Corruption, the key factor in the mounting losses suffered by State Owned Entities (SOEs), is unlikely to be eliminated completely with only the change of Board of Directors (BoDs) as currently under way, analysts said. According to reports SOEs eat up around Rs 350 billion of the taxpayers' money every year because of endemic corruption, inefficiency and mismanagement.
PML (N), Muttahida Qaumi Movement (MQM) and Pakistan Muslim League (Q) are urging the PPP government to eliminate corruption with the overall objective of reducing current expenditure and thereby bringing the budget deficit to a sustainable level instead of raising taxes on those who are already heavily burdened. Transparency International Pakistan (TIP), a major watchdog engaged in identifying corruption in corporations and seeking explanations from the accused has been silenced by the government through sustained arm twisting of its Chairman Syed Adil Gilani.
Presently, Pakistan Electric Power Company (Pepco), its transmission and distribution companies, Wapda, Pakistan Steel Mills (PSM), National Insurance Company Limited (NICL), Trading Corporation of Pakistan (TCP), Oil and Gas Development Authority (OGDCL) are considered corrupt as well as inefficiently-run organisations. The Supreme Court is hearing corruption cases related to quite a number of these corporations.
Chairman of one of the SOEs while talking to Business Recorder admitted that corruption is one of the reasons behind the destruction of SOEs, but differed on estimates of the volume of corruption. "I must say that corruption is devastating public sector entities but the volume of corruption is not as high as is being portrayed by some political parties," he added.
The government is reconstituting new boards which are duly represented by the private sector which may help reduce the bleeding of the exchequer but may not totally eliminate it, analysts said. International financial institutions such as the World Bank, Asian Development Bank (ADB), the International Monetary Fund (IMF) and Western countries are also pressing the government to take concrete measures against corruption.
Though corruption in transmission and distribution projects is not hidden from anybody, especially after revelations in the ADB report on Rental Power Projects, yet the lack of investment in transmission and distribution systems and the government interference are also key factors contributing to power sector woes.
Recovery from federal and provincial governments, attached departments and industrial sector are also bleeding the sector. Official sources told Business Recorder that the Ministry of Water and Power is pursuing National Electric Power Regulatory Authority (Nepra) for direct notification of cost recovery and rationalisation of Nepra determined tariffs.
For instance, Nepra has given target of 98 percent recovery to five companies but their recovery is between 92-95 percent only. The other three companies - Mepco, Hesco and Qesco's recovery is about 80, 68 and 60 percent. Nepra had also set loss target of 18.6 percent but presently losses are about 20 percent. Disturbingly 1.4 percent loss equals Rs 9 billion.
"We have completed technical, financial and managerial audit of Discos and action plans for improvement are under preparation," the sources added. According to the Ministry of Water and Power, lack of investment for rehabilitation of power sector during the last 15-20 years is regarded as inefficiency on the part of the government.
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