Hidden contracts

The KE-SSGC row has now escalated to become an inter-governmental affair, with the CM Sindh writing a letter to the PM demanding a swift resolution of the crisis. The opinions on this issue are divided, and that’s understandable because we live in an unto-your-opinion-unto-mine world. But in this case, and many others like this, the facts are also divided.

The confusion emerges from the hidden nature of government contracts. Aside from the government offices, the KE (and their legal advisors), no independent organization from the media, think tanks or academic circles has access to the contract between the government and the power distribution firm. The result: a mud-slinging match.

This KE deal is not the only instance where the government has kept the contracts secret. Details of the much pending payment from the PTCL deal are another example. A sure shot understanding of who actually is at fault is missing from the public space. Whether it is Etisalat, the Musharraf-era administration, the ensuing governments or all of the above? Without detailed reading of the contract, and a wider debate on it, who can pin point who’s actually at fault.

Or take the case of Reko Diq deal. BR Research is informed by close sources that in the Reko Diq case, Pakistan could have avoided the loss at international court, had her advisors read and understood the contract, and settled out of court instead. Then again, as many people, as many opinions, as many facts. There is no way to be sure whether Pakistan’s loss at international court was inevitable or not, until the veil of secrecy is lifted from the Reko Diq contract.

In some cases, like the case of Saindak, government contracts are kept hidden from government’s own circles such that, for instance, it takes years before honest and eager bureaucrats realize that there is no way to audit the royalties being received from the companies. The story of Gwadar Port is no different, with its BOT agreement kept hidden from public scrutiny.

The implications of keeping contracts secret maybe few but profound. The public is unable to reason whether such contracts were doled out of nepotism/corruption; or whether they suffered from poor commercial understanding at the government’s end, or a weak legal capacity, or all of the above.

Accordingly, when there is no public pressure and lack of accountability, the government manages to worsen the case, or delay the solution on account of the very reasons that created ill-thought out contracts. And that further complicates the problem, often creating more disincentives for potential foreign investors that any of the poor Doing Business indicators could. It’s about time to lift the veil of secrecy that masks Pakistan!