While at his usual best in waxing eloquent about his great economic achievements in a short time at the 17th Sustainable Development Conference
on the night of December 9 in Islamabad, Finance Minister Ishaq Dar
advised those present, this scribe included, to read the PML-N manifesto
to appreciate the carefully laid down plan of economic reform,
especially the one related to privatisation. I did just that. Here is
what the manifesto says: “Today, several key state-owned institutions
like PIA, Railways, Pakistan Steel Mills, Wapda and other institutions
are a major drag on Pakistan’s economy. These loss-making entities are
presently bleeding to the tune of Rs400 billion per annum. Therefore,
reforming these state-owned institutions through a combination of
privatisation and restructuring is fundamental.” Not a shred of evidence
to this effect in the last 18 months, though. Only the shares of
profit-making public entities, described by Dar himself as family
silver, have been off-loaded. According to the Privatisation Commission,
“subsidies to public sector enterprises continue to be a drain on the
nation’s resources. The reduction in subsidies will be possible as
assets are sold, which will be a positive contribution in reducing the
budget deficit.” Far from sustainable deficit reduction, the sale of
shares of blue chip entities like the UBL
and the PPL substitutes a one-time receipt for a revenue inflow in the
form of dividends from the shares. At the same time, the so-called
bleeding of the loss making enterprises continues.
As a matter of fact, the PML-N government in Punjab is actively
involved in creating public sector entities that are likely to add a
huge subsidy burden. The Lahore metro bus is only the first example.
Estimates of total cost vary from the staggering unofficial figure of
Rs70 billion to the precisely wrong amount of Rs29,821.762 million
attributed to the head of the Punjab Planning and Development Board. The
official himself admitted to the projects having been divided into 11
packages. There are, however, more packages hidden here and there in the
budget. The main project is shown under urban development, which as a
whole was allocated Rs14 billion in the 2013-14 budget, but the revised
spending shot up to Rs42 billion. Obviously, the difference was caused
by instant induction of the metro bus project. In the budget for
2014-15, it is still shown as an ongoing project with an allocation of
Rs1.62 billion. The total allocation for urban development is Rs40.4
billion. If the past is any guide, the revised figure will be much
higher. Engineer Abbas Hasan, who must know what he is talking about,
says that the cost was $11 million per kilometre, whereas the “fit for
purpose” estimate could not be more than $5-7 million per kilometre.
Cost aside, the puzzling thing is the non-availability of the running
cost. There is a gap of Rs35-45 between the fare charged and what the
market will bear. A back-of-the-envelope calculation places the subsidy
at around Rs2 billion. This is without any allowance for wear and tear.
Already, overheating of buses is a common occurrence. There are reports
of the non-observance of labour rights, another element of cost which
cannot be kept low. The subsidy is likely to increase in the coming
years. So will the losses. A future PML-N manifesto will then write
about the fiscal haemorrhage caused by the Punjab Metro Bus Authority
and the ‘fundamental’ need to privatise it. Subsidise now, privatise
later, is a policy of double deception.
Source : http://tribune.com.pk/story/805392/subsidise-now-privatise-later/
|
