EDITORIAL: With foreign investment the weakest link in the country’s current account, and the economy on the verge of collapse, one would think that the government would bend over backwards to encourage and facilitate any and all sorts of FDI.
Yet it turns out that foreign firms investing millions of dollars in Pakistan are being frustrated by a form of paralysis in some of the government’s own departments, forcing them to approach the foreign ministry to shake things around.
A Korean firm, Korea South-East Power Company (KOEN), is reportedly very upset that Nepra (National Electric Power Regulatory Authority), the power regulator, is delaying feasibility stage tariff for two of its hydel projects in KP (Khyber Pakhtunkhwa) for no reason at all. This is a very serious international market player that is being let down like this, which is going to have repercussions.
M/s KOEN is a Korean state-owned company and a subsidiary of the Korean Electric Power Corporation (KEPCO), after all, and it owns and maintains 83,000MW of generation capacity worldwide with an asset base of $175 billion. If it breaks off and walks away due to the host government’s mismanagement and mistreatment, the word will go far and wide and it will do our already fragile economy no good at all.
The company is complaining that after spending approximately $25 million on the projects, and recruiting local personnel, Nepra is still unable to determine the tariff, which is causing unnecessary delay and, worse, financial loss to investors. It’s also said, repeatedly, that it has acquired all necessary approvals from the Korean government while lenders and co-sponsors/investors are still waiting for Nepra to determine the feasibility stage tariff.
“Inordinate delay in the tariff determination is prejudicing the Korean government approvals, which are time bound while co-sponsors are losing interest as the project is unable to proceed towards the stage of Letter of Support (LoS),” the company said.
This is shameful on many levels. One, why make such a fuss about attracting foreign investment, which is desperately needed, and then frustrate it for no justifiable reason? Does the fault lie with the government, for not checking if its own house was in order before signing on the dotted line? Or is Nepra simply incapable of dealing with such issues, despite being the official power regulator? Or, perhaps, the systems are in place but officials manning important posts are incompetent?
Two, why has Nepra stayed silent all this time? Why hasn’t it explained the delay, which would have salvaged some of its professional integrity? Surely, the senior executives running it would know that letting doubts fester, especially in this environment, can deliver the kiss of death not only to the company’s reputation, but also the country’s. Yet there’s still no explanation. Why?
And three, why hasn’t the government moved with full speed to address these concerns? A state-owned Korean company operating in Pakistan in these circumstances is a godsend, so why is Islamabad blind to the element of urgency in this matter? It’s bad enough that Nepra is coming across as the epitome of both non-professional and unprofessional behaviour, especially at such a high level. It’s worse that the country itself isn’t positioning any better.
These questions will ultimately have to be answered. And if the government and its departments do it sooner rather than later, they might well keep a sizable chunk of FDI from disappearing into thin air for no bigger reason than their own strange divorce from reality.
Copyright Business Recorder, 2023
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