Policy decisions Required4 min read

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Economic policy
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Several decisions taken by the Khan administration during its two months in power indicate that, like in the past, the focus is on micro decisions rather than taking policy (macro) decisions that would guide and strengthen the institutions that implement them. Examples include: (i) the approval by the Economic Coordination Committee (ECC) of the Cabinet on 10 September 2018 to supply a blend of domestic gas (62 percent) and RLNG (38 percent) for two urea plants namely M/s Agritech and Fatimafert, thereby raising the cost of gas from 729 rupees per mmbtu to 858 rupees per mmbtu. This promoted Agritech to express serious concerns about its ability to operate the plant at the current rate. It would have been more appropriate for the ECC to take a general decision that applied to all fertilizer units not just to two; and (ii) the power tariff hike approved by the cabinet on 25 October 2018 (touted as the result of the presentation of a power tariff rationalization plan to the ECC and finally approved by the Finance Minister Asad Umar) with different rates based on the units consumed in a month with the objective being subsidisation of the poor and the vulnerable – a policy supported by previous administrations; however, the subsidy to five zero-rated industries, at the rate of 3 rupees per unit, implied cross subsidy which raised the costs of production of other industrial units contributing to a raise in general prices.

Also Read: ECC approves 33% hike in power tariff

In April 2015, the Nawaz Sharif-led cabinet defined Liquefied Natural Gas (LNG) as a petroleum product, instead of natural gas, that allowed it to bypass the legal requirement of public hearing by Nepra to determine its price. Given that the Constitution of Pakistan deals with gas and petroleum products differently, had the previous administration defined LNG as natural gas, a definition used the world-over, it would have been unable to set the price but the subsequent controversy over the Qatargas-Pakistan State Oil 15-year LNG deal would not have surfaced. According to a Business Recorder exclusive, Dr Farogh Naseem, the Federal Law Minister, during the last Council of Common Interest meeting, revealed his decision to redefine LNG, a decision that must be fully supported. In other words, the February 2016 LNG deal exemplifies the need for Pakistani administrations to establish procedures and meticulously adhere to them which would take away the capacity of the next government to effectively challenge the deals. This should be particularly the case in deals with foreign governments and multinationals, many of whom have successfully taken the country to international arbitration/court for failing to adhere to the contract signed.

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Prime Minister Imran Khan, before he assumed office, frequently emphasized the need to strengthen institutions through empowering them, which in Pakistan’s case necessarily implies no political interference and allowing institutions to take their own decisions without fear of reprisals. In around two months of its ongoing tenure, the Khan administration has been held accountable by the Supreme Court as well as the public that voted him to power of taking decisions at odds with this commitment. The dismissal of the DPO Pakpattan, the summary dismissal of IGs Punjab and Islamabad have sent shock waves amongst Khan supporters and if he was not involved in these decisions then he needs to take the people into confidence and take immediate mitigating measures. Additionally, the decision of the Khyber Pakhtunkhwa Chief Minister Mahmood Khan to ban the entry of men in girls’ schools and only call on women as chief guests for school events must be reversed as the message at best is that the province is supporting a fundamentalist role for girls and at worst that it has buckled under Taliban pressure.

Imran Khan is also on record before the 25 July elections as having stated that the prime minister should not be the patron-in-chief of the cricket or hockey boards and yet he has made no change in this regard either.

To conclude, Imran Khan made several pledges to the people of this country – pledges that were the reason why he is the country’s prime minister today. One would hope that unlike his predecessors, he refrains from using his executive powers to take decisions or allow others to take decisions that are contrary to these pledges.

(This news/article originally appeared in Business Recorder on October 31st, 2018)

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