Preventing power losses

TALK to a Japanese official and he invariably comes up with a reply that Pakistan is potentially a very rich country with large natural resources, unlike Japan with its narrow strip of hilly land. All we have to do, he says, is to develop those resources and make the best use of them, after checking their waste or misuse.

Look, for example, at the heavy power sector losses within the Wapda and KESC systems, which are 1.4 per cent of the GDP. It is equal to 75 per cent of the education budget and 200 per cent of the public health budget, according to recent calculations. As a result, there will be a shortage of 1,000 megawatts of power per year from 2005 to 2007 according to the current demand, and much more later which can cripple the economy as consumption of power increases by about 500 MW each year.

The shortage increases the cost of production, lowers the volume of industrial output and reduces the export competitiveness in an increasingly competitive world. This is the outcome of the loss of power during the process of production and distribution and the massive theft. The loss and theft of power in the KESC has been 40 per cent after it had touched 60 per cent in 2004 with a lower loss rate for Wapda.

Such a heavy loss of power in the face of the soaring world oil price is appalling. To what extent the new management from Saudi Arabia with a German chief executive can succeed in reducing the losses remains to be seen. But one major result of the high oil price is that larger investment is being made around the world in oil and gas exploration. Even hitherto disapproved countries like Burma and Sudan are being looked to for investment in oil exploration. That reminds one of the old Burma Shell in the days of undivided India because it got its oil from Burma.

Western countries like Germany and Italy are now looking for supplementary source for oil and gas instead of depending largely on Russia, which wants to expand its oil and gas industry.

Energy conservation is also being taken up seriously after the oil price touched $70 a barrel with the possibility of a $100 a barrel eventually, according to US predictions. Along with that, energy efficiency particularly in automobiles is also increasing. Germany and Italy are also formulating new energy policies instead of depending on Russian gas.

The high price of oil has also spurred a quest for alternate and renewable energy around the world to obtain power from wind, sun and hydel sources. China wants more energy frantically not to fuel its cars but to produce power, instead of depending on coal that causes pollution.

China and India signed a memorandum of understanding for cooperation in oil exploration with other countries. But the agreement has been scoffed at as unrewarding in practice in India itself. The American oil experts argue that the world will be able to breathe more easily if the Securities Exchange Commission in New York can force the oil companies to disclose the oil and gas reserves in the oil fields they hold.

It is stated that the world consumes two barrels of oil for every barrel discovered. And that means the world has to discover far more oil quick or reduce its consumption of oil progressively. It appears that it took us 125 years to use the first trillion barrels of oil but we will use the next trillion in 30 years. The oil production in the world has increased by 60 per cent in three decades since the oil price rise of 1973 and it has increased by 40 per cent more in the last 20 years and yet what is produced is not adequate to meet the needs of the world.

A positive result of the current high oil prices is the coming increase in oil production following massive new investment on oil exploration and determined efforts in the West for energy conservation and energy efficiency in its use. How Pakistan will benefit from such developments remains to be seen.

When it comes to the use of the contentious water, experts say that 75 per cent of the water is misused or overused in the farming areas. The result is the shortage of water on the one side, particularly for the tail-enders and waterlogging and salinity on the other side. More economic use will provide water to all but that is going to take a long time.

Power obtained from the hydel source is getting less and less as enough dams have not been built in time. India is pressing ahead with the use of the Indus system at its upper reaches to obtain more power, though in a highly contentious manner. However, now Pakistan has taken a decision to build five dams by 2016 and that Bhasha dam is to be built first.

Meanwhile, the government has put a ban on power production through thermal plants and discouraged the power sector from opting for thermal power because of the high furnace oil import bill. The government has now invited foreign and local investors to set up an oil refinery along the coast line, while it is encouraging offshore oil drilling. It would like to have more than one refinery and plans to export their products. The price of POL in Pakistan did not come down although the world oil prices have come down from their peak.

The government has now refused to increase the wellhead price of gas as demanded by oil-exploring companies by 25 per cent, arguing that the demand for was unwarranted. Instead it has increased the consumer price of gas by over 15 per cent and the dealers pushed up the LPG price per kilogram to Rs 50-60 during Eid.

Another area of waste is the fiscal sector. The official resources are small since the number of taxpayers is small and the overall amount they pay is not large enough. The Central Board of Revenue chief Abdullah Yousaf says that in terms of volume of tax revenues the GST brings in far more than the income tax. While the budgeted income tax revenues this year are Rs 206 billion, the GST is expected to bring in Rs 294 billion. So he wants to spread the GST further and bring in more commercial and industrial activities and services under the 15 per cent sales tax net.

But as far as the tax payers are concerned, they want to know how much of the total collection by the taxation officers actually reached the official coffers and how well that is used or how economically that is spent and how much of it goes into the pockets of the officers in its various corrupt forms.

And finally how much is spent on people and how much is embezzled and additional demands made on the contractors to allow their projects to be executed. The World Bank and the Asian Development Bank have been trying to track down such misuse of public funds rather unsuccessfully. In this area, a large form of waste through the bloated bureaucracy consisting of over four million employees of the federal, provincial and local governments is another access. The strength of the Punjab government bureaucracy is one million, while that of the Sindh government is over half a million.

A large bureaucracy means an excess of red-tape with too many officials having to sign on the same file. That delays the official decisions and results in too many meetings. Delay in the process breeds corruption and money has to be paid to speed up the process. Illegal payments in such circumstances is a multi-tiered exercise with too many officials sharing the loot. Ultimately it becomes a structured payment process and when the amount involved is large, the head of the department too gets his share.

Earlier when administrations around the world were getting modernized and thinned down, we too thought we would eventually have fewer ‘chaprasis’ and ‘chokidars’ packing the corridors of the secretariats. And when the computers came, we presumed we would have fewer clerks with varied tiles and we would have a lean and more economic government.

Little of such changes came about. We have instead now the problem of security which requires a large security apparatus, motorcades for top officials have become too long and include more than one ambulance and at times the fire brigade engine as well. And there is a scramble at the top for bullet proof Mercedes cars and ministers are pressing their claim for a bullet proof car each feigning insecurity, but in reality as a status symbol. All that costs not only huge public funds but also involves blocking the roads of major cities frequently, greatly inconveniencing the people.

Top government functionaries can always reach the people to deliver their homilies as they can always appear on TV channels as they do most of the time. But people cannot reach out to them in the normal course. And in the kind of public meetings arranged for VVIPs to meet people, those who may ask questions are selected by the local administration to avoid any embarrassing situation. So such meetings become expensive feudal exercises. The number of VVIP tours should be reduced both to cut costs for the government and reduce inconvenience to the public.

A conspicuous form of waste of national wealth is holding of large wedding lunches and dinners, with over 5,000 guests. The Supreme Court has banned such wasteful and ostentatious functions but the officials, civil and military, play merry hosts at such functions with impunity and many VIPs attend them. Their example is followed by the less fortunate who borrow money for the purpose at a forbidding interest rate. So the local indebtedness is on the rise. This is the age of consumer banking and many people acquire luxurious commodities with borrowed money whose interest rates are steadily rising. That is meant to create an illusion of an economic boom. But most of the items bought through consumer banking are imported and do not add to industrial growth of the country. So there has to be some kind of a restraint on this kind of consumerism. And what is locally produced should be given a priority over the imported one.

Then, there is the vast waste in the agricultural sector from the sowing and harvesting stage to the time when the produce reaches the market. A country of 160 million people cannot afford such all-round waste, it has to be checked resolutely if the high growth rate is to be sustained.

CCI’s revival & provincial harmony

THE revival of the Council of Common Interest according to the wishes of the constitution makers will greatly harmonize relations between the provinces of Pakistan. Many of the reasons which make the provinces accuse and malign the federal government will be purged.

For the first time it will give the provinces a real share in “formulating and regulating policy” and “exercising control and supervision” in the subjects enumerated in Part II of the Federal Legislative List, which are vital to equitable national development and highly dear to the nationalities.

The constitution provides that the members of the council shall be the chief ministers of the provinces and an equal number of members from the federal government to be nominated by the prime minister. In the present situation, it would be appropriate if the prime minister nominates to the council members of the federal government, including himself in a manner that all of the four provinces are represented. Thus every province shall have two of its domiciles in the Council of Common Interest, one as chief minister and the other nominated by the prime minister.

Part II of the Federal Legislative List specifies the following subjects to the CCI:

Railways. Mineral oil and natural gas; liquids and substances declared by Federal law to be dangerous. Development of industries, where development under federal control is declared by federal law to be expedient in the public interest; institutions, establishments, bodies and corporations administered or managed by the federal government immediately before the commencing day, including the West Pakistan Water and Power Development Authority and the West Pakistan Industrial Development Corporation; all undertakings, projects and schemes of such institutions, establishments, bodies and corporations, industries, projects and undertakings owned wholly or partially by the federation or a corporation set up by the federation.

It would be appropriate and most conducive to improving relations between the provinces if the subjects specified in Part II as listed above are split into eight portfolios, one for each member of the council — for example, in the following manner:

1. Railways.

2. Mineral oil and natural gas; liquids and substances declared by federal law to be dangerous. 3. The West Pakistan Water and Power Development Authority, high dams and hydro-electric power, without contravening the rights of the provinces under entry 34 (electricity) in the Concurrent Legislative List.

[Note: Wapda’s work load and responsibilities need to be drastically reduced. It has proved to be too big and too cumbersome an organization to serve the country. Examples abound: exorbitant payments it makes to contractors and consultants; consistent inability to fulfil the electrical energy requirements of the country causing endemic shortages over the last 40 years, resulting in load shedding; inability to use coal reserves to generate electricity; enormous line losses in its power distribution networks; rampant corruption; failure properly to advise the federal government in matters of distribution of river waters; failure to develop national skills in engineering design and engineered construction resulting in perennial dependence on foreign consultants and contractors.}

4. Thermal power, without contravening the rights of the provinces under entry 34 (electricity) in the Concurrent Legislative List.

[Note:- There is a tremendous scope in Balochistan, Sindh and Punjab and probably in the Frontier province as well for the development electrical power based on coal which needs a separate portfolio at the highest level.]

5. Distribution and withdrawal of water from rivers. [Note: - This is an extremely sensitive subject which requires the full-time attention of a minister.}

6. Water other than river water from “any natural source of supplies” such as underground reservoir, karez, glaciers, desalination from the sea under the provision of Article 155, where supplies have been or are likely to be affected prejudicially by any executive act or legislation ... or failure of any authority to exercise any of its powers with respect to the use and distribution or control of water from that source.

7. Steel and the Steel Mills at Karachi. [Note: - This is a subject of extreme national importance. Either we produce steel at a much lower price than we are doing now or we will be forced to shut down. The subject requires political attention at the highest level.]

8. Development of industries, where development under federal control is declared by federal law to be expedient in the public interest; institutions, establishments, bodies and corporations administered or managed by Federal Government immediately before the commencing day including the West Pakistan Industrial Development Corporation; all undertakings, projects and schemes of such institutions, establishments, bodies and corporations, industries, projects and undertakings owned wholly or partially by the Federation or a corporation set up by the Federation

The prime minister will be the appropriate person in the matters of finance in the meeting of the CCI and if he pleases represent the council in the National Assembly as a member of the CCI during the budget session.

The CCI should have a legal adviser of the calibre and status of the attorney-general of Pakistan as its decisions will surely come up before the Supreme Court and high courts and will have to be legally vetted as the ministry of law vets the work of the federal government.

The writer is a former finance minister.

Civil war threat in Sri Lanka

AN unfortunate feature of politics in the South Asian region during the last 50 years has been the birth of separatist movements based mostly on ethnic and linguistic basis and complicated by majority-minority politics.

Bengali nationalism in East Pakistan, the Sikh uprising in Indian Punjab in the 1980s, current movements in northeast India, the Maoist insurgency in Nepal and the ongoing civil war in the north and northeast of Sri Lanka, all share a common feature.

These movements have been the result of the failure of successive governments to address the overwhelming challenges of development in an equitable and effective manner. Perceived discrimination on demographic or ethnic basis and economic disparities have led to a crisis of legitimacy and encouraged aggrieved elements to resort to violence.

While most such movements have been quelled or controlled, the conflict in Sri Lanka continues to threaten national integrity. Despite indigenous and international mediatory efforts, the prospects for peace remain precarious.

One dominant factor rendering the situation intractable is religion lacerating the socio-economic divide. The insurgency in Sri Lanka by Tamils, demanding a separate homeland in Jaffna, illustrates this malaise. Approximately 70 per cent of Sri Lanka’s 19 million population is Sinhala Buddhists, 18 per cent Tamil Hindus and about eight per cent Muslims, the balance shared between Christians both Tamils and Sinhalese. The ethnic factor has dominated the political landscape and the history of communal clashes dates back to colonial days.

During the colonial era, Tamil Hindus became a privileged class in what was then Ceylon, with higher education and a share in the government, while the majority Sinhalese were left behind. This created resentment and conflict. After independence in 1948, through a series of legislative measures, the Sinhalese majority was provided exclusive opportunities of upward social and economic mobility thus alienating the Tamils. The Sinhala Act of 1956 proclaimed Sinhalese as the only official language. Resentment borne out of political patronage of Sinhalese led to the formation of Tamil Tigers in 1972.

Under the Republican constitution and with Ceylon being christened as Republic of Sri Lanka, Tamil disaffection turned into insurrection and gradually into a secessionist movement led by the Liberation Tigers of Tamil Elam (LTTE). Anti Tamil riots in July 1983 and military action during 1983-87 fuelled further violence and Indian support helped the movement develop into a fully fledged military insurgency. It is believed that India provided military training and equipment to the Tamil guerillas whose operations escalated into civil war.

In July 1987, the Indo-Sri Lanka peace accord was signed and India became a direct player in the game and the Indian Peace Keeping Force (IPKF) was sent to Sri Lanka. Having failed to decisively defeat the Liberation Tigers of Elam (LTTE) withdrew to India in 1990, at the request of the Sri Lanka government. The insurgency since then has become more widespread and brutal, claiming more than 60,000 lives.

It is pertinent to recall that the concept of ‘suicide bombers’ originated with the LTTE. The group has conducted some 200 suicidal bombings since 1980, far more than any other terrorist group. With the passage of time, as the separatists grew desperate their activities also become bloodier and more brutal. Another feature of the LTTE’s operation has been the killing of top leaders, including Rajiv Gandhi (May 1991) and the Sri Lankan president, Premadasa, (May 1993).

A truce was declared in Feb 2002, brokered by the US, the EU, Japan and Norway, which also promised $4.5 billion for post- conflict reconstruction. The ceasefire has held since. However, of late, there have been some serious breaches and there are ominous signs that civil war may once again be about to break out.

The election of Mahinda Rajapakse — a hardliner — in November 2005, has revived fears of the breakdown of the fragile ceasefire accord. Rajapakse, known as ‘lion of the south’ forged an alliance with the JVP and the National Heritage Party of Buddhist monks, both known for their strong opposition to sharing power with Tamils. In his manifesto, Rajapakse promised to adopt a fresh approach to the stalemated peace process with the Tigers, based on the premise of an “undivided country, a national consensus and an honourable peace.”

The LTTE boycotted the presidential elections and used violent tactics to prevent about 400,000 Tamils from casting their votes by a strategy being interpreted Tigers’ return to a military solution.

However, on the assumption of the presidency, Rajapakse has demonstrated flexibility and a fair degree of pragmatism. He has pledged to put the peace process — put on hold since April 2003, back on track, and offered talks anywhere in Asia. The LTTE, however, wants to revive the talks in Oslo, or any other European capital as against Japan’s offer to host it. The choice of venue is crucial for the LTTE, to nullify the travel ban imposed on it by the EU in September. The Tigers, who earlier received sympathy and support from the EU, Foreign Minister have been declared non- grata after last August’s killing of Foreign Minister Lakshman Kadirgamar. The US and the UK have already declared the LTTE a terrorist organization.

An early resolution of the crisis is absolutely imperative if the dark clouds of war hovering over the horizon are to recede. The LTTE also reckons that it has lost the West’s sympathy and having been classified as a terrorist organization, its options and operations will get limited with time. Such a realistic assessment may propel both parties towards a solution in the direction of a settlement. The conflict has already resulted in 60,000 deaths, with one million people displaced and another half a million leaving the island and seeking refugee status abroad.

Recent incidents of renewed violence have aroused great concern and fear that country could slide back into war. The representatives of co-chairs have met and initiated talks with the LTTE leadership. In December alone, over a 100 people were killed.

While efforts to maintain the fragile peace and revive talks on sharing power are in progress, the past history of such talks the Tigers’ lack of trust in Rajapakse’s sincerity and the dispute about the venue of the talks could retard progress. Sri Lanka has consistently maintained its GDP growth at five per cent despite all the violence thanks to its democratic strength. Another civil war may deny Colombo this distinction in the coming years.

The Saarc leadership has kept a distance from the Sri Lankan crisis but the negative fallout of further bloodshed were could create instability in the whole region. This means that Saarc needs to get involved in the interest of regional peace and security.

The writer is a former ambassador.

Killing made easy

WITH pitifully little notice paid, another rash of year-end homicide statistics points up the madness of America’s fascination with handguns.

The domestic arms race continues full tilt. More kids are taking handguns to school in Maryland and Virginia, according to a report in The Washington Post, one big, sorry reason is that more than a few of them are responding to a perceived threat of violence in their midst. Murders by handguns continue to rock Prince George’s County and the District with a vengeance.

Three Maryland jurisdictions — Baltimore City, Baltimore County and Prince George’s — accounted for more than half of all school weapons incidents (the statistics include knives) in the state. Prince George’s tallied 533 weapon suspensions in 2004-05, up 74 per cent from 306 in 1999-2000.

But the prevalence of weapons in the schools is only one reflection of the regional scene and that of the nation as a whole. Police in most jurisdictions report that the majority of killings occur after two men argue and one or both pull out guns.

There’s an obvious thread here that members of Congress choose not to see: The all-too-free flow of handguns, a warped way of life that cows presidents and members of Congress who ought to recognize that the availability of handguns is murderous. The problem is that Americans own 65 million handguns and the only effective safety measure would be a ban on these made-for-murder weapons. Only 160 of the 12,000 guns used to kill people every year are employed in legitimate self-defence; guns in the home are used seven times more often for homicide than for self-defence.

Lawmakers know all this and know as well that handguns — however exalted they seem to be in America — should not be in general circulation. Political long shot that it may be, a national ban on the general manufacture, sale and ownership of handguns ought be enacted. It would not pacify kids or adults with violent tendencies, and it might not curb general criminal activity markedly.

But it might well save thousands of lives. Handgun exceptions could be made for federal, state and local law enforcement and military agencies; collectors of antique firearms; federally licensed handgun sporting clubs with certain safety procedures; security guard services; and licensed dealers, importers or manufacturers that are determined to be meeting those needs. Such a bill was proposed more than a decade ago by Sen. John Chafee, who has since died. “I hear people say it’s a radical proposal,” he said then.

—The Washington Post