Power sector deficit about $2bn a year: WB

Power sector deficit about $2bn a year: WB

World BankISLAMABAD: The power sector deficit in Pakistan is about $2 billion a year, compared with $32 billion of investment needs in 2010-20, while domestic firms face high levels of corruption in a range of interactions with public officials with more than half expected to pay bribes during tax inspections.

The World Bank in its recent report titled ‘More and Better Jobs in South Asia’ says that corruption is among the top five constraints in five South Asian countries. In Pakistan, the domestically owned firms have to pay 71 percent bribe in electrical connections, 62 percent bribes in water connections and 59 percent bribes in tax meetings to the public officials.

Also, more than half of firms in Bangladesh, India, and Pakistan are expected to pay bribes during tax inspections. The tax systems in these countries are complex and create not only high costs of compliance but also opportunities for corruption, the report adds.The power sector financial losses across the region are large, resulting from the misalignment of tariffs, the high cost of power procurement, and high transmission and distribution losses.

Power supply in South Asia, the World Bank notes, has not kept pace with demand, resulting in shortages at peak times ranging from 1 GW (gigawatt) in Bangladesh (13 percent) to 12 GW (10 percent) in India. The toll on the economy is enormous: in Pakistan the cost of industrial load shedding is 400,000 lost jobs; in India 17 percent of total capacity is based on expensive diesel generation.

The World Bank report says that South Asia is characterised by low levels of access, low consumption per capita, and wide demand-supply gaps. Some 600 million people in the region lack access to electricity. That is more than 40 percent of the world total.Among the five large countries in the region, the report says, employment growth since 2000 was highest in Pakistan, followed by Nepal and Bangladesh, India, and Sri Lanka. Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month.

The report says that the growth in GDP per capita has accelerated, particularly since the 1980s, in Bangladesh and India. It has stagnated in Nepal and been marked by volatility around a broadly declining trend over the last four decades in Pakistan.In Bangladesh, education accounted for a fifth of the growth in aggregate labor productivity. Growth of Total Factor Productivity (TFP) was more important in India, reflecting its increased exposure to external and internal competition brought about by trade liberalisation and deregulation. Capital deepening played a significant role in India and Pakistan.

But whereas its contribution rose in India after 1980, it fell sharply in Pakistan, accounting for the relative importance of TFP growth there.Notwithstanding South Asia’s transformation from a food-deficit to a food-surplus region, the productivity of agriculture remains low. India and Pakistan have improved their agricultural productivity over the years. Elsewhere in the region, improvements began only in the 1990s, after decades of relative stagnation. – Brecorder