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Pakistani protesters block the street as they demonstrate against the electricity shortage in Jehlum


As Pakistan's leaders continue to agonize over the U.S.'s breach of their country's sovereignty following the killing of Osama bin Laden its people are more concerned with something closer to home: power cuts.

Nationwide power shortages have brought protesters on to the streets of Pakistan in recent days with many parts of the country suffering "load-shedding" when power utilities, long starved of investment, cut back supply. The result is that as the stifling summer heat rises many households are lucky to receive eight hours of electricity a day.

The air conditioners and fans cut out in near 50 C summer heat and violence soon follows.

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The cuts are more acute this year because of underinvestment in power stations, creaky distribution and gas shortages. The government has also cut funding for the electricity sector as it struggles to reduce its fiscal deficit.

From Karachi to Rawalpindi, protesters have blocked roads, set cars and tires alight and attacked offices of electricity companies adding to daily turmoil caused by militant attacks.

In Chakwal, a city in northern Punjab 90 kilometres from Islamabad, protesters set up road blocks and ransacked local offices at the weekend. In Multan, the local Multan Electricity Supply Co. was attacked. In Karachi, Pakistan's largest city, riots have raged all month after the sacking of 4,000 employees of the Karachi Electric Co.

"The power cuts are terrible. I have a generator so I'm okay. But poorer people don't. I don't know what this country will look like in a few years' time," said Mohammed, one Islamabad resident. "The money is flying out of here [abroad]"

A lack of investment in the power sector during General Pervez Musharraf's rule is widely considered to have been ruinous. The U.S., and other donors, identify rehabilitating the power sector as a top priority for the country's stability and development.

Its peak power demand is 22,000 megawatt. Maximum capacity is well short of that at just 17,500 MW.

The power shortages have become a lightning rod of popular discontent with economic management under a Pakistan People's party-led government. They are also a potent symbol of Pakistan's sharp economic decline. As well as the power sector, sapping financial losses are being sustained in lax tax administration and public sector companies.

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"I worry about the U.S.-Pakistan relationship," says one Islamabad-based diplomat. "But the present budgetary crisis could become an economic crisis with substantial consequences for Pakistan."

The power cuts come as the economy records some of the worst data since Pakistan's creation 64 years ago. The economy is growing at 2.4 per cent, trailing most others in south Asia and well below a long-term trend rate of 5 per cent. Neighbouring India, which for decades lagged behind Pakistan's growth record, is nearing 9 per cent economic growth.

"The two major constraints [on the economy]are the internal security situation and the energy deficit," says Sakib Sherani, an Islamabad-based economic consultant.

"Weak governance, which is amplifying the energy crisis, is the single biggest constraint to higher growth and investment," he adds.

According to Mr. Sherani, per capita income is growing at less than 0.3 per cent a year, the lowest increase since 1951. Private investment in manufacturing is contracting, and threatening the loss of jobs in key industries, like textiles.

Pakistan's Planning Commission warns that capacity constraints are likely only to get worse over the next three years. Energy sector regulators are poorly managed, and new projects are few.

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Against the backdrop of rising public anger and underdelivery, the government has improbable plans to raise electricity tariffs in coming months. Islamabad has promised to raise electricity tariffs by 2 per cent as part of a wider program to reduce the budget deficit and pare back subsidies.

An International Monetary Fund mission concluded this month that Pakistan needed to upgrade the quality of its expenditure, particularly in health, education and infrastructure. Whereas little more than 1 per cent of GDP is devoted to health spending, about 16 per cent is directed towards military spending.

"Continued efforts are needed to reduce the budget deficit to take the pressure off monetary policy and create space for more credit to the private sector," said the mission, led by Adnan Mazarei.

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