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Power to the people proves a costly wager

Pakistan's successful private power initiative has helped overcome an electricity shortage but has created a foreign exchange burden. The government is gambling on increased capacity leading to greater consumption and higher productivity. But will this be sufficient to pay for imported fuel and the tariffs charged by the foreign-owned power stations? By Philip Eade

Senior officials from Enron arrived in Islamabad earlier this year expecting to see the avenues covered with red carpets. The US energy company clicked its corporate finger at everyone, including prime minister Benazir Bhutto, to ensure that all necessary doors would be opened ­ and fast. "The kind of support they were demanding was ludicrous," says a Pakistani power company executive. "They expected the prime minister to run around with them shouting 'do this, do that'."

Enron, though, had not reckoned on the equally swollen egos of some Pakistani politicians. In the end the company's plan to build a 750MW thermal power plant collapsed amid disagreement with the government about the cost of the imported naphtha fuel.

More galling for Enron was the fact that Pakistan was not prepared to bend over backwards to revive negotiations. The country's private power initiative has been so successful at attracting investment that there are already more than enough plants under construction ­ the government does not need to bow and scrape to arrogant multinationals.

Pakistan's power policy is no longer about wooing investors. It has progressed way beyond that.