EDITORIAL: The ECC (Economic Coordination Committee) of the cabinet seems to have its hands full these days, but for all the wrong reasons.
When it is not busy handling politically-motivated issues, it must give time to settling disputes – sometimes going back years and decades – stemming from corruption and neglect typical of the government machinery.
And since it is the highest economic/financial decision-making body in the land, it must duly take responsibility for diverting time and attention away from necessary reforms as well as unnecessarily and cruelly burning taxpayer money to arbitrate contractual violations.
The issue of Rs 312.733 million in customs duty that KESC (Karachi Electric Supply Company) – K-Electric after its privatisation in 2005 – did not pay in 1995-96 on import of “high voltage equipment and electrical material” is a good case in point. 27 years later, and after being pushed from pillar to post, K-Electric’s management is left to the mercy of ECC to approve a pact to take this matter towards closure.
Yet even then, and after already having paid half the outstanding customs duty and taxes, it will have to wait and see if Nepra allows the remaining payment as a pass-through amount in tariff.
And if it doesn’t, the matter will go right back to ECC to find a “mutually acceptable solution”; which, ironically enough, is where it all began all those years ago, when the ECC decided it should be looked into by a committee in 1998.
This is just one of the many such problems that K-Electric inherited from KESC. Surely, the new owners would have never taken the deal if they knew what they were in for.
KE’s post-privatisation troubles and how they hounded the new team are now pretty well documented, of course, but such things only go to show, yet again, why serious FDI would rather give the Pakistani market as a whole a wide berth.
Another headline KE finds itself in is about the ministry of finance refusing to become party to agreements on the Tariff Differential Subsidy (TDS), throwing the ball to the power division instead.
KE has its hands tied (financially), and since a lot of non-payment that feeds its deficit is shielded by interests that run very high, as everybody in the market knows, nobody is willing to touch this corruption with a 10-foot pole.
That leaves the country’s financial managers, who are supposed to divert all their energies into dragging it out of its economic crisis, consumed with dodging a beehive of fraud and exploitation that has rattled KE ever since it was given to the private sector.
Yet the power sector and all its problems are just one part of the bigger, uglier picture. All sorts of administrations have been tossing around all sorts of ideas to reform and turn around SOEs (State-Owned Enterprises) for at least 30 years.
And there’s still no final plan of action even though they’ve grown into a financial black hole that sucks trillions of rupees every year. The knee-jerk reaction, even after all this time, is to give them up to the market and let private owners sort them out.
Clearly, they’ve still not realised that these items will not fetch top dollar just because they were once the family silver.
The government’s own policies, especially the corruption, red tape and sheer incompetence they are wrapped around, continue to be the biggest hurdles in attracting serious FDI.
Let’s not forget that perhaps the most crucial and the most ignored component of the current account (CA) is this kind of investment.
And given that our current predicament revolves around low reserves, not giving it the serious attention it deserves, especially at this time, amounts to doing the country and the people a grave harm.
Copyright Business Recorder, 2023
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