| October 26, 2002 | Saturday | Sha’aban 19,1423 |
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Power: breaking the nexus
NEW DELHI has finally confirmed that withdrawal of Indian troops from the international border with Pakistan has begun. As already promised by Islamabad, Pakistan, too, will begin pulling back its troops to peacetime locations as a reciprocal move. New Delhi had begun it all in the wake of the terrorist attack on the Indian parliament building last December, and it is in the fitness of things that it is India which should start the de-escalation process. However, now that troop disengagement has been set in motion, one hopes things will not remain confined to the military part of the de-escalation process, and the two governments will make serious moves for a wider process of normalization of relations.
Earlier this week, there was some good news. Indian Defence Minister George Fernandes had announced that Prime Minister Atal Behari Vajpayee would visit Islamabad to attend the SAARC summit in January. Even though there was no indication that Mr Vajpayee would use the occasion to take up bilateral issues with Pakistani leaders, the visit was nevertheless seen as a move that could serve to break the ice. But later developments have put a damper on such optimism. An Indian spokesman has said that no decision has been made about the Indian prime minister’s visit to Islamabad and that this would depend on the announcement of dates for the SAARC summit. Pakistan says it had previously conveyed the summit’s schedule to all Saarc members, fixing January 11-13 for the heads of government and state to meet in Islamabad. This has now been acknowledged by India, but there is still no indication as to whether Mr Vajpayee will attend the conference. More regrettably, Indian spokesmen continue to harp on the old theme — that there will be no negotiations with Pakistan until Islamabad stops “cross-border terrorism.”
The decision to attend the SAARC summit was sound, and backtracking on it will only serve to block progress towards normalization or at least towards a state of Indo-Pakistan relations that is less acrimonious than at present. Friends of Pakistan and India have welcomed the decision to end the military stand-off, and they expect the two sides to follow this up with meaningful talks to resolve all issues, including the Kashmir dispute, which is at the core of their antagonistic relations. Following the elections in Pakistan and in Indian held Kashmir, the geopolitical scenario in South Asia seems to be undergoing a transformation. In Pakistan, a civilian government will take over soon. It is this government that India should be talking to as and when it decides to do so. The eyeball-to-eyeball confrontation along the border lasted a good 10 months and served no purpose. At times, it threatened to escalate into a full-blown conflict, and, though it was averted, the financial cost to both sides has been heavy. Now that withdrawals have begun, it is only logical that the two sides should enter into a meaningful and purposive dialogue.
As a prelude to normalization, the two countries ought immediately to restore diplomatic relations. At the moment, they are operating without their high commissioners, because India withdrew its envoy from Islamabad in December and asked Pakistan’s chief of mission to leave New Delhi in May. Also, to create a congenial atmosphere for talks, India should restore road, rail and air links that it had unilaterally snapped in December along with the troop deployment. Pakistan will surely reciprocate such a move. Resumption of communication lines will doubtless provide the people of India and Pakistan with a tangible sign of progress towards a more normal bilateral relationship.
IN A welcome development, Wapda has decided to abandon its traditional stand of linking electricity tariff to frequently changing international prices of oil. It has now made it known to the government that it no longer favours the automatic tariff adjustment (ATA) formula and asked the ministry of water and power not to effect the six-paisa-per-unit increase granted by the National Electric Power Regulatory Authority (Nepra) on October 17 under the ATA mechanism. In a letter to the ministry, the Wapda chairman is said to have termed the formula as ill-advised and recommended its discontinuance. It has proposed that instead the price of furnace oil be stabilized at a reasonable level. Wapda claims that while frequent increases in tariff tarnished its image, these were never enough to make up for the additional expenditure. With 70 to 80 per cent electricity generation being thermal and furnace oil prices constituting a major portion of the cost, increases in the latter have an upsetting effect on Wapda’s expenditure, causing losses to mount. Indications are that the government has accepted Wapda’s proposal and the implementation of a new tariff raise has been stopped.
As the Oil and Gas Regulatory Authority (Ogra) has not been made operational so far, there is no forum where the rationale of oil price fluctuations can be challenged, especially in event of a price decline when this benefit is not passed on to the consumers in the same proportion as in the case of an oil price hike. Wapda says that since July last, the price of oil in the international market has come down from $34 to $27 per barrel and at the same time the rupee has also appreciated. Despite these favourable developments, the price of furnace oil in Pakistan has maintained its upward trend because the government mopped up the excess margin in taxes and levies. According to Wapda, even if the tariff had been raised by the approved six paisa per unit, it would have fetched Rs 2 billion while furnace oil price increase would have cost Rs 5.45 billion, still leaving a gap of Rs 3.45 billion. Thus, the ATA mechanism, on the one hand, does not compensate Wapda fully for its losses, and, on the other, creates a bad image for the authority among consumers.
The policy of linking power tariff with the price of oil in the world market has become outdated and needs to be changed. It has made our electricity the most expensive in the Asian region which in turn has eroded the purchasing power of citizens and the competitiveness of our products in the international market. This newspaper had previously suggested that the price of oil and its products be pegged at a reasonable level and not changed too frequently to suit the convenience of the ministry of finance. This is possible because at present taxes and surcharges, constituting more than 50 per cent of the price, provide an ample cushion for absorbing the effects of the price fluctuations in the international oil market. What the government has to decide is whether it will continue to use oil and its products as a convenient instrument of revenue generation or a stimulant for economic growth and job creation.