Editorial - A complex crisis - Saturday, March 05, 2011

Source : http://thenews.com.pk/TodaysPrintDetail.aspx?ID=34398&Cat=8

The difficulty of comprehending – never mind finding a credible solution to – our power and energy crisis almost defies description. There is no single answer to this multi-layered and faceted problem, and a contributory factor to the failure of its resolution is the consistent inability of governments to transcend political imperatives and formulate a holistic and non-partisan national energy strategy. The government first raised the price of fuel by almost 10 percent and then within two days cut the raise by almost half. It did so in both cases because it had little choice in the matter. External events beyond our politics are driving the price of oil ever upwards, and coupled with the pressure from our donors to eradicate fuel subsidies a rise was inevitable. Equally inevitable was the outcry at home which drove the increase back down again, although for how long remains a matter of debate. The government had already put on hold since last November the incremental rises in power that were part of the plan to appease the donors, but it now looks as if the stepped increases of about two percent a month between now and June are again on the cards. ‘Foul’ cry the opposition parties, as is their right and duty. Foul they may cry, but none of them has yet come up with an alternative strategy to fix the fuel and power problem; and they would do better instead to say to the government that now is the time for unity rather than mudslinging and let us try to resolve this together.

The Karachi transporters called a strike in protest at the price-hike which is now into its second day; but do these same transporters adjust their fares downwards when the price of fuel comes down? We think not because they are far more interested in maximising profits than providing a flexible fare tariff. The pressure was on from all sides to take back the increase; but this is a government increasingly desperate to raise revenue against a background where the tax to GDP ratio at about 10 percent is one of the lowest in the world. As well as paying more for our fuel, those of us that do pay income tax are going to find a flood surcharge of 15 percent imposed at some future date, again as part of the process of satisfying the donors that we really are doing something about broadening the tax base. The Reform of General Sales Tax (RGST) which was designed to in part solve our cashflow problems is stalled and parked in a parliamentary siding, circular debt in every part of the power generation and distribution process continues to cripple both industries and all and sundry pilfer what power they can for free. We accept that the government faces huge challenges, but we do not accept the piecemeal approach to solving them, the poor coordination, the lack of vision across the political spectrum and the unwillingness to seek common ground in solution of a common problem. An injection of unity and discipline could do much to solve the difficulties we all share.

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