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Pakistan’s 1980s policy failures are responsible for today’s Energy Crisis: Chairman WAPDA

As PM Imran Khan heads to China to meet with President Xi and attend the Winter Olympics, GVS Editor Dr Moeed Pirzada sits down with Chairman WAPDA, Gen. Muzammil Hussain to understand what is behind Pakistan's energy challenges, Why dams were not built, and what further role Chinese companies and investment can play in helping Pakistan improving its energy challenges.

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Moeed Pirzada: We keep on discussing on media that Pakistan’s energy situation started to deteriorate by the early 1990s. Why did this happen?

Gen. (r) Muzammil Hussain: To understand the dynamics of the energy crisis, which started way back in the 1980s and 1990s, there are two fundamental things which we need to understand. The first is the question of energy needs which are increasing every year in every country, and that depends on the growth and pace of your economic development.  A country with a good pace of development should have about five to seven percent minimum energy needs increasing every year.

The second part is your food security. Food security has two parts, which are the energy part and the water part. For water, I am sure you know that there is a very old saying, if you want to trace back the economic ill of any country in the world, it will reach back to water. Even Goldman Sachs (Investment Bank) said just last month that water is going to be the petroleum of the next century.

Unfortunately, we faltered on both things going way back to 1976. Once we commissioned our large dam, the Tarbela dam, thereafter, there was a blackout for about 15 to 20 years; we couldn’t really keep pace with what needed to be done in the 1990s.

Moeed Pirzada: WAPDA was created to give the vision on water and power development in the early 1960s. Was it WAPDA’s failure in giving the necessary vision to the governments or the governments who were politically stuck and couldn’t act on the vision?

Gen. (r) Muzammil Hussain: its national policy, you know, WAPDA is an executing authority. A good thing about WAPDA is that it was raised on the lines of TVA (Tennessee Valley Authority) in the U.S. It is supposed to be having a single mandate by an Act of Parliament; that is integrated development of water and hydropower resources in Pakistan.

The entire structure of WAPDA is similar to what is in TVA in the U.S. So the first 20 years have been a glorious part of Pakistan’s history and also WAPDA’s history up to 1976. Why? You did two large dams. You did eight barrages. You did nine link canals, and you laid the second-largest transmission system of Asia after Japan. Having done that, there was a need to carry this on for the next 10 or 20 years.

We lost the way somewhere in the 1970s. We stopped it after Tarbela there was, you know, on the economy of scale. You need to have a large dam, which can help your energy needs, your industry to be more competitive, we didn’t do that. We had plans of going for Kalabagh dam. We had a plan of going for the Diamer Basha, and we have five more sites on Indus cascade starting from Shayok going down to Skardu come down to Pattan and Thakot, Diamer Bhasha and Dasu, which we are doing, fortunately now, but after 45 years.

We woke up to this reality somewhere in the 1990s. We realized that we don’t have water and we don’t have power. Then there was a firefight, and in that, we took the fateful decision of getting IPPs in Pakistan on the terms and conditions which suited them.

Read more: Addressing the Mismanagement of Water Resources

Moeed Pirzada: This is the other thing that intrigues many in the media and civil society is why we went towards oil and gas, which were to be imported and were much more expensive than water?

Gen. (r) Muzammil Hussain: Two reasons. You know, for developing hydropower, you need to have two fundamentals. The gestation period is much longer; you could take anything between five to 10 years, and they are initially capital intensive, very huge investment to start with. So once you woke up in the 1990s, you didn’t have power. So if you could go in for hydropower, it would have taken you 5 to 10 years.

Then there was firefighting by the government. So we went for an easy solution, having fossil fuel plants and being dependent on it. It comes from outside, it’s a volatile market, it is expensive, and it has destroyed your climate. More importantly, they produce power for you which you are not even using, and you end up paying them 60 to 80 percent of capacity charges. It’s a classic example of what happens when you do not keep pace with your national needs. You know, water has two factors. It directly affects your food security and your human security. These two fundamentals are cardinal for national security.

You grew in population; your population is now above 220 million people, and you have urbanization, which is unregulated. You have industries coming up, which have no regulations, and you are dependent on a power that is produced mostly by the IPPs. Now, it’s up to four decades. The government is fully aware of this, and as we speak, we are doing ten projects in Pakistan.

Moeed Pirzada: I want to take you back. It’s understandable that in 1994, the government was under pressure that they immediately wanted energy, power, and electricity. We didn’t have the gestation time period of 5 to 10 years and didn’t want to incur the billion-dollar investments, but before that between 1976-1994, the crucial 18 years, why were we sleeping during that?

Gen. (r) Muzammil Hussain: Negligence. That was the government’s policy. The governments faulted on that; they couldn’t keep pace with what needed to be done. Imagine a country that hasn’t made a single dam in the last 40 years. You have a country across [India], which has made 5000 dams, and you have 80,000 in China, and you have 70,000 in the US. What I’m trying to say is that fundamentally, it happened because of our negligence.

Read more: China Three Gorges: World’s largest hydropower company is symbol of Pak-China friendship

Moeed Pirzada: What was WAPDA doing?

Gen. (r) Muzammil Hussain: WAPDA was doing smaller projects. WAPDA has faced the brunt. You know, WAPDA was unbundled. The government of Pakistan took a disastrous decision of dividing WAPDA into three parts.

As we speak now, why your circular debt is out of control? Because you have these Discos [Distribution companies] working under an organization, which is sunset organizations, They can’t even handle them. Why is the NTDC a separate organization because they evacuate power from a particular point to the load center. They don’t work under WAPDA.

Moeed Pirzada: Were they not created to improve the distribution?

Gen. (r) Muzammil Hussain: it hasn’t been done. It has given you 2.4 trillion rupees of circular debt; your transmission system and distribution system is in shambles. The installed capacity in Pakistan can’t be transmitted. Why? As long as they were part of the WAPDA, they had a certain kind of structure in place to make decisions.

These two entities of Disco companies work under an organization called Pepco, which does not have a decision-making capacity, and which does not have the systems to really control such huge monsters like NTDC and distribution companies. WAPDA now handles only hydropower development in Pakistan.

Moeed Pirzada: This is the first time I am hearing this argument in such precise terms, so where these ideas were coming from, let’s create Pepco, let’s create NTDC, let’s create Discos. These ideas must be coming from somewhere?

Gen. (r) Muzammil Hussain: Well, I won’t really raise a finger on people, but I would like to mention one decision that was taken by Prime Minister Shoukat Aziz during Musharraf’s time, and that was the unbundling of WAPDA. The decision was taken in the late 1990s but implemented somewhere in 2003-04.

Read more: Azad Kashmir: Bringing Water, Power & Beauty to Pakistan & CPEC

Moeed Pirzada: So these decisions and ideas were not coming from World Bank and Asian Development Bank?

Gen. (r) Muzammil Hussain: World Bank was part of it. World Bank decisions or guidelines essentially have to be compatible with the happenings of the country and elsewhere. You know, your losses are extremely high, and your recoveries are poor because your governance is zero. World Bank can give you solutions, which are based on the perfect condition, but these were not present in Pakistan. So you privatized these NTDC’S or Discos.

Moeed Pirzada: Come back to 1994. We woke up after 20 years; we realized we didn’t have the energy; we immediately needed electrical power and everything, but it took us another 25 years, at least before we started making these dams. Why?

Gen. (r) Muzammil Hussain: You know, dam construction was like I mentioned a savior back in the 1960s. Those people did a very difficult job of constructing the Tarbela, Mangla, and Warsak. I salute their ability and professional competence, but times today have changed. Today, you do not have the funds to construct a dam; your economic challenge is absolutely critical. You do not have the technical capacity to construct dams. You depend on foreign support.

Moeed Pirzada:  Do you mean in the 1960s, the capacity was coming from World Bank?

Gen. (r) Muzammil Hussain: The World Bank supported our work. They brought in the American engineers and the British consultants in Mangla and Tarbela both, but this was in lieu of you giving three rivers to India. These projects were supported by World Bank in the 1960s.

Now you don’t have money; you don’t have the technical support. Now, without money, without technical support, and zero governance, your Deputy Commissioner, cannot even get the land now. Your safety networks like NAB and your Audit are not performing well; people are now reluctant to make any decisions.

Moeed Pirzada: Are you saying that from the 1990s onwards, the World Bank, Asian Development Bank, and International financial institutions were not prepared to invest in these large dams because of Indian concerns?

Gen. (r) Muzammil Hussain: Practically because most of these dams are in the areas, which they considered as a disputed territory. We will talk about Diamer Basha. Diamer Basha was on the landscape for engineering survey back in 1982-84, but we finally managed to start constructing it in 2020.

Moeed Pirzada: So the finance and technical help were not available for these dams in the territories of Azad Kashmir and Gilgit Baltistan, but what about the other dams that were not in the disputed territory?

Gen. (r) Muzammil Hussain: There aren’t many. You could make some in Khyber Pakhtunkhwa. Dams are only made in the mountains. Of the entire Indus cascade, I am mentioning starting from Shyok, Skardu, Bunji, and Herbo. They are all in Gilgit Baltistan, and some of them are in Khyber Pakhtunkhwa.

Let me give you an example of Kalabagh Dam. This should have been the best place for Pakistan to construct a dam. At the time of Tarbela, the option was to pick up either Tarbela or Kalabagh. In a good sense, Tarbela was taken as an option, but Kalabagh; went into thin air; why? Because we fell prey to political machinations.

There were intra-province disputes, which the federal government didn’t have the ability to resolve. Imagine a river that has 90 million-acre water flowing at Kalabagh, 90 million acre-feet, and 1 million acre-feet are that you have 1 million acres of land and one-foot of water standing there. Imagine the quantity of the water.

Read more: Kalabagh Dam: A necesaity rather than a luxury

Moeed Pirzada: And we are not stopping that. We are not storing that. Are we letting it flow to the sea?

Gen. (r) Muzammil Hussain: Absolutely, and of course, you waste a lot of it in agriculture practices that you have, and those practices are absolutely primitive. You do the flood irrigations. You don’t do the laser leveling; you don’t have an interface with technology. You use different kinds of seeds. What I am saying is that was the past.

The good thing is that as we speak today, we are doing ten projects in Pakistan, and these projects altogether will store 11 million acre-feet water, which is about 95 percent of what we have been storing in the last about 70 years.

Moeed Pirzada: But still as compared to the 90 million acre-feet. This is nothing.

Gen. (r) Muzammil Hussain: Absolutely. But you have a 100 percent increase in seven, eight years’ time; it is phenomenal.

Moeed Pirzada: What I understand is that we needed finance, and we needed strategic technical support. And this is where the CPEC and China’s help comes into play.

Gen. (r) Muzammil Hussain: The Chinese help basically is manifold. One is, of course, under the flag of CPEC. The CPEC is doing three different kinds of energy projects. There are more than 38 billion US dollars of the entire CPEC, which is being used for the energy part of it.

In that, we are doing the coal power, which is going to be about 6000 megawatts, in that we are doing the hydropower projects the two of which are going to be complete in next about eight to ten months they are about 1800 megawatts. Two more should come out in about three years’ time. They are also helping on the solar and wind projects. There is going to be about 17,000-megawatt power, which comes through CPEC.

The second part, which is very important, is that in the context of what’s happening in the world and elsewhere, we are making these three major dams like Dasu, Diamer Basha, and Mohmand. So Chinese companies which have come in international competitive biddings, with their skills and their experience of having built dams, like Three Gorges Dam.

Moeed Pirzada: And perhaps they will also have to raise financing for that.

Gen. (r) Muzammil Hussain: Well, they do help us they will in any financial model that we make. But their ability to construct dams in Pakistan, along with the consultants that we have from the world over, we have a Montgomery Harza from the US working with us. We have Mott MacDonald from the UK. We have SMEC from Australia; we have AFRY from Sweden, and we also have Dolsar from Turkey.

In the presence of these consultants and Chinese companies, we are basically doing such a phenomenal capacity up-gradation of Pakistani engineers. Those engineers are going to be about 1650 in numbers.

And imagine they have done these five major projects in Pakistan, the young guys we picked up from the best universities in Pakistan. So that’s the kind of role which China is playing now, and we are grateful to them.

Read more: Why Pakistan’s water crisis needs urgent attention?

Moeed Pirzada: Who are the major Chinese companies that are helping us?

Gen. (r) Muzammil Hussain: You will be happy to hear that of the entire water sector; more than 99 percent of the work is with the Chinese companies. China Gezhouba Group is doing the Dasu project, which is 4300 megawatts. China Gezhouba Group is also doing Mohmand, which is 800 megawatt. Power China is doing Diamer Basha, which is 4600 megawatt, and we have recently finished the Neelum Jhelum project, which is 969 megawatt. It was also done by China Gezhouba. We are also working on Tarbela 5, which is being done by power China.

Moeed Pirzada: We keep on hearing about these projects. When will the energy start to flow from these projects?

Gen. (r) Muzammil Hussain: That’s a good question. You know, in a time factor, I have just explained to you in normal terms that Pakistan is producing about 121 billion kilowatts units of electricity in a year.

Moeed Pirzada: What is the daily production?

Gen. (r) Muzammil Hussain: It depends on how much do you need. Spread it over the year, 121 billion units. Of course, in summers, we have more units. We have 39,000 megawatts installed capacity in Pakistan; of this, about 35,000 megawatts is what we can use as derated capacity. Our evacuation system can take only about 24,000 megawatts.

We have added 7 billion units in the last two years; by adding about 5 billion units in the Neelum, Jhelum, and about three and a half billion units at Tarbela 4. Now from 30 billion units, the WAPDA has gone to 37 billion units. This is precisely 30 percent of total power. Our aim now is to take this energy mix to at least 50 percent of the total power.

How do we take this? In our ten projects that we are doing, we will be adding 44 billion units in the next seven years, and of this, we will be raising 21 billion units from Dasu, 18 billion units from Diamer Basha, about 4.5 billion from Mohmand, and about 4 billion from Tarbela five.

Now on your question on timings. You know our watershed time is 2025. We are now in 2022. By the end of 2025, We will be able to add 12 billion from Dasu in the first stage. We will be able to add about 4 billion from Mohmand, and we will be able to add about 4 billion from Tarbela five. So you have 20 billion units coming by the end of 2025, and from 2025 to 2028 December, that is about three to four years. That is where we will add about 20 billion units more.

Moeed Pirzada: Can we hope that within the next ten years or so, we can wean away and shift from our dependence on oil and gas for electricity and power back to the hydro-electrical, or we can improve a mix?

Gen. (r) Muzammil Hussain: It is an interesting question. You know, hydropower is cheap and green. You can reuse it yet at the same time; you also need to have some power to be used during the winter times when you need to have a patch up to have your energy mix coming up for your industrial capacity building. What I’m saying is that we have enough because we have now; for example, Neelum Jhelum or whatever project we have, we store water.

Now, this very interesting mix; if you have more storage, and that is where the Kalabagh dam comes into play. Right from Tarbela, we do not have any storage downside Tarbela, we can only produce electricity, and we can only release water for agriculture needs, so power is a byproduct. We don’t waste our water for power generation, but if we release water at Tarbela, it straight goes to the sea.

Moeed Pirzada: I have lived all my life next to Mangla dam, living in Mirpur as a schoolchild. The Mangla dam starts to get empty after September or October; are we still producing something from Mangla? What is Mangla’s production or contribution once the water level goes down?

Gen. (r) Muzammil Hussain: Let me explain the concept; the concept is that if you release water, you produce power, but we don’t release water for producing power. So, fundamentally the question is there do we need to have more storage? If you have Kalabagh, you could release water from Tarbela whenever you want to produce more power, even in winters. We do not release the water if it is not required by the Punjab and Sindh. More storage will also help you to produce more power.

Read more: Pakistan’s Real Challenge: Water Crisis

Moeed Pirzada: We need to strategically plan the water release; is this what you are saying?

Gen. (r) Muzammil Hussain: Yeah, if you have more storage in case you have a cascade effect, you store water at Diamer Basha, you produce power, and you release water whenever you want for the power and store it at Tarbela. At Tarbela, you store water and also produce power if you release it to store at Kalabagh dam, so both storages will give you more water, but more importantly, more energy is to produce.

Moeed Pirzada: We can also learn much from China because this is a country with 80,000 plus dams; this is also a country that started making dams hundreds of years ago because of the flood problem on the Yangtze Yellow River and all that. What are the learning lessons or the critical points we can learn from them?

Gen. (r) Muzammil Hussain: Three, first is you have to make your long-term sustainable policies. That, I think, is the Chinese art for governance. The second is the quality. Imagine they have constructed three gorges. One dam alone produces 23,000 megawatts. The third is capacity building. They have developed the capacity of Chinese engineers to produce or construct or do any kind of a power project. We are focusing on the same in the next nine years.

We started way back in 2018. We have a sustainable program regardless of the time it takes. We have an innovative financial model where despite the economic challenges, we are doing 26 billion US dollars projects in Pakistan. Out of 26 US billion dollars, it’s only 20 percent, which is being taken care of by the Government of Pakistan. Rest is WAPDA’s own model; we have equity generation, we have commercial financing, both domestic and foreign.

You will be glad to hear that we have become the first Pakistani parastate which have gone for the international credit rating. This rating has been done by all three, the Fitch, Moody’s, and S&P. We have also been successful in launching the first green Euro bond in London. We got the first 500 million US dollars in Euro bond, without government guarantee without having any assets. The precondition is that you need to have your credit rating done by three agencies; we got it from three.

That was good enough standing on WAPDA’s own balance sheet, WAPDA’s decision-making, and WAPDA’s financial model. We went into the market in London, and we got 500 million US dollars; we are raising 6 billion US dollars on our own for these projects, linking it with the Chinese concept of producing sustainability.

We started in 2018, and we will be doing that till 2028. Second is, by having all the international consultants and Chinese companies, we are creating a reservoir treasure of Pakistani engineers, and third is our financial models are essentially those which are not causing that stress on the government.

Moeed Pirzada: From this discussion, I understand that water is also of critical importance. It is not only the power, so what are you doing for water for a population that is growing and would probably be crossing, becoming 350 million in the next ten years?

Gen. (r) Muzammil Hussain: In water, the three things are important. The storage is one part we need to have more storage. The second is the conservation part, and the third is the management part. We are extremely poor on both management and conservation, and we haven’t done well in storage either. Like I said, out of 145 million acre-feet water coming in Pakistan, we are storing only 10 percent, and this percentage, we would like to take it up.

Moeed Pirzada: 140 million-plus acre of water is coming and flowing through Pakistan, and we are only storing less than 10 percent. What is the realistic storage capacity we can build in the next several decades?

Gen. (r) Muzammil Hussain: Well, we can at least firstly, increase the capacity of the water availability, secondary capacity, on the Indus cascade alone, you could store 30 million acre-feet water. We haven’t done that; we went to 6 million acre-feet. So our plan is that we store water at Diamer Basha 8.2 million acres.

We have a site that we are constructing on Mohmand. Kalabagh dam, given political harmony between the provinces, we can kick start the work. It’s all geared up, and in view of the CPEC road, which has been constructed on the Western route, it is much easier for us to start working on Kalabagh we can come up with in four or five years’ time.

Then we have two more sites. One is in Skardu, Shayok and the other is in Thakot in Pattan. So our plan has been lined up, and Allah willing, once you complete these ten projects, we will be in a much better position.

Read more: Thar Coal: Pakistan’s best bet to ensure energy security?

Moeed Pirzada: So what would be the total percentage of the water which we will be able to store?

Gen. (r) Muzammil Hussain: These projects that I am doing right now from 13, I am adding about 11 more. So that means at about plus 21 million acre-feet water. So that’s about more than 20 percent.

Moeed Pirzada: More than 20 percent, but that is a maximum?

Gen. (r) Muzammil Hussain: No, we can take it to even 30 percent.

Moeed Pirzada: So any idea what percentage of water Chinese are storing of the rivers?

Gen. (r) Muzammil Hussain: Their storage of water is a different concept. They are not really looking at only for the purpose of irrigations. We have an agrarian society; 60 percent of people in Pakistan live on agricultural soils. You need to grow more in Pakistan to have food security, and that will lead you to have human security. So our needs actually cannot be compared with China in terms of what percentage of water is required for the storage.

Moeed Pirzada: Can we learn from the Chinese in agriculture, water use water conservation?

Gen. (r) Muzammil Hussain: Absolutely. The strategies are threefold. One is how to conserve water, how to manage water, and the classic case, the kind of agriculture skills you are using it, you know, we don’t need to grow sugar cane and cotton in Pakistan. We can leave them.

The kind of seed which we use is even worse. The kind for drinking water in Karachi, we have not been able to give drinking water to Karachi in last ten years, we are now going for the K IV project providing drinking water to people of Karachi after ten years.

Moeed Pirzada: Why do we have not been able to move away from flood irrigation?

Gen. (r) Muzammil Hussain: Why? Because our people are not familiar with the technology. And unless you price the water, water pricing is extremely important, as an economic good. Your governance is not good enough to ensure that people use water judiciously. To encourage them to conserve it, equitably use it, and more importantly, they pay for what they use. It is the cheapest commodity that you have in Pakistan. We have landlords and people who use water and don’t even pay for it.

Read more: Climate Change and Pakistan’s Water Security

Moeed Pirzada: So one last question, what are your expectations from the meeting between Prime Minister Imran Khan and President Xi Jinping?

Gen. (r) Muzammil Hussain: I am extremely happy to hear of this meeting; you know why? It has two domains. One is, of course, the political domain, and we have an everlasting relationship with them. I am sure it will be a step further for the relationship.

The second part is that we will translate that relationship into hardcore development projects. So our reliance on China is pretty high both in terms of technical and financial support. I am sure this is going to be a good visit, and especially WAPDA will be the real beneficiary of this visit.

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