Anomalies in oil pricing

THE petroleum dealers’ strike — now postponed — in protest against the reduction in their commission is the outcome of a government policy that was flawed since its inception. Stopped sales for even a day rendered thousands of petrol pumps inoperative and left millions of consumers, particularly in big cities like Karachi and Lahore, suffering for no fault of their own. As though this was not bad enough, we have the oil companies also giving the impression that they are considering halting further investments. The petroleum deregulation initiated by the Musharraf administration in 2000 led to an increase in the oil companies’ margin and the dealers’ commission from a fixed 22-55 paisa per litre to 3.5 per cent and four per cent respectively on the final sale price in 2002. This automatically brought windfall earnings to dealers and oil marketing companies as the international oil prices spiralled.

To make things worse, the government allowed the calculation of the commission and the margin on the final sale price of petroleum products, including taxes and government levies, in such a way that they worked to the disadvantage of the national economy and domestic consumers. Further, the government delegated the regulatory powers of price fixation to a cartel of oil companies — Oil Companies’ Advisory Committee (OCAC). The industry, however, did not fulfil its commitment of enhancing its storage capacity. Instead, it invested in improving the outlook of their outlets and of course the product quality. Special investigations by the audit authorities and the National Accountability Bureau (NAB) and their reports were swept under the carpet. Whether or not it was by design, ill-will, omission or commission is not the issue at the moment. The fact remains that the industry continuously earned profits beyond the principles of fiscal propriety and prudent economic policy. It was only in 2005 that adverse newspaper reports, objections by the audit authorities and consumer protests and criticism forced the government to transfer the price fixation authority to the Oil and Gas Regulatory Authority (OGRA) but that too under a pre-determined straitjacket pricing formula.

The intervention of the Supreme Court of Pakistan early last year, however, made a difference. The situation became grave for the government when the former attorney-general of Pakistan expressed his inability to defend the government in the Supreme Court of Pakistan due to serious illegalities of the whole mechanism. As a result, the government modified the oil pricing mechanism and gradually excluded GST and PDL from the calculation of dealer commission and OMCs margin. This practically reduced the margins and commissions by about 22 per cent on petrol in absolute terms but increased the government’s PDL instead of reducing prices for the common man. Policies are supposedly designed to be for the public good. In this case, the objective could only be achieved when investigation reports of NAB and the audit authorities are made public and prudent returns are allowed to the dealers and companies only on the basis of production costs, keeping in mind the interest of the national economy and its people.

Gul in the presidency

TURKEY’S generals are now an isolated lot. Their own people have in no uncertain terms made their preferences known to the world, and the reaction in the European Union to Mr Abdullah Gul’s election as president has been positive. This means that, when Europe, that bastion of secularism, and Turkey’s own people have thrown their support behind the Gul presidency, the Turkish generals must ask themselves whether their attitudes are anachronistic. A fixation on women’s dress is too small a matter to be used as a yardstick to determine state policy. The fundamentalists who staunchly support the headscarf and the diehard secularists who oppose its use both miss the essence of what is important in policymaking. By voting for the Justice and Development Party (AKP) twice, the Turkish people have expressed their confidence in a party that despite its Islamist roots is committed to secularism and democracy. This is the big change Mr Recep Tayyip Erdogan made in the Islamist camp by making it accept the reality of secularism, which has been well-entrenched in Turkey’s power centres for over eight decades.

Mr Gul’s election has sent a message to the world — that there is no incompatibility between Turkey’s secularism and its European orientation on the one hand and the country’s Islamic roots on the other. Against this background army chief Yasar Buyukanit’s warning that “centres of evil” were trying to undermine the Turkish state looks ridiculous and has evoked little enthusiasm in Europe, where observers know that the army’s commitment to secularism also reveals its political ambitions. These fears are reinforced by the fact that the generals have in the past overthrown four elected governments. The generals should show pragmatism. Secularism has helped consolidate Turkey and saved it from the mischief to which many Muslim countries, including Pakistan, have fallen because they let some parties and individuals exploit religion for political purposes. Turkey’s economy is doing well, and given the slow and steady manner in which the AKP is managing things, Turkey could become an EU member provided the generals do not destabilise the AKP government.

Admission controversies

ENTRY tests for admission to Punjab’s public sector colleges and universities are an annual topic of discussion around this time of the year. And almost every season of debate, since the introduction of these tests in 1997-1999, has involved the courts. This time round, the Lahore High Court has restrained the Punjab University from conducting an entry test for 18 students aspiring to obtain admission in the MSc programme in the botany and zoology departments. These students had passed their BSc Honours examination from the same departments and were being asked to take the entry tests for admission to the higher level. The court declared that this practice was discriminatory as some other departments falling under the same faculty of the university were allowing admissions to their internal students without the tests.

The case raises two important points. First, the absence of a uniform admission policy and, secondly, the lack of trust in the examination system. Even within Punjab University, each department devises its own admission criteria which, as the case above shows, sometimes vary for internal and external students. Not only that, out of 64 departments of the university, six require an entry test conducted by the National Testing Service while the rest hold their own tests. Given the variety of subjects being taught at the university, devising a uniform test for all of them may be difficult. But the same principle should govern the admission policy of all departments.Testing students’ abilities and aptitudes before admissions is certainly required but this is what examinations are conducted for. If they don’t allow colleges and universities to select the most suitable students, what are they there for? True, our examination system encourages rote learning and leaves a lot of room for the employment of foul means for getting through. Introducing entry tests rather than correcting the flaws in the examination system is like treating the symptoms and allowing the disease to continue wreaking havoc. Before a comprehensive reform of the education system is undertaken, such anomalies will remain open to challenge and will have to be addressed as best as the university can.

Who caused the energy crisis?

By Dr M. Asif

PAKISTAN is facing one of the worst energy crises of its history. The gap between energy demand and supply has grown sharply over the last few years making life harder for the masses.

This year’s summer months saw electricity in the country, even in the major cities, becoming a rare commodity. With this kind of situation prevailing in the cities, one can easily imagine the hardships faced by those living in the rural areas.

It is difficult to believe that in this time and age, when the provision of sufficient and affordable energy caters to a basic human need, taxpayers in Pakistan have been made to spend sleepless nights because of load-shedding and that too when temperatures have soared to above 40 degrees Celsius. Putting it mildly, this reflects no less than a total failure on the part of our policymakers including the regime, the bureaucracy and the relevant departments.

Even a primary school student knows that with the population growing so rapidly, urbanisation on the rise and modernisation taking place, energy demands were all set to rise. Yet the present and the past few regimes have failed to anticipate the growing energy challenges. They have helped foster the crisis with their ineptitude.

In the name of a booming economy, markets have been flooded with imported air conditioners and similar energy-intensive home appliances while no measures have been taken to ensure a sufficient supply of electricity required to operate these.

Enhancing the production capacity has not been given any consideration at all. Over the years, a consistent increment at the demand end coupled with stagnancy at the supply end set the stage for the devastating crisis that we are now witnessing. This summer, the gap between demand and supply grew to 2,500 MW.

In the business-as-usual scenario, the energy crisis in the country is likely to aggravate in the days to come. At the micro level, it is going to affect the masses as energy will become an ‘unaffordable luxury’ for the vast majority of the country. Industry will not be able to operate with economy and to compete in local and international markets, and industrial recession will increase unemployment. This will have further social implications. At the macro level, the energy crisis is going to adversely affect economic growth, national security and the sovereignty of the country.

At this point, it is worth noting that the energy sector is given great priority in the developed world where the provision of affordable, sufficient and secure energy is considered as a basic service on which no compromise can be made. Therefore, the energy issue tops the policymaking agendas of individual countries as well as a consortium of countries. The European Union, for example, adopted energy and environmental sustainability as an integral part of its geopolitical policies several years ago.

At their recent summit in Brussels in March 2007, EU leaders adopted a roadmap the highlight of which was ‘Energy is what makes Europe tick. It is essential, then, for the European Union to address the major energy challenges facing us today and in future’. Similarly, the 2006 G8 summit held in St Petersburg had energy security on top of its agenda, to the surprise of many as it was ahead of issues like education, health, trade, environment and terrorism.

At the country level, whether it is a national policy statement on the part of some heads of the EU member-states or the State of the Union address of the US president, energy can never be missed out in the list of priorities. The governments of these countries not only make effective policies but also ensure their implementation.

Contrary to this approach, the energy issue has not been able to earn the respect of policymakers in Pakistan, its critical status notwithstanding. The present energy crisis emerged gradually and thus is simply a failure not only of the present regime but also of previous governments, especially those who took things for granted over the last two decades. The lot of the political parties in this regard is not an exception.

In developed countries, the backbone of political parties is a team of professionally competent experts and it is they who dictate the policymaking process. They have representation from all stakeholders i.e. physical and social scientists, educationists, doctors, engineers, lawyers etc that do all the brainstorming to deliver realistic and creative policies.

Contrary to that, our political parties, even if they happen to have some professionals in their ranks, never give them a chance to share their expertise with the policymakers. Going by their track record, it appears that their only interest lies in promoting narrow political goals. The concepts of ‘long-term sustainable policies’ and ‘vision’ are quite alien to our political parties. They are very naive and once in power they are unable to see anything beyond their tenure.

Apart from technical issues, governments have fared no better on the administrative front. Irrespective of the nature of government, they invariably appoint irrelevant people to man the energy offices. The irony is that there are examples of ‘illiterate’ people having become ministers of ‘oil and gas’ or ‘water and power’ and who are not even graduates. In other cases, where educated people are appointed, they turn out to be most ill-qualified for the job — some being graduates in the social sciences. It is not clear how a person holding such a degree can be expected to understand the technical details of the science of energy.

Yet, the portfolios in the energy-related offices are amongst the most coveted ones in any cabinet simply because they are considered to be the most lucrative. The posts in this sector are often used to accommodate anchor figures within a government. After having committed such a folly, governments don’t even bother to induct some professionally competent advisers in the ministries in order to get the business to run smoothly.

The greatest responsibility for the present energy crisis thus falls on those who have held office in the energy sector but have failed to deliver the goods, only making bankrupt policies. Today, Pakistan’s population of 160 million is paying a heavy price for the failures of governments, policymakers and political parties.

The writer is lecturer in Renewable Energy, Glasgow University, UK

The bottlenecks

By Indian Press

THE economy seems to be doing fine at one level, despite myriad problems like the global financial crisis, domestic unrest and growing Naxalite and terrorist attacks. But this could soon become history if the government continues to delay tackling the infrastructure bottlenecks that are a real threat to economic growth. Be it the ports, the roads, airports, railways, telecom or the power sector, the problems are complicated more because of the lack of political will and bureaucratic red tape than because of mere financial constraints…

Even where money is allocated it is not spent. For instance, the finance minister had in the last budget allocated Rs15,000 crore for ports...But barely Rs300 crores were said to have been spent…Is there any accountability for this non-spend especially when there is a desperate need to develop more ports and upgrade the existing ports?

Then, if the ports are improved, exporters and importers would still have to deal with the road and rail networks for transporting goods…The transportation infrastructure is just not keeping up with the business growth in the country. The story in the power sector is even more scary.

All that the country can hope for is that in the Eleventh Plan the capacity target of at least the Tenth Five-Year Plan would be achieved…How will India’s exciting and unprecedented growth story be sustained in these circumstances? The answer to these questions is accountability. Of course the most common excuse for delays is the fact that India is a democracy. The authorities know that India is a democracy, so why are rules and regulations not framed in a way that takes this into consideration? — (Aug 30)

Love conquers all

By Indian Press

TAKE heart, for love is in the air and in elephantine proportions. He and she met, something happened; and then they ran away together. It’s a story as old as time. Only, this time, it’s elephants who are doing it. He, an untamed tusker straight out from the wild; she, a circus elephant, one of the working classes, her name Savitri.

He smashed through the tin walls of the circus and rested his eyes on Savitri. She… meekly followed him out of the circus and into freedom... Meanwhile, a second female elephant, said to be very attached to the one that eloped, is pining for her friend…These are strong bonds indeed…

Elephants in particular, among the higher mammals — highly intelligent and who live in herds within a complex social structure — are said to experience feelings. They are known to mourn the death of a companion, a mate, a sibling or a child, and linger over the bones of dead relatives….There are many tales of animal bonding... Scientists who have studied consciousness in animals tell us that they have emotions, behaviours and perhaps even thoughts similar to humans…

The limbic system of the brain, which human beings share with mammals and other species, is said to be the seat of emotions. This explains the emotional behaviour that we notice in animals.

This does raise ethical questions about how humanity deals with animals, for if animals have consciousness and awareness similar to our own, can the cruel, unthinking ways in which they are often treated ever be justified? There is, therefore, a need for humanity to re-evaluate its behaviour towards other species with whom it shares the planet… — (Sept 1)

© DAWN Group of Newspapers, 2007



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