ISLAMABAD: The government may have to transfer important regulatory bodies to the Inter-Provincial Coordi­nation (IPC) division from their current placement under the line ministries in order to persuade provincial governments to support meaningful regulatory reforms.

Sources told Dawn that the contemplated move, part of a transition the government was currently working on, would lead to placement of the regulatory bodies under the proposed permanent secretariat of the Council of Common Interests (CCI).

On Dec 19, the prime minister transferred administrative control of five key regulatory bodies to the ministries concerned, a move that was seen by opposition parties as compromising the regulators’ relative independence under the Cabinet Division.

Move would be a confidence-building measure to secure Sindh, KP’s support for reform of regulatory bodies

According to sources privy to the development, the IPC division is in the process of sending a summary to the stakeholders, asking for feedback before seeking the approval of the prime minister and the CCI in its coming meeting.

The IPC division, in addition to its responsibility for “general coordination between the federal government and the provinces in economic, cultural and administrative fields”, is also the custodian of departments and functions left over following devolution under the 18th Amendment.

The governments of Sindh and Khyber Pakhtunkhwa have told the centre in recent interactions at the political and bureaucratic levels that placing key regulatory bodies under the IPC division for an interim period could be the bare minimum confidence-building measure if the centre wanted their support for overarching reforms of regulatory authorities.

In the absence of such an assurance, the government would be left with no option but to take a divisive route to decision-making through a majority vote at the CCI and in a joint session of parliament.

This is critical, particularly in case of amendments in the 1997 National Electric Power Regulatory Authority (Nepra) Act. It also pertains to other regulatory authorities such as the Oil and Gas Regulatory Authority (Ogra), Pakistan Telecommunication Authority (PTA), Public Procurement Regulatory Authority (PPRA) and the Frequency Allocation Board (FAB).

A government official said Finance Minister Ishaq Dar and IPC Minister Riaz Hussain Pirzada had been advised by opposition colleagues that placing the regulatory bodies under the IPC division for an interim period would help water down the staunch positions being taken by the two provinces.

They also reminded the government of the understanding reached by all parliamentary forces, as part of the 18th Amendment, for the creation of a permanent secretariat of the CCI to deal with issues relating to devolved subjects on a regular basis.

As part of interactions last week, the two provinces are understood to have told the centre that while the subjects of power generation, distribution, transmission, independent power producers and alternative energy development institutions continue to work under the Ministry of Water and Power, the provinces could not be expected to approve changes to laws governing Nepra and have it continue working under the power ministry.

Sources said that Sindh and the KPK told the centre that they would be ready to approve qualification and selection criteria and processes for the regulatory body members, as recommended by the federal government, only after they had the confidence that these members would have full independence to take decisions.

This is all the more important at a time the government has contracted sufficient power capacities and the power regulator is set to introduce a market-based tariff-setting process – doing away with upfront and negotiated tariffs and replacing them with international competitive bidding for lowest tariffs initially for wind, solar and coal power.

Separately, the Water and Power Development Authority (Wapda) is also seeking bids for hydropower projects on the basis of lower tariff and early project completion.

Published in Dawn, February 13th, 2017