Irrational water pricing
A RECENT report by the Planning Commission of Pakistan on the country’s irrigation systems delivers a stentorian warning, calling it unsustainable and a drag on national exchequer.
The report pleads for drastic measures to make it financially self-serving and more efficient. It notes that all four provinces recover only 24 per cent operation and maintenance cost, with rest 76 per cent coming in the form of subsidies — a burden of Rs5.4 billion.
In Punjab, the report says, the situation is even worse where the province recovers only 20 per cent of O&M charges and pays Rs689 million in subsidies every year. Here, the report seems to have taken it grossly wrong. Punjab on an average had been spending Rs10 billion a year for the last one decade but its recoveries have fluctuated between Rs1 billion to Rs2 billion (or 10 to 20 per cent). It alone had been paying Rs8 to Rs9 billion yearly in subsidies. The ground reality is much worse than what the report portrays.
But without getting into the debate on figures, one, however, cannot deny the main thrust of the report, which is: the current collection and spending pattern makes the irrigation systems nationally and provincially unsustainable. The province, which now owns agriculture along with all its sub-sectors, needs to think afresh and adjust its water pricing pattern to new realities.
It is especially true for Punjab, main consumer of national water resources and producer of 80 per cent agriculture in the country. If it continues with its benevolence for farmers at the cost of provincial exchequer, fiscal deficits would continue to mount.
Punjab water pricing defies all logics. On the turn of the century, it introduced a flat rate system; charging Rs135 per acre (abyana) annually. The charges apply (on perennial system) for water supply for 48 weeks — out of 52 weeks a year, canal remains close for a month — almost Rs2.79 per week.
If a grower runs his tube-well on diesel, it costs him over Rs2,500 per watering if the farmers are to be believed. On electricity, which is simply not available any more in the rural areas, the cost comes to around Rs500 for each watering. It is not to suggest that diesel price should be recovered from the farmers, but only to underline the irrationality of the current pricing system.
The current flat system also defies crop water requirement logic. It charges same amount for cane and cotton for that matter — or, the same money for maize or rice. The requirement for water for all the crops varies by ten times. When these rates were implemented, wheat used to cost Rs300 per 40kg, which has now gone beyond Rs1,000 for the same quantity. An acre of Kinnow orchards used to sell for Rs50,000 and now brings three times more income for the farmer.
All these points suggest only one thing: bring some kind of rationality in water pricing mechanism.
Apart from the direct cost, which the highly skewed departmental balance sheets represent, this subsidising water policy also has huge hidden cost. It breeds a culture of dependence and inefficiency in all the departments concerned and multiplies the cost. For example, Punjab irrigation department officials know that the gap between income and expenditure has to be filled by the finance department — regardless how wide or narrow it is — and the latter is policy bound to do so. What incentive or compulsion they would have to increase their
The irrigation officials are busy all the time making summaries for finance department to spare more money for them instead of diverting their energies to improve their own recoveries. Even that grossly irrational water charges are being recovered because money can come from other departments.
When some one else has to foot the bill and money is always be in short supply, deflecting the blame for one’s own inefficiencies becomes the easiest option. That is precisely what is being done by the irrigation department, whenever it is asked to improve its infrastructure and services. Instead of being held accountable on its own deeds, it hides behind the government subsidy policy even for routine maintenance of the system, which is now 100 to 150 years old and collapsing with every passing year. How much this neglect is eating into the already debilitating system, no one really knows.
With keeping canal water dirt cheap, the provincial governments has lost control over the demand side management and cropping pattern as well. For the last one decade, it has been trying to promote high efficiency sprinkle and drip irrigation system and investing heavily on them. But to no avail. All such systems don’t make commercial sense with canal water being so cheap and delivered at the farm with all losses going to the government.
Another result is loss of influence on cropping pattern. Right in the middle of cotton zone, people are sowing cane, which is highly harmful to cotton. But the provincial government cannot do anything about it. Water supply cannot, especially when so cheap, induce farmers to fit their crops in the national picture by sowing it under national guidelines. But it has not happened.
It may not be far in future, when the country will have to take a tightrope walk; balancing between decreasing supplies, increasing demands and recovering the full cost. The earlier it is started, the better it would be.