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Pakistan: Problems paying power bills

Pakistan's power privatization programme was once the jewel in the crown of a country whose private sector was generally underdeveloped and poorly performing.

Now power is a source of great anxiety as the government struggles to pay for electricity at tariffs it complains are too high. There is even talk of default.

But critics say the real problem is not the electricity tariffs but government inefficiency in selling on the power and collecting revenue.

World Bank president James Wolfensohn has personally urged Pakistan to fix things by privatizing further rather than placing the blame on what has already been privatized.

However, this has not stopped the government seeking to renegotiate terms with the sponsors of the power projects to reduce the tariffs.

It is also in discussions with the World Bank to agree an emergency loan enabling it to soften the blow of the agreements with the power sponsors.

These were entered into by previous administrations and are now crippling the current government.

The issue is stark, says World Bank consultant Shahid Sattar. The government really cannot get out of the agreement with the independent power project (IPP) sponsors, other than by defaulting; and that would be in nobody's interest.

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