Public Investigative Series | Episode 39

🔳 My Dramatic Meeting with Shahid Hasan Khan, the Long Obscured Architect of Pakistan’s 1994 Power Policy and the Man Who Helped Shape the Country’s Present IPP Model

1. Dollar indexation

2. Capacity payments

3. Take or pay arrangements

4. Reliance on imported fossil fuels

5. High guaranteed returns on investment

6. Sovereign guarantees

Critics argue that these terms placed a lasting burden on Pakistan’s economy, the cost of which continues to be recovered from ordinary citizens through their electricity bills. Because many of these IPP agreements run for decades, the resulting payments and financial consequences are expected to continue until 2048.

It is worth noting that approximately 16 to 20 major IPPs became operational under the 1994 policy. Over time, that number continued to rise and has now crossed 100.

Critics maintain that responsibility for the excess generation capacity created by this planning, and for the trillions of rupees now being paid in capacity charges, rests with the task force and the decisions it made.

Another major criticism directed at Shahid Hasan Khan concerns the choice of fuel. Pakistan had considerable potential to generate electricity from water, wind and solar resources. Why, then, did the 1994 Power Policy favour plants running on imported fossil fuels, particularly furnace oil and natural gas?

Had local resources and renewable energy been given greater priority at the time, Pakistan might not have become so heavily dependent on imported fuel or so exposed to fluctuations in the value of the dollar.

Public Investigative Series | Episode 39

Subject: How Can Pakistan’s Electricity System Be Fixed?

Title: Pakistan’s Present Power Policy, the Imported Financing Model and the Role of Technocrat Shahid Hasan Khan

🔺When institutions avoid providing the facts, the effort to uncover the truth becomes a public responsibility.

Written and researched by Syed Shayan

In the previous episode, we examined Salman Faruqui, one of Pakistan’s most powerful bureaucrats, and his role in implementing the 1994 Power Policy. It was in that context that we described him as one of the principal architects of the policy.

This episode turns to a technocrat widely described as the true architect of the 1994 Power Policy. He is said to be the man who conceived its central idea, designed its framework and put it into writing. The policy was later carried forward through the machinery of the state.

It was this policy that introduced six defining financial features into Pakistan’s power sector: dollar indexation, capacity payments, take or pay contracts, dependence on imported fuel, guaranteed returns and sovereign guarantees.

This brings us to a man whose name remains largely unknown to the Pakistani public. Remarkably, not even a single photograph of him could be found online. Government records, old newspaper archives, American documents, international agreements and the records of companies with which he was associated offered neither a photograph nor a detailed personal profile.

That man is Shahid Hasan Khan.

In 1993, Prime Minister Benazir Bhutto appointed him chairman of a Special Task Force on Energy established to address Pakistan’s electricity crisis and chronic load shedding.

He was neither a career bureaucrat nor a member of a political family. He was a technocrat who had previously worked with a prominent American power company. That experience brought him into the influential circle shaping Pakistan’s energy policy during the 1990s, at a time when crucial decisions were being made about the future of the country’s power sector.

It is said that Shahid Hasan Khan’s wife was among Benazir Bhutto’s most trusted and close friends during her years of exile and residence abroad. She was not a well known political figure. She remained largely out of public view and is said to have hosted Benazir Bhutto on several occasions during the difficult years of exile.

In the early 1990s, as Benazir Bhutto was campaigning to return to power, load shedding in Pakistan was at its peak and the public was facing severe hardship. She believed that presenting an immediate and credible solution to the electricity crisis could strengthen her political position.

During this period, she discussed her economic and energy vision with Shahid Hasan Khan, the husband of her close friend, who was then associated with an American power company. She also sought his views on possible solutions to Pakistan’s electricity shortage.

When Benazir Bhutto became prime minister for the second time in 1993, Shahid Hasan Khan’s name was evidently still in her mind. Rather than relying entirely on the conventional bureaucracy, she created a powerful Task Force on Energy and appointed him to lead it.

The task force’s central objective was to attract immediate private investment in order to pull the country out of its load shedding crisis.

From September 1993 to November 1996, Shahid Hasan Khan served for approximately three years in Benazir Bhutto’s second government as Special Assistant to the Prime Minister, with responsibility for economic affairs and the energy sector.

During much of this period, the energy portfolio was either retained by Prime Minister Benazir Bhutto herself or supervised by other ministers. Yet Shahid Hasan Khan is widely regarded as the principal policy mind and the central authority behind the formulation of the 1994 Power Policy and the negotiations with independent power producers.

For this reason, he is also frequently held responsible for the policy and its long term consequences.

Now to the story of my unexpected meeting with Shahid Hasan Khan.

Two days earlier, I happened to come across an old issue of The Nation carrying a death notice and condolence advertisement for his mother. It stated that her funeral had taken place years earlier from the family residence on Tufail Road in Lahore Cantonment.

This was the first concrete lead we had found.

We thought that, even after so many years, someone at the address might still be able to help. It could be a relative, an old acquaintance or a family member who could at least tell us where Shahid Hasan Khan was now living.

My hope was to obtain some reliable information about him or, at the very least, a photograph that could be included in my research on Pakistan’s power sector.

Until then, most of my sources had maintained that after the fall of the Benazir Bhutto government and the beginning of accountability proceedings, Shahid Hasan Khan and his wife had left Pakistan and returned to the United States.

So, two days ago, when office hours ended, I decided not to go home. Instead, I asked my driver to take me to Lahore Cantonment.

It was already evening, but at this time of year the sun sets late and there was still plenty of daylight after six o’clock. After a considerable search, we finally located the house at the address mentioned in the old newspaper notice.

What happened next was entirely unexpected.

A woman was standing at the gate with a household employee, apparently waiting for her daughter. As our car approached, she opened the gate, perhaps assuming that her daughter had arrived.

When we stepped out of the vehicle, she looked surprised and said in English:

“No, no, this is the wrong address. You have come to the wrong house.”

I replied that we had come to the correct address and that I wished to meet Shahid Hasan Khan.

The moment she heard his name, she said:

“Yes, he is my husband. I am his wife.”

I explained that I was preparing a research report on Pakistan’s power sector and wanted to speak with Shahid Hasan Khan.

She replied, quite simply, that Shahid was at home.

Only someone who has spent months trying to locate a single person can understand what I felt at that moment.

I had arrived hoping, at best, to find a photograph. It had not even occurred to me that I might meet Shahid Hasan Khan himself.

For several days, this episode had remained unfinished because I could find neither a photograph of him nor any direct way of reaching him. I alone know how many people I contacted, how many records I searched and how many avenues I explored in trying to trace him.

So, when I was told that he was inside the house, this was not merely a meeting. It was the culmination of months of searching.

I was shown into Shahid Hasan Khan’s extremely modest home office.

A short while later, a man dressed in white entered the room. He extended his hand and said:

“I am Shahid Hasan Khan.”

And so, after months of searching, Shahid Hasan Khan was standing before me in person. The meeting had come about suddenly and in the most dramatic way.

During our conversation, he told me that throughout his life he had tried to keep his attention focused solely on his work.

He said he had always preferred to stay away from the media and from unnecessary publicity because, in his view, once a person becomes accustomed to fame, attention begins to shift away from the work itself.

“That may be why,” he said, “you will find very little information about me and hardly any photographs.”

He then became somewhat more serious and added:

“But since you have made such an effort to reach my home, I do not think it would be right to send you back empty handed. The work you have done on the electricity sector has persuaded me to answer your questions, explain my point of view and share some of my memories with you.”

He then began to present his account of the 1994 Power Policy.

I must admit that several of the things he said were entirely unexpected.

Our conversation continued for a considerable time and covered far more than could reasonably be included in a single episode.

In the next instalment, I will present selected parts of my interview with Shahid Hasan Khan in which he speaks in detail about the 1994 Power Policy, the establishment of the IPPs, the changes introduced later and the decisions taken inside the corridors of power.

Some of what he said surprised me. I believe it may prove equally surprising and revealing for readers.

The full account of this lengthy and remarkable conversation will appear in the next episode.

The photograph of Shahid Hasan Khan published with this article is most likely his first public image to appear on the internet or anywhere in the digital world. It was taken during our conversation with his permission.

The interview, video clips and other important parts of the discussion recorded on that occasion will be released gradually over the next several episodes.

[ To be continued in the next episode.]