Jinnah's Pakistan


PREAMBLE: Ever wondered why strategic planning is trashed periodically in Pakistan? Why the nation’s hydro endowment & its related national assets are suffering attrition & neglect? India’s water war is no longer surreptitious. It is blatant. It is now a cold-blooded campaign. Her transparent interference internally in Pakistan has created an anti-dam lobby within the three smaller provinces. Their open opposition to a second reservoir on the Indus after commissioning of Tarbela Dam (1974) has been suicidal for Pakistan’s economy. Punjab, Pakistan’s largest populated province and breadbasket has seen its agricultural output stagnate. No thanks to Pakistan’s rising population the per-capita agricultural output has fallen in real terms. Poverty & the resulting tensions within the Federation have multiplied. India’s internal factor (in Pakistan) & external activities (in Kashmir) have inflicted upto 2010 a financial loss of over a trillion USD equivalent to the PAK economy & it is growing. Due to Pakistan’s failure to build multi-purpose dams the desired hydel:thermal ratio has become lopsided; around 30:70. Imported oil based power generation cannot be financially sustainable for the PAK economy. The financial deficit has climbed above USD 10bn for the first time. The national debt servicing is even greater. Textiles our dominant agro based sector has not grown in real terms; merely a hostage to the tripling of the cotton / yarn prices that have inflated the export statistics by around 26%.

India now goes ahead with plans to build 100 + hydro-electric projects on Pakistan’s waters flowing through Indian Held-Kashmir. These are the so-called three western rivers: Indus, Jhelum & Chenab. She uses a benign concession in the landmark Indus Waters Treaty of Sep 1960 to justify building dozens of high dams & creating reservoirs in cascade on all three. She could build some non-controversial run-of-the-river hydro-electric power plants (using diversion thru weirs & power tunnels) that return the water flows to the river concerned. Equally disturbing is India’s claim on the waters that Pakistan’s anti-dam lobby compels it to waste. Pakistan is already since several years facing the inexplicable scenario of drastically shrinking inflows from her western rivers. The hydro based infrastructures being constructed by India in Kashmir permit her absolute control of the surface flows into Pakistan besides creating the capability to divert Kashmir waters into the northern Indian basin. India is building the world’s largest single irrigation project stretching from the Indian Punjab (in the west) to Indian Bengal (in the east). A blueprint for history’s greatest genocide is unwittingly under implementation?

The tragic symptoms of irrational behavior among Pakistani youth including the bizarre & murderous mission to Mumbai by ten odd PAK militants in Nov 2008 are signs of a despondent people. Such missions will escalate exponentially as a nation comes in the throes of an economic suffocation orchestrated by its upper riparian neighbor. Inhuman policies can bring out inhuman reactions. A sad analogy of Newton’s third law of Motion. Indian maneuvering & high handed tactics before the IWT 1960 got them the entire flow of the three Eastern Rivers. It was historically an unprecedented & anti-civil milestone. Equally unforgiveable was that the Pakistani leadership had acquiesced. Today, Pakistan’s second largest city Lahore is sinking in its sewage. Its life sustaining Ravi river has become a sewer. It’s deep water pumps throwing up arsenic & nitrates far beyond safe limits. Situation in South Punjab is now critical. The anti-dam lobby has ensured reduction of Pakistan’s storage capacity to about 8% of its annual surface flows of 145 MAF. Clean drinking water had already become a nationwide struggle. The 2010 floods have demonstrated that lack of mega dams has another ominous dimension. A deadly fifth column exists which the nation has failed to cleanse. Pakistan is economically choking due to its water stressed situation. Yet the Indians project themselves as the aggrieved party.

This paper will focus on the lack of reservoirs & the ignored hydel energy potential. The tragic mistakes clearly orchestrated by our regional adversary & the fifth column within the republic.

PART A:      Pakistan’s economy could not become self-sustaining

We were by 2006 completely dependent on IPPs and the developing “Circular Debt” has been growing menacingly since 1994 due to our unsustainable Imported Energy Policy. The era of massive deficit financing & de-industrialization had arrived. The nation had been trapped in the guise of FDI. How could the thermal based privatization policy lead to lower tariffs? The Statement of Dr. Salman Shah former Adviser to the PM on Finance and Revenue as reported on 30 July 07 to the effect that private companies will build and operate mega dams jolted many of us out of our stupor. Such a model does not exist anywhere. A developing country with an agrarian economy cannot even dream of handing over its irrigation water to the private sector. It is clear that the mistakes committed since 1980s in the operation of Utilities had reached the pits. There is a Chinese saying” when a Utility is in profit the nation is in loss”. Tragically we had created a USD two billion financial black hole in our economy by the year 2004 thanks to the unsustainable private thermal generation which was uncapped and based on imported oil. The Independent Power Producers (IPPs) were inducted under the 1994 Power Policy. The devil is in the detail. WAPDA/GoP has to pay the fuel cost differential as a pass-thru component. Today this financial black hole has at least doubled because RFO/HFO (& Diesel fuel) for power generation has crossed + 10 million tons/annum. The creaky infrastructure is overwhelmed. Tragically our hydel development has been dismal and the mega reservoir projects are virtually on hold since Tarbela Dam (1974). The surface storage is now less than 8% of the average 145MAF surface flows. In 2008 & again in 2009 Chairman WAPDA a non-technical bureaucrat clearly advised the Federal Minister to announce the official closure of the Kalabagh Dam project and WAPDA House was the venue for this tragic announcement. Does a nation, a town, a village, a home require “consensus” for its sweet water supplies? Water is life and only an enemy will disagree. Reservoirs are indeed also the lowest cost electric energy resource.

We learnt in 1994 that Pakistan was adopting the California model of IPPs but with radical changes i.e. it was being made unsustainably generous. The California model inflicted great damage to the economy of California within the 90’s decade. One had been aware of the basic recommendations of the TASK FORCE on Energy (Jan 94). My serious concern was that any policy based on imported energy, which is uncapped, will destabilize WAPDA therefore the national economy and eventually damage the Federation. Some of us observed that the 1994 Private Power Policy was an evil on the scale of the Agartala Conspiracy which had resulted in East Pakistan’s separation from Pakistan. The hibernating HUBCO Agreement of Aug 1992 (negotiated since 1985) was made functional by unfair concessions through amendments upto 1994. HUBCO was the experiment the genesis of which was laid in 1985 on the advice of IMF. To accommodate this 1292MW conventional HFO (furnace oil) fired steam power station WAPDA had scrapped plans for the 1000MW imported coal project to be financed by Canada and froze the extension of Jamshoro thermal P.S. for which the Japanese Government had offered to accept payment in Pak Rupees. Mr. Jam Yousaf Federal Minister of Water and Power gifted a 7 km of beach near Karachi city. A tax free island in Baluchistan. The area gifted is larger than Hong Kong. The World Bank had estimated USD 0.8 mn/MW but later allowed USD 1.2mn/MW. Can we overlook that HUBCO had within 13 months recovered its entire equity of about USD 375mn? It is universally accepted that any IPP controlling +10% of the power supply is a monopoly. This was the period when Bangladesh was purchasing steam power stations with gas fired boilers at USD 350000/MW. Today 15 of the 19 originally sanctioned IPPs under the ‘94 Private Power Policies are established. Together with the newly inducted IPP’s & a privatized KESC the nation is generating about 130bn electrical units per annum; limited only by the financial & infrastructural constraints as discussed. This means about 75% of the total thermal installed capacity and more than 50% of Pakistan’s generating capacity is in private hands. We can guess how many more thermal IPPs will be inducted by PPIB, Islamabad.

In contrast both China and India never appreciated this IMF/World Bank concept and did not allow more than 5% of IPP power on imported energy in their national grids. In Pakistan we see that IPPs have throttled the public sector. Surely the OECD Helsinki Accord of 1992 discouraging bilateral financing was not a signal for new imperialism through IPPs? There were some unsung heroes within WAPDA’s hierarchy. Foremost among them being Mr. Javed Akhtar, WAPDA’s brilliant Member Power who was squeezed out in May 1994 several months before his 60th birthday. It is not a co-incidence that the IPPs have found an opportunity to provide over 66% of Pakistan’s electric power taking advantage of the low hydel generation cycle. This is unsustainable and the dire predictions made in 1994-99 period by several of us have been unfortunately accurate. Mass industrialization is now impossible. This is the age of aluminum but we cannot have an aluminum smelter since it is not viable with expensive electric power. Similarly we are excluded from several basic industrial sectors. The developing world’s most expensive power is now perforce being supplied to domestic users (over 60%) then to industry (around 28%) and agriculture (around 10%). The IPPs propaganda machine is so effective that even sensible people are heard expressing their gratitude for the great contribution of IPPs oblivious that imported fuel based IPPs are playing havoc with our economy. Where in the world do investors get a blank cheque for their capital cost repayments and pass-thru increase in fuel prices all indexed to U.S CPI as allowed in the 1994 Thermal IPP policy? Projects that were granted without competition for a minimum guaranteed profit over a thirty years period found ways to increase their IRRs through several routes. The capital costs of the projects (including HUBCO) being a direct liability of the GoP. Who could resist over invoicing if someone else has to pay the bill? Yes there was to be no taxation on the income of IPPs although they are Pakistani companies. The US 6.5$ tariff was a bluff as furnace oil is pegged at a rate (Rs 2350/ton) which is around 6% of today’s rates. The difference payable by GoP/WAPDA. Since 2006 we see rental power also being contracted. Imported oil cannot bring prosperity. The fuel would be provided free (pass-thru) to the RPP operating the rental power station. How can anyone justify the actions of former Prime Minister Shaukat Aziz to disallow new WAPDA/Gencos thermal projects in the public sector? A 1000 MW of additional public sector power would have made a difference especially in the perception of IPPs stranglehold. This was precisely what Mr. Shaukat Aziz could not allow. He treated public sector generation with contempt. He diverted 110mmcfd of Guddu’s gas quota to his friends operating Fatima Fertilizer. He denied 300mmcfd to Muzaffargarh TPS. When IPP Rousch failed to run on HFO he diverted GENCO gas quota to operate the IPP. He ensured over 250mmcfd for private transport and ignored public sector CNG based Mass Transit. He diverted over 20% of national gas resource from power generation. Today the new round of Fast Track IPPs based on thermal energy are negotiating and re-negotiating with GoP/PPIB, taking maximum advantage of the shortages and load-shedding. All this while the public sector is kept blocked since 1988. HUBCO set the precedent. The post 9/11 events brought an artificial respite for the economy giving a false indication of prosperity. The illusion could last only till the aid was flowing freely.

A desperate economic situation has engulfed Pakistan since 1994. Hopefully you will agree with Edward Burke “The only thing for evil to triumph is for good men to do nothing”. I salute the wisdom of late Engr. Dr. Ghulam Safdar Butt (Lt. Gen. Rtd) the hero of the KKH saga who helped to open the Northern Areas for economic development. He made the international conference of 9 Feb 98 possible and was an inspiration till his passing away in early 2006. I also salute the courage of several patriots including Mr. Hidayatullah whose conscience reportedly resulted in his exit as auditor of Hub Power Co. Mr. Aziz Qureshi an ex-banker who was the moving spirit in WAPDA’s short-lived legal challenge to Hub Power Co’s indiscretions allegedly committed in their first 2 years of operations (1996-98). Mr. Salahuddin Rifai former G.M WAPDA / NTDC who ensured economic despatch without fear & favour. The rogues can also be identified. Above all the Indian factor emerges very strongly. When the GNP of a nation does not rise in tandem with its GDP (due to excessive outflows of profits and dividends) we have economic and social upheavals. The British Imperial masters had increased India’s GDP. After a while they had become a liability inspite of a benign rule. Secondly we all know that economic inequities lead to political and social upheavals. Historically FDI has often been misdirected and used as a tool of exploitation. In Pakistan’s case we are no longer having a self sustainable economy primarily due to our tragically flawed policy in the three crucial areas i.e. civilian engineering industry sustenance of our irrigation assets and last but not the least our treacherous energy policy. Clearly FDI is not always healthy for the recipient. FDI should be accepted on a rational and selective basis. The Economist of 02 Feb 2008 reported that finally India has eased limits on FDI in six industries only. These included commodity exchanges, credit information firms, oil refining, titanium mining and parts of aviation concerning only cargo planes and services including relevant pilot training.

It was on 09 Feb 98 that I had convened a conference on Water Reservoirs in the National Economy at Islamabad. The morning session was presided by the Prime Minister and during the full days discussion all major aspects of our predominantly irrigated agriculture, hydro energy potential and related aspects were addressed. The legendary S.S Kirmani Sahib was unable to attend but his kind fax message was read out. Three months later he was summoned by the Creator. His message remains most relevant. The guest from Turkey Mr. Irfan Aker made an inspiring analysis of the Greater Anatolian Project (GAP). An enlightening talk was given by Dr. Peter Grein of Switzerland on desilting of reservoirs and his experiences in China. Presented late Maj. Gen. (Rtd) Fazle Raziq late, Lt. Gen (Rtd) Dr. Ghulam Safdar Butt and Engr. Hissamuddin Bangash as speakers. The guest speaker Engr. Khalid Mohtadullah (Member Water WAPDA) had discussed the benefits of reservoir construction and explained the details of the IBIS (Indus Basin Irrigation System). There was a prolific technical session in the afternoon presided by eminent irrigation engineer of Sindh Mr. Elahi Buskh Soomro then Speaker of the National Assembly. The expected pit-falls in the building of Diamer -Bhasha and the near impossible status of Katzarah/Yago/Skardu on humanitarian and ecological grounds were also deliberated by several experts. A resolution was unanimously approved by the delegates for the construction of atleast one reservoir on the Indus without further loss of time. Everyone agreed that some 16 years had already been lost as 10 years after Tarbela (1974) a new reservoir’s construction should have started and would have been available by 1990. In financial terms a staggering wastage of around USD 230bn equivalent between 1990 and 2010 & due to non-availability of a second reservoir on the Indus that could have kept our economic growth far ahead of our population increase. A near hopeless sociological situation as experienced today would have been averted. The arbitrary private thermal power policy of 1994 based primarily on imported oil after imposing a ban on increased public sector generation was a national tragedy.

In Dec 1998 in the office of the COAS I had presented my essay “Pakistan’s Strategic Federal Assets”. In my long meeting I had exhorted all present in his office that WAPDA must be kept intact inline with its charter of 1958. I repeated this analysis in March 1999 during the second marathon meeting with him and several of his military colleagues. On his desire there was a well attended seminar at GHQ in April 1999 which was coordinated by Lt. Gen Jahangir Nasrullah (Engineer-in-Chief). My team had included some elders of the Feb 98 Water Conference including late Lt. Gen (Rtd) Dr. G.S. Butt, Engr. Hisamuddin Bangash and Dr. H. Grein of Switzerland an academic associated with ETH Lausanne. No one can object to WAPDA’s modernization. It is modeled on the TVA which is America’s most successful civilian project. The willful destruction of its balance sheet is a national calamity. It was only eight years ago when the Indian Army COAS declared and translated verbatim “Every proposal in opposition to Kalabagh Dam is like a new nail in the coffin of Pakistan’s defense capability”. A three member Indian delegation to an Islamabad conference declared that Indus Waters Treaty is superfluous! It is quite apparent that the induction of non-technical bureaucrats in Engineering Organizations has been a major factor in the nation’s economic plight. In WAPDA’s nascent developing stages it was fortunate to have had visionaries such as Ghulam Ishaq Khan, Ghulam Faruque Khan & I. A. Khan. They were trained to seek advice & work as a team. They could study the financial impact of every step. Today the seat of Chairman WAPDA has been reserved for a political group whose declared policy is “No more reservoirs on the Indus”. No wonder the Chairman does not spend more than a week in Lahore. He demands that the 96MW Jinnah Low Head project be expedited while the 3600MW KBD, few km upstream is willfully forgotten.

PART B:      The Hydel:Thermal ratio holds the key to economic independence.

Are you aware that India has effectively lobbied with the multilaterals about the Northern Areas being part of Greater Kashmir? She has blocked World Bank financing for mega projects such as Diamer-Basha Dam & Bunji HPP due to this linkage. Why no one appealed against this AJK High Court decision? Indian machinations & anti- Pakistan activities are no longer analyzed & published by most of our media groups. Real peace & “shanti” cannot be achieved if one party is after the very existence & survival of the other. Let the Engineers of all disciplines in partnership with scientists and civil society compel the major media groups thru force of facts & logic that there can be no peace until the Indians abandon their hydro offensive in all its manifestations. Kashmir was always recognized by our elders as the “jugular vein” of the nation. Why are we allowing the fifth column to conceal these deadly realities? While we address this menace and compel the government of the day to appeal this “Greater Kashmir” Judgment by an AJK High Court Judge we may rethink our national strategy for a sincere Fast-Track hydel development campaign. The engineers must give this the top priority. Let us assume that reservoirs on major rivers are presently not being allowed by political elements & their bureaucrat nominees. A deadly squeeze on the economy is therefore visible. Major reservoirs have three purposes viz, Irrigation Water, Electrical Energy & Attenuation of Floods. Comrades are requested to study the WRDC article on proposed CIBSA as a counter to the ICID menace at www.wrdc.com.pk Our Sindhi brethren infact drink canal water inspite of the pollution. Their ground water is brackish & full of pathogens which makes it unfit for human consumption. In fact whichever part of Pakistan will be denied Indus Waters its economic growth will be nearly impossible & extremism will follow. At best in the next five years we can expect about 500MW tunnel/run-of-river projects to be additionally commissioned providing around 2.5bn units per annum. Neelum Jhelum tunnel project is around 10 years away. Procurement of TBMs seems to be the present obsession of the WAPDA Chairman and his colleagues inspite of the dubious technical benefits. We are all familiar with the hydro power potential river-wise summary that is periodically issued by WAPDA including large reservoirs. Below are the recent figures in chart form.

Sr. No. River / Tributary Power (MW)
01. Indus River 37780
02. Tributaries of Indus (Northern Areas) & NWFP 6006
03. Jhelum River 3143
04. Kunhar River 1435
05. Neelum River & its Tributaries 1844
06. Poonch River 397
07. Swat River & its Tributaries 2371
08. Chitral River & its Tributaries 2282
09. Schemes below 50MW on Tributaries 1055
10. Schemes below 50MW on Canals 408

PART C:      Indian hydro policy in Indian Held Kashmir (IHK)

Let us now discuss the rising menace of India’s Northern Canal Project. What this USD 200Bn + project means for the future of our children. The real implications of Baghliar Dam, Kishinganga Barrage and the infrastructure on the Wullar Lake. Being in the peace mode we should surely advocate a peaceful accord. There has to be a consensus internally and thereafter a recognition by the world community of our historical apprehension that Kashmir is a water related issue. Since 1947 we have failed to surmount the Indian factor. India must respect in letter and spirit the tenets of the “Indus Waters Treaty 1960”. It is sacrosanct. Tragically the Indians are now guilty of laying the groundwork for genocide of our nation through the ongoing theft of Pakistan waters. India is in the process of planning & constructing 171 hydroelectric power projects (HPP) in Indian Held Kashmir (IHK). Atleast 42 projects on the three western rivers and their tributaries are already in operation. Atleast 14 are under construction & remaining 115 in advanced stages of planning & design. Indian official strategy is to achieve +28,000MW installed hydroelectric capacity in IHK before 2020. This fact has been known since many years.

There are 17 projects in operation on Chenab & its tributaries. Three more are under construction (including Baghliar II). Another 56 are in advanced stages of planning & design. The IHK projects in operation on Chenab main include Salal Dam & HPP (345MW) as well as Baghliar I HPP (450MW). The Salal Dam for example has considerable storage capability which can be mis-operated in violation of the Indus Waters Treaty (1960) and could seriously affect the inflow into Pakistan (at Maralla). Secondly on Jhelum& its tributaries another 13 projects are in operation, 8 projects under construction & 43 HPP in advanced planning stages. Work on their Wullar Barrage Project was suspended; the URI HPP (480MW) is operating. Pakistan has taken a serious view of the Kishenganga HPP project as it is in blatant violation of the IWT 1960. It includes the transfer of Neelum waters into Jhelum & is a violation of the IWT 1960, Annexure D para 15c(iii) & Annexure E para 10. Neelum is a tributary of the Jhelum. The completion of Pakistan’s Neelum Jhelum HPP / tunnel project will mean that India cannot operate its Kishenganga HPP as Pakistan has the right to the uninterrupted use of the western rivers. Another interpretation is diabolical. There is no race between the two parties. Thirdly on the Indus & its tributaries 12 smaller projects are operating, 3 under construction & 16 planned.

It is apparent that by constructing these HPP in cascade, creating substantial storage at any given time, Indian would seriously disturb the flow (and timing of the flow) of the western rivers in clear violation of the IWT 1960. Such activity would have serious repercussion on Pakistan’s future reservoir projects such as Kalabagh Dam, Akhori Dam & Diamer Basha Dam. Also due to India’s Kishenganga HPP water diversion aspect there would be a serious impact on the power generation potential of the Neelum Jhelum HPP. We cannot remain passive.

Mr. David Lilienthal, a founding Director of the TVA was dispatched to the subcontinent by President Truman and had predicted these tragic events in his August 1951 report to PM Liaquat Ali Khan. In the present decade Prof. John Briscoe of Harvard University has published two major books on the subject of Indus Waters. His recent article “War on the Indus” is highly critical of Indian projects in IHK as they blatantly violate the IWT 1960 by disturbing the flow and timing of the flows of the western rivers. With pondage from dozens of HPP projects the cumulative gross storage at any moment of time will be several MAF & inherently lethal for all downstream infrastructure projects including the Indus Basin Irrigation System (IBIS). Pakistan has priority and exclusive rights (with minor exceptions) over the waters of the western rivers and this issue is non-negotiable. Pakistan’s anxiety to secure these rights had resulted in the historic blunder within the IWT 1960; of granting India the 100% water rights of the three eastern rivers (Ravi, Sutlej, Beas). India has to be made to respect Pakistan’s exclusive rights on the western rivers.


WAPDA the economic backbone of Pakistan has to be made viable. A technocrat from the civil or military hierarchy must be inducted to stop the rot. The engineering community must play its role in building public awareness on the “Greater Kashmir” game which has blocked our mega projects. KBD is a quick & economical lifeline for Pakistan and has to be built at all costs. It’s perfect location for both irrigation & energy production are indisputable. Tarbela Dam’s hydraulic efficiency & energy output is vastly enhanced if there is a downstream dam working in cascade. Imported oil based IPPs & RPPs have to be pushed out asap from the PEPCO system.

The anti-dam lobby has ensured reduction of Pakistan’s storage capacity to about 8% of its annual surface flows of 145MAF. Pakistan is economically choking due to its water stressed situation. Pakistan needs water for its agricultural and energy needs. Substitution by imported energy (oil) is not sustainable. The national objective has to be an annual increase of 12% in the surface storages for the next 15 years and within 10 years to achieve the desired Hydel:Thermal ratio of 70:30 from Hydro Reservoirs & Run-of-River projects. Our sovereignty is at stake.

Our mission should be to focus Indian and world attention on the spirit of the Indus Waters Treaty 1960 so that violations & transgressions can be checked if not totally eliminated ab-initio. Indians must become good upper riparian neighbors. We have missed several opportunities. Renegotiation of the IWT 1960 is not possible because the Indians will not discuss the ownership of the three eastern rivers. Indian official strategy since 1947 is leading to history’s greatest genocide and this must be reversed for the sake of all people in the region and beyond. Mr. John Briscoe correctly hopes for an Indian Mandella. Let us all sincerely pray for one before it is too late. Both resultant scenarios are frightening. An economically crippled Pakistan which, God forbid, would be prone to separatist intrigues or nuclear Armageddon.

Suleman N. Khan
02 March 11