In an exclusive interview to Business Recorder team comprising Wasim Iqbal, Zaheer Abbasi and Naveed Butt, Deputy Chairman Planning Commission Dr Nadeem-ul-Haq, a retired 24-year staff member of the International Monetary Fund, maintains that the privatisation of power sector is the only solution to the prevailing loadshedding in the country. His rationale common to multilateral staff is that performance will rise with a reduction in political interference.
Dr Haq adds that CDWP meetings are necessary as they not only review the performance of ongoing development projects but also extend approval of critical new projects. He also maintains that abolishing of tariffs and duties will make the consumer market competitive and proposed a growth strategy that, he argues, will assist in energy conservation and enhance human productivity by constructing high-rise cities.
Business Recorder: What has been your success in implementing reforms in the economy?
Nadeemul Haq: The energy sector reforms will not take more than two years provided they are implemented on a fast track basis. Slow implementation would require five years to complete the reforms proposed by the Planning Commission. The entire power sector must be revamped by inducting professional management otherwise its collapse is not far. I am not the sole decision making authority in the power sector as some others are also involved in the decision making.
BR: Any suggestions to stop political interference in power sector reforms?
NUH: Privatisation is the only solution to stop political interference in the power sector and to address governance issues.
BR: What reforms have you proposed for the power sector?
NUH: We cannot bring change in power sector by sitting in Islamabad. Power sector reforms meant a complete revamping of the power sector - Power Generating Companies and Power Distribution Companies (DISCOs), by inducting professionals and giving them a free hand. Along with developing a viable financial structure power companies need to put an audit system in place as well as bring in efficient technology to reduce losses. New appointments of CEOs and trained staff were also suggested by the Planning Commission. In our assessment approximately 150 new qualified staff is required per Disco. Power sector reform is a question of building an entire system. New technology is also needed in this sector to enhance capacity.
BR: How can energy efficiency be improved in Pakistan?
NUH: We are not implementing the fourth important strategy in the growth strategy, namely construction of dense and high rise cities as a growth engine for the economy. All industrial zones must be built in cities and not away from cities. Commerce must be in cities. Big hotels and shopping malls on international standards must be built in cities. We do not have office infrastructure. Flats - middle-class living - are not available. We are expanding our cities, which further deepen our energy crises. One needs transport even for small shopping. In Pakistan, focus has been on construction of roads, bridges and flyovers and cities were neglected. This concept is wrong. The Motorway cannot generate enough resources to meet its recurring expenditure. The countries who have constructed dense cities are rich compared to others. Productivity of any human being in dense, high-rise cities is relatively higher, and also helps in energy conservation by using the cheapest form of transport, elevators. The rich and not the poor are wasting energy resources because their consumption is much higher.
BR: What needs to change to ensure reforms?
NUH: Without fundamental reforms and meritocracy, the change in the system can not be brought about in the country. We have been talking about reforms for the last thirty years not only in power sector but in other areas of the economy as well but have failed to implement them primarily because of resistance by the powerful vested interest. There is a nexus among vested interests - in bureaucracy, business community and politicians who are resisting reforms because it would hurt their interests. It is enormously difficult to dismantle their strong nexus.
BR: The government is considering minimising duties and tariffs from the next budget: Your comments?
NUH: How long can the government continue to protect local industry at the cost of consumers? We have been protecting industry for the last fifty years and we cannot sustain this for long. No country can produce everything indigenously and of course one would have to rely on and look to other countries, but this does not mean lowering the competitiveness of our own industry by patronising them.
BR: Public Accounts Committee (PAC) recommended to the government to suspend meetings of CDWP?
NUH: This is not in my knowledge. However, sometimes under pressure from certain quarters, the meeting of CDWP is convened and sometimes it reviews and revises ongoing development projects. The completion of documentation and to be update on ongoing development projects in the meetings of CDWP is another requirement of the government for taking decisions.
BR: What is the role of Higher Education Commission?
NUH: The HEC has a countrywide agenda. They made the mistake of centralising the universities which must be de-centralised. There must be an in-house decentralisation in the universities. Pakistan's future lies in the development of human resources and not in short-term solutions of electricity or gas shortages. We need university professors and educated youth, not universities covering a vast area with huge structures. We should encourage foreign qualified professors to visit Pakistan and educate our youth.
BR: Why was your lecture on economic growth cancelled in National Defence University?
NUH: A day before the meeting, I was informed that my scheduled visit to NDU on December 26 was cancelled. This did not surprise me and the reason given in the newspapers was not correct. I have given almost 25 presentations at various national and international forums on development and growth strategy.
BR: What is your preferred growth strategy?
NUH: I wrote content analyses in 1992 that economic development requires change of mind set. Bringing change in growth strategy does not need funds. The Planning Commission has not requested the government for money. Growth strategy is a bunch of suggestions which could be wrong in the long run and therefore need to evolve over time. The US government has been trying to implement various reforms in the health sector for the last 25 years and the reforms are still evolving. Similarly, during the Depression, regulations were changed but problems persist and therefore more changes would be required.
BR: Are you following the austerity plan tabled by former Finance Minister Shaukat Tarin?
NUH: Yes, we are following the plan. What Shaukat Tarin did as early as in 1997 should be a role model for reform in the public sector. Tarin with his Citibank team replaced the senior management of Habib Bank with qualified professionals and surplus staff was awarded golden handshake. With change of management, the bank started running into profit within a short period of two months. That kind of reform we need in energy sector as well as in other State-Owned Enterprises (SOEs) to lessen their burden on the budget.
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