Power sector allocation

During the first ten months of the current fiscal year, the federal government was able to release only 38 percent of its budgetary commitment to the Water and Power Development Authority (Wapda) for power projects.
Or, in other words, the government's commitment to meet the ongoing energy shortfall, within a specific target date, based on the identification of medium to long-term power sector projects and their completion dates would inevitably be severely compromised.
This is disheartening for the public, especially given the fact that the short-term power sector projects, consisting primarily of the controversial rental power projects that Minister for Water and Power Raja Parvez Ashraf claimed would end load-shedding by December 2009, were slashed to 1250 MW from the original 2250MW.
This decision was taken in response to the findings of the third party audit that confirmed the general view that these projects were awarded in violation of the public procurement rules, as terms were changed after the awards were approved.
The obvious question is why did the Finance Ministry fail to allocate funds to Wapda that it had committed to in the budget for fiscal year 2009-10 given the fact that the ongoing energy crisis is regarded as the major reason why the country's productivity remains low? Severe financial constraints, is the obvious answer - constraints that are partly attributable to the failure of the Friends of Democratic Pakistan (FoDP) to translate their April 2009 Tokyo pledges to disbursements.
There is evidence to suggest that the FoDP countries were engaged in fire-fighting within their own economies due to the global recession leaving little funding to extend as aid to poor countries including Pakistan; however part of the reason for the slow pace of realising FoDP pledges was due to the general perception that there is poor governance in Pakistan.
The findings of the third party audit, with respect to the rental power projects, would have simply strengthened this perception. It is little wonder that bilaterals, including the United States, are now considering extending assistance with greater oversight, requiring an allocation that would be part and parcel of the 1.5 billion dollar annual assistance under the Kerry-Lugar bill. There is also talk of extending assistance, either through NGOs like the Edhi Foundation or through an institution headed by a respected individual like Fakhruddin Ibrahim, instead of extending assistance directly to the government.
However, another reason for the failure of the government to make good its financial pledges with respect to power sector projects is its inability to raise the tax to Gross Domestic Product (GDP) ratio. Exemptions to the rich and influential continue in Pakistan and the country was faced with the humiliating exhortation, made by Secretary of State Hillary Clinton, to pay taxes - an exhortation that 90 percent of the people of this country would support as the biggest offenders remain the rich and the influential, sitting in the country's national and provincial assemblies.
Be that as it may, the major responsibility for the failure of the Finance Ministry to release the funds it committed in its budget document to the power sector rests with the Prime Minister and his cabinet. The reason is that the cut in allocations reflects the government's priorities.
There is little doubt that the public would have supported the government's attempt to focus on the power sector on a war footing and, in turn, slash expenditure from other ministries, which would suffer some neglect till such a time as energy supply could ensure that the wheels of industry are well-oiled, leading to higher employment and lower inflation.
However, the Finance Ministry, it appears, slashed expenditure equitably with respect to all ministries and departments. There is, thus, an emergent need for the Prime Minister, currently holding the portfolio of Finance as well, to prioritise power sector development projects above all other allocations.