Room for reforms

The gas price fiasco: A billion cubic-feet of gas is being stolen every day. The bureaucrats running gas companies and the regulatory authority need to fill this hole. Over the past few months, bureaucrats have discovered that their political bosses are technically incompetent. In order to fill the hole, bureaucrats had submitted a complicated slab formula. The ECC approved the formula (that increased the price of gas). PM Imran Khan also approved the formula. On February 3, after the gas bomb had exploded, he ordered an inquiry.The ground reality of Naya Pakistan is that making ends meet is becoming more difficult for a Pakistani breadwinner making around Rs50,000 per month. Imagine: power-related expenses, including gas, the electricity and the petrol bills taking away around 30 percent of income. Imagine: the rupee falling by 30 percent over the past 12 months. Not much is left for kitchen expenses, rent, school fees, medical or winter clothes. Life is becoming harsher by the day.Now, on to reform. To reform is to “make changes in (something, especially an institution or practice) in order to improve it”. We must reform if we want to get somewhere – and if we are going nowhere, any road will take us there. Reformers must prioritise reform actions – and prioritising reforms “lies at the heart of the sequencing issue”.Reforming public procurement: A World Bank blog states: “Across regions, South Asia has the highest share of public procurement in GDP, at 19.3 [percent]; followed by sub-Saharan Africa at 14.9 [percent]. India procures 20 [percent] of GDP publicly, Pakistan 19.8 [percent].”Pakistan’s GDP of Rs35 trillion would mean public procurements amounting to a Rs7 trillion. According to a World Bank study, “public procurement is one of the government functions most prone to corruption”. According to Transparency International, “up to a fifth of the value of government contracts may be lost to corruption”. To be certain, quantifying corruption is next to impossible. But in our case, a fifth of the Rs7 trillion will be Rs1.4 trillion “lost to corruption”.Alarmingly, there are no procurement reforms in sight. The PTI government is undertaking multi-trillion rupee public procurements no differently than the PML-N and PPP governments did. The easiest way out would be to adopt a successful model. Jordan has adopted the Korean Online E-procurement System. Poland and Ireland are adopting the Pan-European Public Procurement On-Line. Singapore is adopting a “nationwide, interoperable electronic invoicing framework”. Why can’t we adopt one?Reforming PSEs: Pakistan’s 195 PSE’s end up losing Rs1.1 trillion a year. The PTI government must have lost at least Rs550 billion over the past six months. Alarmingly, there are no real reforms in sight. Yes, there’s talk of a Sarmaya Pakistan Company, a company chaired by the PM that will restructure the loss-making 195 PSEs. This is a tried-and-failed model around the world (except in Singapore).Reforming the power sector: The foundation of an economy is its power sector. And the circular debt worth Rs1.5 trillion is holding Pakistan’s power sector hostage. Over the past decade, circular debt has grown from Rs228 billion to its current level. Over the past decade, governments have come and gone. Over the past decade, policies have all been the same –gather additional debt and pay off the accumulated circular debt (often without any pre-audit requirements). The PTI government isn’t doing anything different.The first rule behind every reform effort is that there are potential winners and potential losers. The second is that as long as potential losers are also the decision-makers, reforms will not take place. The game of reforms is all about conflict of interest. And a “public official has a disqualifying conflict of interest in a government decision if it is foreseeable that the decision will have a financial impact on his or her personal finances or other financial interests”.Reform we must. Reforms won’t take place for as long as the decision-making hierarchy is infected with conflict of interest. Reform we must. Can we afford to let the ‘hybrid warriors’ win?The writer is a columnist based in Islamabad.Email: farrukh15@hotmail.com Twitter: @saleemfarrukh

from The News International - Opinion http://bit.ly/2tfrZAU