This Was A Low Hanging Fruit.
But Alas We Can Only Bang Our Heads On The Wall

Because you donr have transmission
Neither the money to build transmission
Nor the money to subsidize the already expensive power for industries
Govt paid 40b in power sibsidiy to get textile exports up
Its not just capacith payments the power at base is expensive too
PMLN did a decemt job with LNG high effiency plants but LNG is too expensibe globally today.
Pakistan power is import base and thats the problem
The IPP hydros are too expensive for first 10 yrs at 10cents(7.5 levelized for 30 yrs)..so that wont solve the problem..will make it worse

In short..too expensive to use..if you dont ise u r still stuck with capacity payments

Worse these have soverign grantees so its considered debt on paper

Screwed either way is right term

Solution is mobilized revenues, maximum usage and then subsize it at 300-400b/yr till cheaper hydro, thar coal come online or gas becomes cheaper like it was in 2013-2018

the IPP based hydro wont solve the problem since for first 10 yrs they are at 10 cents
Pakistanis think they cam borrow/makw comitments and then walk away..this kinda childish behavioir is only seen in toddlers..
Dont believe me..? Jusy google NEPRA rates..all of this is public enough..

Transmission capacity nahi hai bhai N league bijli Bana to di Pohanchane ka koi arrange nahi kiya

Even if u have it its too expensive for anyone to use it
Only way is tax mobilozation and then subsidizng power

Or if gas becomes very cheap and president Xi asks the chinese companies to reduce their ROI
Power crisis should improve in next 5-10 years with dasu munda, bhasha,tarbela V, kpk hydro projects, thar coal, & IPP hydro high period ending

But this is assuming all of this happens

Its very much possible everything changes in 2023 back to old ways..

 

[hydrabadi_arab]

Its more complicated then that. There is no transmission lines for all that extra power and neither this govt have done much to reduce theft. Need to keep working on both areas and in few years capacity payments will be behind us. But circular debt will remain for many years.

 

[Materialistic]

Transmission capacity nahi hai bhai N league bijli Bana to di Pohanchane ka koi arrange nahi kiya

Couldn't find the original comment, therefore, responding to this post which is itself a response to the original question.

Point #1:
We DO NOT produce excess energy at least by the measure it is mentioned. This is mostly reported in winter months that we are producing about 50% more electricity than required. If some of you remember then before Musharaf era this used to be a topic of debate (until he came and screwed it) that what can we do with excess electricity.

Anyways, so the problem of load shedding is that we produce, infact lower than our peak requirement (if i remember correctly there was a reported shortfall of about 2-3k MW) which is what we hit in summers, and in other seasons the balance tilts and our media starts reporting it every year as if this is a new milestone hit.

Point #2:
On the other hand, we have Imran Khan who wants to be a sustainability champion ( I appreciate that) and wants a scapegoat and he has a big healthy one (Nawaz Shareef). You might see him complaining that PML N wasted resources on producing excess energy and never spent a dime on network degradation. However, in reality, we need even more projects because power should be generated foreseeing the peak time requirements of the decade coming ahead.
So, we have to keep up else suffer for another decade.

Point #3:
As for the network degradation, there was a major national-level up-gradation project underway for about 1-2 years before PTI came into power and the moment they stepped in it was stopped as part of the austerity drive which makes it another contributing factor to summer load-shedding which PTI blames on previous government.

Point #4:
Last, but not the least. We need reliable and cheap energy which is ===> Coal. Pakistan contributes less than 1% to global climate crises and all the rich and developed nations have relied heavily on coal to meet their requirements and now when they're ahead of the pack and can easily move to highly expensive sustainable sources they are gradually moving. It's not that they needed a handful of climate activists to tell them that coal was not a good source, they simply milked it for as long as they could. And countries like US, China and India still heavily rely on it. So we have to give up the love of the Climate Champion Title and focus on coal energy, instead of shutting down coal projects and moving towards Hydal power which our PM plans to. We should go to coal.

All the other sources are either expensive due to costs (hydal/wind/solar), impractical (solar/wind = low output) and unreliable (hydal, reducing water levels, water crises every summer and India diverting more and more water away).

 

[ziaulislam]

Couldn't find the original comment, therefore, responding to this post which is itself a response to the original question.

Point #1:
We DO NOT produce excess energy at least by the measure it is mentioned. This is mostly reported in winter months that we are producing about 50% more electricity than required. If some of you remember then before Musharaf era this used to be a topic of debate (until he came and screwed it) that what can we do with excess electricity.

Anyways, so the problem of load shedding is that we produce, infact lower than our peak requirement (if i remember correctly there was a reported shortfall of about 2-3k MW) which is what we hit in summers, and in other seasons the balance tilts and our media starts reporting it every year as if this is a new milestone hit.

Point #2:
On the other hand, we have Imran Khan who wants to be a sustainability champion ( I appreciate that) and wants a scapegoat and he has a big healthy one (Nawaz Shareef). You might see him complaining that PML N wasted resources on producing excess energy and never spent a dime on network degradation. However, in reality, we need even more projects because power should be generated foreseeing the peak time requirements of the decade coming ahead.
So, we have to keep up else suffer for another decade.

Point #3:
As for the network degradation, there was a major national-level up-gradation project underway for about 1-2 years before PTI came into power and the moment they stepped in it was stopped as part of the austerity drive which makes it another contributing factor to summer load-shedding which PTI blames on previous government.

Point #4:
Last, but not the least. We need reliable and cheap energy which is ===> Coal. Pakistan contributes less than 1% to global climate crises and all the rich and developed nations have relied heavily on coal to meet their requirements and now when they're ahead of the pack and can easily move to highly expensive sustainable sources they are gradually moving. It's not that they needed a handful of climate activists to tell them that coal was not a good source, they simply milked it for as long as they could. And countries like US, China and India still heavily rely on it. So we have to give up the love of the Climate Champion Title and focus on coal energy, instead of shutting down coal projects and moving towards Hydal power which our PM plans to. We should go to coal.

All the other sources are either expensive due to costs (hydal/wind/solar), impractical (solar/wind = low output) and unreliable (hydal, reducing water levels, water crises every summer and India diverting more and more water away).

1# we do have excess capacity ..we simply dont use it and pay hefty fees..most of the time when ask for it the IPP with his old desky plant cant produce it at said capacity but still charges at the said capacity as that is how the agreement was signed
2# we produce lower because we cant transmit that power. We teansmitted power at peak capacity
We also produced lower to areas we can transmit due to losses or theft
3#you were bankrupted in 2018..if this simple thing doesnt make sense then you should go back to school
The federal govt was having primary deficit..i.e deficit before it budget even begins(loans+defense was more then revenues)..doesnt that make sense????.. Read about it? So tell me are you asking us to print notes..? (State bank lending) or curtial imports(50% of your tax base)..would like to hear your solution
4# anything imported is expensive..solution isnt coal(at8 cents) but hydro thar coal solar(pump hydro) and nuclear(long term cost is reliable and cheap)
All of these are abundant but problem is take 5+ years to build a.k.a beyond election cycle

We could have given away the electricity for a fixed number of years if companies had signed a contract to produce textiles in Pakistan for an additional ten years. Yes, definitely an opportunity missed.

Who will pay for the deficit?
Had we focused on power first rather then infrastruture things would have been different
IK said ban on imported coal. He never said thar coal

 

[Materialistic]

1# we do have excess capacity ..we simply dont use it and pay hefty fees..most of the time when ask for it the IPP with his old desky plant cant produce it at said capacity but still charges at the said capacity as that is how the agreement was signed
2# we produce lower because we cant transmit that power. We teansmitted power at peak capacity
We also produced lower to areas we can transmit due to losses or theft
3#you were bankrupted in 2018..if this simple thing doesnt make sense then you should go back to school
The federal govt was having primary deficit..i.e deficit before it budget even begins(loans+defense was more then revenues)..doesnt that make sense????.. Read about it? So tell me are you asking us to print notes..? (State bank lending) or curtial imports(50% of your tax base)..would like to hear your solution
4# anything imported is expensive..solution isnt coal(at8 cents) but hydro thar coal solar(pump hydro) and nuclear(long term cost is reliable and cheap)
All of these are abundant but problem is take 5+ years to build a.k.a beyond election cycle

Point #1 & 2, this is not my domain I wrote on what was in my knowledge. Here I would take your argument that we produced lower due to transmission bottlenecks. Makes sense, no point in burning extra fuel for no reason.

Point #3, Read again and tell me where did I criticize PTI for not continuing the up-gradation of the network. Network upgradation was underway (Fact), PTI stopped it (Fact) and instead went an extra mile to blame the previous government for never initiating it? That was completely dishonest and uncalled for. So I just stated what the fact was and I did mention it was done due to the austerity drive!

As for the solution, there are thousands of services and projects running under the government and it wasn't like every single one of them was stopped. One can argue that network upgradation could be prioritized seeing how crucial energy was/is for the economy. However, let's leave that argument, later the government could still propose for this to be covered under CPEC, we know there are many projects from ML-1 to smaller power projects and road infrastructure in fact some are remote highway upgrades. Any one of those could be postponed to cover network power transmission up-gradation if it was not accepted to be covered under CPEC. There's no point in these projects when the economic engine is down amid power shortages or resulting liabilities.

Lastly, the severity of this entire economic crisis could have been lesser if the action was taken by Asad Umer timely. It is clearly understood even in PTI circles that those initial few months lost were very crucial.

Point#4, completely agree with you.. No government plans beyond their tenure.

 

[ziaulislam]

Point #1 & 2, this is not my domain I wrote on what was in my knowledge. Here I would take your argument that we produced lower due to transmission bottlenecks. Makes sense, no point in burning extra fuel for no reason.

Point #3, Read again and tell me where did I criticize PTI for not continuing the up-gradation of the network. Network upgradation was underway (Fact), PTI stopped it (Fact) and instead went an extra mile to blame the previous government for never initiating it? That was completely dishonest and uncalled for. So I just stated what the fact was and I did mention it was done due to the austerity drive!

As for the solution, there are thousands of services and projects running under the government and it wasn't like every single one of them was stopped. One can argue that network upgradation could be prioritized seeing how crucial energy was/is for the economy. However, let's leave that argument, later the government could still propose for this to be covered under CPEC, we know there are many projects from ML-1 to smaller power projects and road infrastructure in fact some are remote highway upgrades. Any one of those could be postponed to cover network power transmission up-gradation if it was not accepted to be covered under CPEC. There's no point in these projects when the economic engine is down amid power shortages or resulting liabilities.

Lastly, the severity of this entire economic crisis could have been lesser if the action was taken by Asad Umer timely. It is clearly understood even in PTI circles that those initial few months lost were very crucial.

Point#4, completely agree with you.. No government plans beyond their tenure.

PTI stopped it because it had no money to do anything..govt was running a primary deficit and had to jack up interest rates (33% of govt spending trippled over night when rates were jacked from 5 to 13%)

Does that make sense..
Breaking things are easy..fixing it is more difficult
Asad umar was a politicans and didnt wanted high inflation by stringent measures

Had he donefast pace adjustment we would have seen inflation in range of 20-30%

Yes power sector was more or less draged on as central govt is bankrupted
Those distribution should have been privitized but cost of electricity would have gone up for ROI

I believe govt should have privitized and maximzed production

Then simply provided subsidiy to selected people and industries ..you get effiency of private sector and pricing as what govt wants

 

[SoulSpokesman]

How about making Pakistan a hub for bitcoin mining? It is a very power intensive industry and could boost offtake.

Regards