The federal government is caught in a bind. Ministry of Water and Power has been instructed to keep the electricity loadshedding at the minimum especially in urban areas where violent protests in particular could badly hurt government's prospects. Water and Power Ministry, therefore, wants uninterrupted supply of furnace oil and gas regardless of payment issues. Ministry of Petroleum and Natural Resources in turn wants the Ministry of Finance (MoF) to keep on footing the bill ad-infinitum.
The MoF wants Water and Power to reverse the growing gap between its revenue receipts and costly energy expenditure. The MoF has repeatedly called for re-organisation of both the power generation and transmission and distribution system on commercial lines. Promises by Water and Power have been made and in some cases Boards of Directors formed with some directors from the private sector. However, the dominant role of the line ministry - water and power - remains in place. The change of ministers - Naveed Qamar replaced by Ahmad Mukhtar - was meant to assuage the growing feeling of discrimination by the federal government in Punjab. So far the results have been of little or no consequence.
Ministry of Petroleum and Natural Resources is therefore really in a bad situation. They want money to pay the local suppliers as well as for imports. In less than first two months of the current fiscal year, the element of subsidy on the head has crossed Rs 50 billion mark. This is more than twice the amount provided in the budget. For two years, MoF has described the expenditure as one-off to show a reduced fiscal deficit. The amount of subsidy already provided (one trillion rupees) has to be recognised one way or the other. So let us not fool ourselves. PM Raja Pervez Ashraf's comments, in last Thursday's meeting carried by Business Recorder, reflected the government's predicament. He formed a secretaries committee comprising bureaucrats of the same three ministries with a view to ensuring uninterrupted supply of fuel for optimal generation and come up with doable suggestions to improve the entire energy chain from generation to distribution.
It is, however, not known whether the recommendations made by the secretaries' committee get political ownership. Zero tolerance for those who do not pay their bills is easier said than done when the major defaulters are government-managed entities themselves. There is complete helplessness of the T&D companies to collect what is due on time or even right-size themselves. A cut in the perks of their employees like supply of electricity for free has not been possible thus far. This can only be done if T&D entities are placed in private hands. KESC has shown the way. So it is doable. But for this to happen the mindset of PPP leadership towards privatisation needs to change. The need to understand that Rs 3.50 per unit of subsidy across the board has not been appreciated and will not get them the votes at the hustings. KESC's policy to minimise loadshedding in areas which pay their bills will pay dividend. For example, the difference in durations of loadshedding in different blocks in middle-cum-upper-middle class neighbourhood of Gulshan-e-Iqbal is a case in point.
The restraint on the federal government from deducting the receivables from the monthly revenue given every month to the provinces appears to be political and also the fear of courts staying such a move as the figures of outstanding amounts are yet to be reconciled while the numbers of receivables keep on increasing. Why should the subsidy of Rs 3.50 per unit be paid by the federal government alone? Provinces have increased resources at their disposal following passage of the 18th Constitutional Amendment and historic 7th NFC Award. They, therefore, need to share the burden. The rising inter-circular debt, if not resolved anytime soon, could force the imposition of a financial emergency in the country as the current situation is no longer tenable. Political accommodation on realistic lines, instead of a 'secretaries committee', is badly needed. Federal secretaries could make suggestions. The question, however, remains whether the political leadership is willing to swallow their input hook, line and sinker. Energy shortages and high inflation will be taking centre stage at the general election show. Voters are looking for a doable plan aimed at ameliorating their lot; they are not interested in party manifestos and pompous speeches characterised by long lists of promises and pledges. They want jobs, electricity and gas. Above all, they want security of life and property. The resolution of these seemingly core economic issues requires a clear - not blurred - political vision and a change in the way of governance. Will the change come? Urban voters may force this but it is the rural folks who matter more as far as formation of governments is concerned! Although, democracy is a messy business because humans are messy, the country needs a government which is rigorously frugal and simple.
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