Regulatory agencies as per Wikipedia deal in the areas of administrative law, regulatory law, secondary legislation, and rule making (codifying and enforcing rules and regulations and imposing supervision or oversight for the benefit of the public at large). The existence of independent regulatory agencies is justified by the complexity of certain regulatory and supervisory tasks that require expertise, the need for rapid implementation of public authority in certain sectors, and the drawbacks of political interference. The key responsibility of regulatory bodies is to work for the benefit of public at large and to guard against drawbacks associated with political interference.
That there are serious drawbacks of political interference on regulatory bodies is widely acknowledged in Pakistan. With the best possible intent of any administration to safeguard the interests of the general public the fact remains that subsequent heads of government in Pakistan - politicians and military dictators alike - have not exhibited any tendency to take informed decisions premised on economic factors. Instead our governments have either been guided exclusively by donor agencies with their standard conditions, notably to raise tariffs to achieve full cost recovery, or have manipulated cost benefit analysis data to reach their desired outcome. An example is Nawaz Sharif's recent announcement to build an international airport in Bannu this month - an announcement that was made during a political jalsa and met with much approbation by his audience. This is not to state that constructing an international airport at Bannu, or anywhere else in the country, is not a good idea but merely to emphasise that: (i) any expensive project's approval must be viewed in the context of competing projects. In other words would an international airport in Bannu, announced by the Prime Minister this month be the preferred option of the people of Bannu rather than investing a much smaller amount in drinking water purification given a recent study that shows that significantly higher values of TDS (total dissolved solids) and EC (electrical conductivity) than WHO permissible limits greatly influence the health conditions of the residents of this area?; (ii) if a mega project is considered to be a major vote gainer, clearly the perception with respect to the Metrobus, then here too care must be taken not to overstate the actual beneficiaries of the project that would give an unrealistic internal and economic rate of return. Be that as it may, politicians no doubt look at Musharraf's sustained high popularity ratings in Chitral attributed to his decision to construct the Lowari tunnel even though he has been discredited in the rest of the country; and (iii) the autonomy granted to the regulators guarantees relevant expertise in a specific technical area which allows the regulator to guard against political interference.
In spite of these globally acknowledged benefits associated with regulators the Sharif administration issued a notification dated 19 December 2016 bringing five regulators under their line ministries: Nepra under the administrative control of Water & Power Division; Oil and Gas Regulatory Authority (Ogra) under Petroleum & Natural Resources Division; Public Procurement Regulatory Authority (PPRA) functional under administrative control of Finance Division; Pakistan Telecommunication Authority (PTA) and Frequency Allocation Board (FAB) under the administrative control of Information Technology and Telecom Division.
It would surprise no one that all these regulatory bodies have defied their line ministries' recommendations on a number of occasions; some of which are mentioned below. Nepra has defied the Water and Power Ministry by refusing to (i) add one percent to the cost of electricity to be passed onto the consumers as security cost for the CPEC projects by pointing out that security cost is already a component of electricity tariff and a higher cost for the CPEC projects would create an imbalance with existing power projects; (ii) the 62 billion rupees to be charged to K-Electric consumers is not justified, and in a letter to the Ministry argued that 'although, Nepra determines separate tariff for each of the ex-Wapda Discos and KE, however, the government following its own socio-economic objectives provides subsidy or levy surcharge in order to make the consumer end tariff uniform, all across the country. Thus, the presumption of overburdening KE consumers is not correct.
Ogra defied the Ministry of Petroleum and Natural Resources in February this year when the latter's recommended price of 1100 rupees per 11.8 kg LPG cylinder was rejected and 910 rupees per cylinder recommended. Given the perception of the massive scale and extent of corruption in government procurement PPRA Ordinance was passed designed to take such measures and exercise such powers as may be necessary for improving governance, management, transparency, accountability and quality of public procurement of goods, services and works in the public sector. However it is well known that PPRA rules are routinely violated by the government, especially in the case of China Pakistan Economic Corridor as one clause of the Ordinance allows the government to issue directives to the Authority on matters of policy, and such directives shall be binding on the Authority.
PTA has been pressured by the ministry to sell the remaining 3G/4G licence by this month (May) even though PTA maintains that this is not the right time to make the sale. However, the pressure by the relevant Ministry is actually sourced to the Ministry of Finance struggling to contain the budget deficit for the current fiscal year.
FAB performs technical evaluation of all wireless networks on specialized spectrum management tools before assignment of optimum frequencies to end users. It creates, formulates and reviews the National Frequency Spectrum Plan, specialized Frequency Band Plans and particular Frequency Plans and also suggests means for optimised spectrum utilisation in the country. It is unclear why this highly specialized function was given over to the Ministry other than to expand the ambit of the Ministry's control.
To conclude, the argument that federal ministers are more savvy with respect to the intricacies of several areas of influence of their ministries' for the duration of their tenures rather than regulators dedicated to dealing with one specific sub-sector for a much longer term for the protection of consumer interests is simply hogwash. One can only hope that the Sharif administration abandons its perception that the administration alone has the capacity to take informed decisions.
Copyright Business Recorder, 2017