Home / Economy / 2015 – What a Year it has Been! | A B Shahid

2015 – What a Year it has Been! | A B Shahid

As 2015 comes to an end, there are hardly any successes but many starkly visible governance failures that the government keeps denying. While 2015 was unique in terms of exposing corruption and mismanagement in too many state offices, regulatory authorities, schools, colleges, universities, hospitals, even the Pakistan Arts Council, accountability was inadequate and selective.

This perception is gaining strength because too many of the alleged powerful beneficiaries of mega corruption scandals continue to hold important state offices while others have quietly exited Pakistan, and remain at large. This outcome is damaging the image of the establishment. PPP, which was steadily disintegrating, is capitalising on this perception to rebuild its image.

In March, a Judicial Commission comprising the Chief Justice and two other judges of the Supreme Court concluded that, based on the evidence placed before it, the 2013 general elections were ‘largely’ fair and in accordance with the law. Yet even parties that ended up forming federal and provincial governments claimed massive vote-rigging.

Vocal, at times violent, vote-rigging claims were made during the bye-elections for the vacated national and provincial assembly seats as well as for installing local governments. What is worth questioning is whether ‘largely’ fair elections should elect governments, and can Pakistan afford to be administered by regimes elected via ‘largely’ fair elections?

Not unexpectedly, performance of the PML-N regimes elected by these ‘largely’ fair elections to govern the federation and the county’s biggest province – Punjab – disappointed the electorate because in 2015 alone, what surfaced were shocking instances of mismanagement and corruption that cost the nation hundreds of billions of rupees.

Last week, winding up a debate prompted by a PPP Senator, Minister of Petroleum & Natural Resources told the Senate that PSM owes over Rs 35 billion to SSGC (whose equity is worth Rs 18 billion), which could render SSGC bankrupt. Also, that since PSM is to be privatised, to clear its dues it must transfer its land worth Rs 35 billion to SSGC, implying thereby SSGC’s subsequent sale of that land to recover its dues.

The PPP senator had alleged that PSM was intentionally being destroyed for privatisation at a low price, but forgot that PSM was a profit-making entity until 2008 when it recorded a profit of Rs 23 billion, and during 2008-13it accumulated a loss of Rs 104bn. However, his fear about pocketing of huge benefits through SSGC’s sale of land (to be acquired from PSM) sounded justified.

Last month, while addressing a forum in Karachi, the Japanese ambassador had rightly pointed to the energy deficit and security issues – reflection on governance – as the key diluters of Pakistan’s competitiveness and economic growth, and their reform had to be prioritised. One example of how this was done was reflected by Nepra’s shocking revelations about the energy sector.

Despite their controversial cost, LNG import and the state of Neelum-Jehlum, Nandipur and Bahawalpur’s solar energy park manifest the government’s response. On the Iran-Pakistan-India gas pipeline -cheapest and fast route to compensating for Pakistan’s failure to extract more gas from its own reservoirs – remained side-lined, although a controversial Gas Infrastructure Development was added to the gas tariff.

The government continued to ignore the population growth-driven demand for everything; the poverty-escalating solution it opted for was to increase tariffs. Yet again, natural gas tariff will soar effective January – this time by 38 percent- and petroleum products’ prices won’t be reduced commensurate with the fall in global oil prices.

According to SBP’s Annual Report 2014-15, although during 2014-15 global price of furnace oil (the key fuel used by the power sector) declined by around 30 percent, drop in the cost of power generation over 2013-14 was only 1.6 percent. On top thereof, according to Nepra, line losses soared and IPPs continued to profit by misreporting facts and costs relating to power generation.

According to SBP, the policy remained focused on enhancement of power generation capacity (projects that will, if at all, begin delivering in 2017-18). This policy favoured the IPPs instead of forcing them to contain transmission and distribution losses, which were eroding the competitiveness of the economy at a huge cost in terms of losing global share in exports.

The government also remained oblivious to its constitutional obligations. In the context of supply of natural gas, Article 158 of the Constitution states that the province wherein a gas well is located shall have precedence over other provinces. But Balochistan, which produces the bulk of Pakistan’s natural gas is facing severe gas load-shedding at a time when it is experiencing below freezing temperatures.

The Minister of Petroleum & Natural Resources bluntly denied gas load-shedding in Quetta although “that city’s bill recovery rate was mere 10percent”, but admitted a 20 percent supply shortfall in Kalat and Mastung and blamed it on technical faults in the Zarghoon gas field without explaining the cause of delay in repairing that damage, although winter was approaching.

Despite nation-wide criticism of the world’s most expensive metro-bus projects in Rawalpindi and Lahore, they remained the government’s priority, while increasing productivity and delivery capacity of the fuel and energy sectors (crippling every sector of the economy) remained a low priority – a profile reflecting the vision and self-proclaimed nationalistic commitments of the government.

Government’s focus on healthcare was manifested by the fact that, in its Budget 2014-15, the Punjab government allocated only Rs 30bn for health services compared to Rs 162bn for the orange railway despite life-threatening incidents of care neglect and equipment failures in hospitals. In Sukkur, half a million syringes provided by USAID were sold to junk a dealer.

In the backdrop of discovery of scores of outfits producing fake medicines, Minister of Science &technology admitted before the National Assembly’s Standing Committee on these sectors that 82 percent of the country’s drinking water was unsafe and even the bottled water being sold was substandard – a shocking state of healthcare in a country with annual population growth rate of over 2 percent.

While the Finance Minister kept pointing to building the largest-ever exchange reserves (bulk of them borrowed), exports – the real source of building these reserves – kept sliding because of the industry’s steady loss of competitiveness courtesy fuel pricing, power and gas load-shedding, and non-payment of refundable taxes, as pointed out by none other than the Chairman TDAP.

As for expanding the tax net, according to the FBR, till December 23, only 33,000 new entities filed their returns, though in the PML-N government’s first budget in 2013 the Finance Minister had promised to bring 100,000 new taxpayers into the tax net; sadly, his remained focused on containing the fiscal deficit by imposing higher and more taxes on the already taxed.

Last week, the Special Assistant to the Prime Minister on Revenue made a more shocking disclosure – in 2013-14, value of goods smuggled by 11 major smuggling-prone sectors reached $9 billion (crime for curbing which FBR had given requisite powers to Pakistan Rangers, Coast Guards, Frontier Cops and Pakistan Maritime Agency) and the import duty revenue loss was 3.88 percent of the GDP.

He also claimed that in 2014-15, goods worth Rs 24.5 billion were seized compared to Rs 7.4 billion in 2013-14. Then why the revenue loss due lower duty recovery on oil imports (courtesy much lower oil price) could be compensated? In the same forum, a former FBR Member Customs said that annual quantum of smuggling was between $15 billion and $20 billion and duty revenue loss thereon could be around $4 billion.

Put together, all this makes 2015 an historic year in terms of exposing maladministration without but going far enough in nabbing its committers.

Source: http://www.brecorder.com/articles-a-letters/187:articles/1259853:2015-what-a-year-it-has-been/?date=2015-12-29

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