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petroleum climate Shedding
the backlog tax Putting
it plain and simple proposal Crux
of the problem
petroleum policy2012 Exploring new energy reservoirs The new policy promises considerable incentives to investors, whether it will make a difference remains to be seen By Shujauddin Qureshi Marred with slow
economic growth due to severe energy crisis across the country, the
government on August 8, 2012 got approval of yet another Petroleum
Exploration and Production Policy (2012) from Council of Common Interests
(CCI), the constitutional supreme body for decision making. This is the second
petroleum policy of the present PPP-led coalition government and eighth of
the country since 1991, followed by Petroleum Policies of 1993, 1994,
1997, 2001 and 2007 and 2009. The question arises why yet another policy
within three years? The government has tried
to answer this question in the policy document that the 2009 Policy had to
be amended “as the new market conditions warranted urgent changes
required for investment promotion in view of increasing international
energy prices.” While looking at the
documents of both 2009 and 2012 policies, one can realise that most of the
objectives are almost the same; however, two additional objectives have
been inserted in 2012 policy – to decrease reliance on imported energy
by providing additional incentives to exploration and production companies
for enhancing indigenous production and to undertake exploitation of oil
and gas resources in a socially, economically and environmentally
sustainable manner. “There has been a
paradigm shift in the natural gas scenario due to higher trend of
consumption of natural gas in the country and overall energy requirement
was changing, therefore, there was great need to bring new policy with
additives.” The new policy, as
usual, mostly provides and discusses the licensing issues as well as
pricing and taxation on gas and oil exploration and production. It also
fixes the rates of royalties, production bonus, windfall levy, etc, and
providing guidance how to get licence. The government has
enhanced the rates of windfall levy in 2012 policy, whereas the royalty
rates and production bonus rates kept the same as of 2009 policy. For the
windfall levy, the base price for crude oil and condensate has been fixed
at US$ 40 per barrel (bbl), whereas it was US$ 30 in 2009 policy. The base price for crude
and condensate will escalate each calendar year by US$ 0.5 per bbl (0.25
in 2009) starting from the date of first commercial production in contract
areas. Government’s take in windfall levy has been reduced from 50
percent to 40 percent which is applicable on the domestic crude oil price
exceeding base price. In the event Market
Price of Crude Oil/Condensate exceeds US$ 110/bbl ($100/barrel in 2009),
the 100 percent benefit of Windfall Levy will pass on to the government.
The ceiling would be reviewed as and when the pricing dynamics
significantly change in the international market, the policy stated. Pakistan is facing acute
shortage of energy (electricity and gas) for the last many years and both
domestic and industrial subscribers are bearing the entire brunt.
Pakistan’s average daily production of crude oil and gas in 2009-10 was
65,000 barrels and 4,063, million cubic feet, respectively, which were 53
percent of the country’s total demand whereas other indigenous sources
provided 19 percent of the energy, rest of the demand gap was filled
through 27 percent imports of oil and gas. Steep rise in balance of
trade due to growing import bill and declining exports has already
strained the economy and any further increase in imports, mainly due to
growing fuel demand would further aggravate the economic situation. Due to its failure to
kick start the much publicised Iran gas pipeline project to import gas
from Iran (owing to strong opposition by the US, backing out of India and
increasing oil prices in the international market), Pakistan is left with
no other choice but to tap its local reservoirs, many of already explored
ones are depleting fast. There is a need to
explore more fields offshore as well as onshore by granting new licences
to overseas as well as local companies. The new petroleum policy provides
impetus to this growing demand of fuel and the government expects it would
increase the chances of new discoveries both in the sea and in the land
and would attract foreign direct investment. The government has
provided attractive incentives to the overseas and local investors in the
new petroleum policy by enhancing the prices of the wellhead gas price
from US$ 4.5 per Million British Thermal Unit (MMBTU) to $6 to $9 per
MMBTU. Similarly, a price bonanza of $ 1 per MMBTU has been offered for
the first time to investors for the first three discoveries in offshore
areas. This increase in the
wellhead gas price is likely to increase the weighted average price of gas
and, thus, is bound to have corresponding increase in the domestic gas
prices for local consumers. The local prices of gas are already lower as
compared to neighbouring India or other countries, but due to poverty and
mostly reluctance of the consumers to pay more the price impact would
create hardships among the population. The industrial sector,
especially fertilizer, cement, and textile mills are the main consumers of
natural gas besides commercial use of natural gas in the form of CNG.
There are still many areas where natural gas has still not reached. The
government provides cheaper gas to local fertilizer manufacturing plants
in order to subsidize the local farmers. The government is also
providing gas to power generating units in order to generate
cost-effective electricity and reduce the imported furnace oil bill.
“The new policy would encourage foreign investment in exploration and
production as attractive prices are offered for oil and gas and discounts
are less (5 percent against 10 percent in 2009 policy),” says Khurram
Shahzad, senior analysts at InvestCap Securities. He says new explorations
were virtually halted because of uncompetitive prices and law and order
situation in many areas. Interestingly, after the
18th
Amendment in the Pakistani Constitution, the role of provinces
should have been increased particularly after abolition of the concurrent
list. Under the policy, one office of Director General Petroleum
Concessions, DG (PC) is empowered to implement the policy, whereas Federal
Minister for Petroleum and Natural Resources is the Chairman of the
implementation committee. After insertion of
Article 172(3) now the provinces have equal and joint ownership on mineral
oil and natural gas. The Article 172 mainly deals with ownerless property
in a particular province. 172(1) states any property which has no rightful
owner shall, if located in a province, vest in the government of that
province, and in every other case, in the federal government, whereas 172
(2) states all lands, minerals and other things of value within the
continental shelf or underlying the ocean beyond the territorial waters of
Pakistan shall vest in the Federal Government. “Effective from 19th
April 2010 when 18th
Amendment in the Constitution has been enforced, now the 172 (3) is
also effective which states: ‘Subject to the existing commitments and
obligations, mineral oil and natural gas within the Province or the
territorial waters adjacent thereto shall vest jointly and equally in that
Province and the Federal Government,” says Muhammad Arif, President,
Energy Lawyers Association of Pakistan. Talking to The News on
Sunday Arif says because of 18thAmendment, the say of the provinces in the
policy formulation role has increased as has been proven during the
process of the new Petroleum Policy formulation. He says insertion of
172(3) has, however, created a contradiction with Article 161 which
provides for the payment of 100 percent of the royalty on natural gas to
the provinces. “Because of
misinterpretation of the new Article 172(3), the provinces had started
asking for regulatory and administrative control on the day to day
administration of the licensing and related affairs. This halted the award
of new exploration blocks since June 2010,” he adds. Arif believes that
“this new 2012 Policy provides substantial fiscal incentives but these
alone may not be sufficient to attract desired level of investment unless
sufficient attention was paid to create enabling environments as well.
Another big challenge for the federal government would be to implement the
policy as soon as possible which also seems quite difficult due to serious
capacity constraints of the office of DG (PC),” Arif, adds. The new policy has
provided a provision of setting up of a Technical Committee under the
chairmanship of Secretary Petroleum and Natural Resources and comprising
of a nominee each of all the Provinces, Director General Petroleum
Concessions, DG (Gas), Oil and Gas Regulatory Authority (OGRA),
distribution and transmission companies, Pakistan Petroleum Exploration
and Production Companies Association (PPEPCA) and the concerned E&P
companies and this committee will be empowered to resolve the key issues
between E&P and gas marketing companies. Arif believes creation
of such a big committee is likely to cause substantial delays in the
implementation of the policy measures which the country cannot afford at
this juncture of energy crisis. Under the policy the
government has also committed to bring appropriate changes in relevant
rules, regulations and model agreements for its effective implementation.
climate Food and Agriculture
Organization (FAO) of the UN issued a statement earlier this month warning
that food prices on international level have started increasing rapidly
because of climate change. Food price index of the
FAO, which measures monthly cost changes for a food basket of cereals,
oilseeds and others, had hit 213 points in July, up six points on a month
ago in June. Senior economists of the UN agency warned that 2007-08 like
food crisis could develop when violent protests against food prices
erupted in several countries of the world. According to FAO,
untimely rains in Brazil, extreme hot and dry weather in the US and bad
wheat crop in Russia are the major reasons for food inflation at
international level. The US department of
Agriculture has already slashed its forecast for drought-hit corn
production by 17 percent while soyabean crop has also been badly affected
in US. The reduction in estimates of the crop resulted in 60 percent
increase in the corn price during last two months in US market. The US supplies nearly
half of the world’s export of corn and much of its soybeans and wheat,
is passing through its history’s worst drought since 1956. Parts of
Russia, Canada, Australia and Brazil are also experiencing drought
conditions. Most of these countries
have downgraded their harvest outlooks. Russia which exported 23 million
tons of grains last year may not be able to export more than 10 million
tons, and with a possibility that they may ban export all together as they
did in 2010. Responding to the surge
in food prices, the British-based charity Oxfam warned that the developing
world would be hit hardest. “This is not some gentle wake-up call —
it’s the same global alarm that’s been screaming at us since 2008,”
Hannah Stoddart, Oxfam’s head of economic justice policy, told The
Guardian. “The combination of
rising prices and forecast low reserves means the world is facing a double
danger. As usual, it will be people in developing countries who will be
hit the hardest, with millions who are currently ‘just getting by’
starting to go hungry as a result” she said. India the world’s
second largest producer of sugar, cotton and rice is also experiencing a
drought like situation with 35 percent less monsoon rains in key
crop-growing areas which will badly affect rice and sugar crops. India’s
most water reservoirs out of total 84 have not been filled by 30 percent
and may affect its next wheat crop as well. “Their higher food
reserve’s inventory from last year is expected to absorb most of the
shock as far as the domestic consumption of food grains is concerned.
However, in all probability, India may restrict their agro-exports during
the next 6-8 months”, says Dr Qamar uz Zaman Chaudhry, government of
Pakistan’s advisor on Met and Climate Affairs. Pakistan, which at
present does not seem affected by the emerging world food crisis as it has
sufficient grain stocks. Pakistan’s food basket depends less on corn and
soyabean. But Pakistani experts believe it cannot sustain an international
food crisis for a longer period of time as it is already a victim of
climate change. Head of Pakistan
Meteorological department, Arif Mehmood, tells TNS his department is
hoping less monsoon rains in the next couple of months. “In upper
Punjab, Gilgit-Baltistan and Kashmir we are having at least 20 percent
less rains while in Sindh, Balochistan and south Punjab 40 percent less
rains. We think that same rain pattern will be observed in the month of
September as well”, he says. Water situation at major
water reservoirs of Pakistan is not encouraging as well. In Tarbela so
far, only 3.637 MAF of water is available while its capacity is to store
6.73 MAF which means it is filled only 54 percent of its capacity and its
status has already been declared as critical while water storage situation
in Mangala dam is even bad. Its maximum capacity to
store water is 7.392 MAF while it has only 2.653 MAF water stored in it
which makes only 36 percent of total capacity which is highly critical.
Water inflow is these reservoirs would further decrease with coming days
as temperature will decrease. So, if there are no good rains in month of
September Pakistan would experience worst water shortage for next wheat
crop. Dr Qamar uz Zaman
Chaudhry sent an urgent letter to ministries and departments on August 6,
2012 explaining them about emerging global food crisis and its
implications for Pakistan. “I pointed out that the abnormal Climate
Patterns in some of the world’s vital food-producing regions are
threatening global food shortages. As such there is a strong possibility
of lower production of food grains and soaring prices globally in the
coming months”, the advisory read. “All this analysis
indicates that the world is fast heading towards another global food
crisis. If we recall 2007-08 crisis that sparked food riots in more than
30 developing countries, the expected shortages may surpass that level. To
save our country from the adverse impact of this global food crisis, we
need to develop appropriate contingency plans and to see how best we can
deal with its minimum impacts on Pakistan and particularly on poor people.
Because poor will be the most affected from this global food inflationary
spear.” Dr Qamar says Pakistan
has satisfactory stocks of grain but once the prices of food item start
increasing in neighbouring countries, Pakistan would also be affected.
“It will start the phenomenon of hoarding and smuggling of wheat.” Climate change is
another issue that can create problems for next wheat crop in Pakistan. At
present, it is also experiencing low monsoon rains, and so far these are
largely below normal. Water levels in our
reservoirs are the lowest in many years. This may affect water
availability for our next winter wheat crops. “The county’s policy
makers and economists need to consider the best possible limited policy
options available, including beefing up the strategic grains reserves and
discouraging the wheat smuggling”. Qamar says President Asif Zardari has
taken notice of the situation and has directed concerned authorities to
take steps to fight the situation. Dr Abid Qaiyum Suleri,
Executive Direct of SDPI and an expert on food security and climate change
issues says Pakistan at present has been facing two types of issues
related to climate change and food security. “We have been observing
huge late monsoon rains in a minimum time period like we had in 2010 and
2011 while on the other hand we have drought like situation. Both create
huge problems for crops”, he says, adding that in 2010 and 2011 these
rains badly affected rice, tomato and banana crops in Sindh province.
“Banana crop has not recovered yet and that is why we have seen a huge
price hike of banana during the last two years. These climatic
variations would affect crops in Pakistan in future as well. This year we
have seen late rice crop sowing because of less rains, next wheat crop may
also be affected”, Suleri says, adding it is true that we have
stockpiles of wheat at present. “But, because we do not have good
storage facilities, we have to export our crop on low prices to stock new
crop. During the Shaukat Aziz tenure we exported our good quality wheat
crop at low prices while only a few months after that we had to import
wheat at very high prices”. He says that smuggling of wheat is another
issue which can result in increase in food prices in Pakistan.
Shedding
the backlog On July 16, 2012, an
advertisement appeared in newspapers on behalf of the Law and Justice
Commission of Pakistan (LJCP) inviting proposals from lawyers,
academicians, researchers, human rights activists, institutions, bar
councils, bar associations and well-reputed civil society organisations in
various areas that, according to LJCP, affect citizens’ access to
justice. In an effort to do my
bit as a practicing lawyer to identify the issues that to my opinion
currently stifle the justice system of Pakistan (when I refer to justice
system I mean to refer to it in a broad sense ranging from legal education
to the court system) and propose measures to address them, I accessed the
LJCP’s website referred to in the advertisement. However, to my
disappointment and contrary to the contents of the advertisement, the
pre-qualification notice clearly limited the right to submit proposals to
institutions and organisations. Still determined, I decided to write the
current article so as to convey my views on the captioned issues to the
relevant officials (not necessarily limited to LJCP). This article is not an
expert report on all the irritants in the justice system of Pakistan,
rather it deals with frivolous litigation in the courts. The reason
frivolous litigation is a threat to the justice system is that it
constitutes a major portion of the current backlog of court cases and the
new court cases being filed every day. The measures suggested in this
article aim primarily to curb such frivolous litigation. Short term measures: The measures suggested
under this heading can be deliberated upon and implemented in a short span
of time. The first and the foremost measure to curb frivolous litigation
is to revise the current court fees law of Pakistan. As per the current
court fees law, an ad-valorem court fees of 7.5 percent is payable
according to the value of the subject-matter in dispute in the suit
subject to the maximum of Rs15000. So it is not unexpected that people
resort to the courts to settle even petty disputes, which they could have
otherwise settled out-of-court if paying hefty court fees would have been
the consideration. A revision in the court
fees structure is also due as it has remained the same for the last over a
decade. An increase in court fees will not only help curb frivolous
litigation to a large extent but it will also increase revenue collection
for the provincial governments, which in turn could be spent to improve
the quality of service delivery in the justice sector. Another measure that can
be taken is to direct the judges to strictly adhere to the important
procedural provisions stipulated in our civil procedural law, i.e., the
Code of Civil Procedure, 1908 (the CPC). For instance, one provision of
the CPC (Order V Rule 5) obliges a court to determine at the time of
issuing summons to the defendant to identify whether the summons are for
the settlement of issues or for the final disposal of the suit. However,
in practice the summons are issued in normal course without any such
direction. Likewise, another provision (Order X Rule 1) obliges a court to
ascertain from each party or their pleaders on the first date of hearing
whether they admit or deny such allegations of fact as are made in the
plaint or the written statement by the other party and record such
findings. However, this provision, to my knowledge, has never been applied
in practice (if applied this can reduce the scope of litigation to a
considerable extent). Some other pertinent
provisions include requiring production of documents on the first date of
hearing and requiring parties to admit and deny documents at such hearing
(Order XIII Rule 1) and delineating by the court of the issues at which
the parties are at dispute (legally termed as framing of issues) on the
first date of hearing (Order XIV Rule 1) that are never implemented in
practice as required by the CPC. This lax attitude over a period of time
has literally made these important provisions redundant paving the way for
a recalcitrant party to utilize the court system without fear of any early
determination, which may eventually lead to dismissal of his suit. One of the important
tools to discourage frivolous litigation is to invoke the provision for
imposition of special costs on recalcitrant parties as a matter of
routine. During my practice, I have come across a number of frivolous
suits, which were ultimately dismissed after 3-4 years of futile exercise
without any compensation to the innocent party. This inaction on court’s
part is encouraging the recalcitrant parties to exploit the court system
with impunity. Finally, parties should
be obliged by law to mediate their differences before approaching the
courts. This can be applied to all categories of cases or to some selected
categories of cases, for instance, disputes for subject matter of less
than Rs1,000,000. Although Section 89-A of
the CPC empowers the court to refer the parties before it in a suit to
alternate means of dispute resolution including mediation and
conciliation, this provision has failed to bear any fruit for two reasons:
(i) this provision is not mandatory; (ii) and it applies after a suit has
been instituted. A provision can be added in the CPC or Section 89-A can
be amended so as to oblige the parties to enter into mediation or
conciliation before approaching a court of law. Since one of the
objectives of the frivolous litigation is to obtain an injunction order
without notice to the other party and then to drag the proceedings to
cause maximum inconvenience to the other party, the aforesaid change in
law will prevent such situation. Medium term measures: One of the major causes
of frivolous litigation is inappropriate or wrong advice by a counsel to
his client. While a litigant may lose his resources, time and energy in
courts pursuing a frivolous suit for times to come, the person responsible
for the misery of the litigant goes scot free. The bar councils in the
country, which are responsible for regulating the conducts of the lawyers,
have miserably failed to fulfill their mandate in implementing the ethics
of legal practice. To my knowledge, there
is no case in the country’s history where a complaint has been filed or
action taken against a counsel for providing wrong advice to his client.
Even the complaints which are filed with the bar councils against counsels
on other grounds of misconduct do not bear any fruit as decisions on such
complaints have to made again by lawyers who fear any adverse order
against the fellow lawyer may deprive them of a possible voter or a group
of voters in the bar council elections. Hence, one cannot expect fair
working by the bar councils in the present scenario. This requires revamping
the bar councils including putting competent non-practicing lawyers or
academicians at the helm of affairs of the bar councils. Furthermore, the
bar councils should administer programmes on continued professional
development (CPD) for the lawyers to assess and improve their legal acumen
and the validity of their licenses should be contingent on successful
completion of the CPD programmes. Besides this, the
government should encourage infrastructure development relating to
alternate dispute resolution. Centres for arbitration, mediation etc
should be established in major cities and the stakeholders should be
educated and encouraged to utilise services of such centres for settling
their disputes. Once the infrastructure is in place, it can be utilised
through a legislative measure to adjudicate any particular category of
cases, for instance, family cases or rent cases etc. Long term measures: In the long term, it is
imperative to reform our legal education system and the system for the
grant of license by the bar councils to law graduates to practice in
courts. Only good and productive law graduates will transform into good
lawyers in the future. The current legal
education system should be divided in two categories; (i) legal education
for persons interested in studying law only; (ii) legal education coupled
with rigorous practical training for persons interested in practicing law
after the studies. In this model, the theoretical study should be alike
for both groups with more emphasis on legal ethics, but practical training
should be reserved for persons interested in law practice afterwards. The
writer is a lawyer based in Lahore and can be accessed at www.wmco.pk
tax Khyber Pakhtunkhwa’s
receipts from federal and foreign sources have increased in recent years
but the province’s own revenue receipts have failed to register any
significant growth. The PORs stood at
Rs18.91bn against the target of Rs19.49bn in 2011-12. These comprised
direct taxes — taxes on agriculture, property, land revenue, trade and
callings — of just Rs1.4bn, indirect taxes — GST on services,
provincial excise, motor vehicle tax, stamp duties, cess of all types,
electricity duty etc — of Rs11.1bn and non tax receipts — income from
property and enterprises, civil administration, economic services,
community services, social services and miscellaneous receipts — of
Rs6.3bn. For this fiscal a target
of Rs20.10bn has been fixed for the PORs. Rs13.8bn of these are tax
receipts, including Rs9.89bn GST on services to be collected by the FBR on
behalf of KP government, and Rs6.2bn are non tax receipts. Though GST has been
included in the provincial tax receipts which has made the figures look
attractive, the decision is not reasonable as the provincial tax machinery
takes credit for an amount which has been collected by the FBR. If we exclude the GST of
Rs8.92bn from the provincial taxes, provincial tax receipts register a
nominal growth as percentage to the total PORs. Tax receipts were Rs3.64bn
or 36 per cent of the PORs of Rs9.98 last year. This year tax receipts
will be Rs3.98 or 39 per cent of the PORs of Rs10.18bn. The share of PORs as
percentage to the overall revenue receipts of the province from all
sources is on the decline. For example, the total PORs of Rs18.9bn were
7.4 per cent of the revised total revenue receipts of Rs255bn last year
but this year’s PORs target of Rs20.1bn is 6.6 per cent of the total
expected receipts of Rs303bn. And if the GST is excluded from the tax
receipts, last year’s PORs come to just 3.9 per cent and that of this
year’s further to 3.3 per cent of the total revenue receipts from all
sources. From the financial year
2005-06 to 2009-10, actual collection of the PORs has been way short of
the targets. The targets/actual collection were Rs4.47bn /Rs4.34bn,
Rs5.20/Rs4.77bn, Rs6.22bn/Rs5.32bn, Rs7.44bn/Rs5.43bn and
Rs7.53bn/Rs6.41bn in the above five years respectively. Some ascribe this gap to
unrealistic target by finance department and the dilapidated law and order
situation but others say complicated tax system and lack of incentives to
entrepreneurs are also to blame. The share of direct
taxes has been on the decline and while that of the indirect taxes is on
the rise in PORs. While direct taxes constituted 30 per cent of the tax
receipts in 2011, their share has come down to just 11 per cent this year.
And the share of the indirect taxes has jumped to over 89 per cent from 64
per cent, according to the budget white paper 2011-12. On the other hand, non
tax receipts have been on the rise and always met the targets. These
receipts rose from Rs4.7bn in 2009 to Rs5.4bn and Rs6.3bn in the next two
years. The outlook for the
future is not bright either. Under the Medium term fiscal framework,
fiscal outlook paper prepared by the KP finance department that shows
fiscal targets and prospects for all the departments in KP, PORs are
projected at Rs10.21bn for the ongoing year, Rs11.3bn for 2013 and
Rs12.58bn for the FY 2014. On the contrary, KP has projected income from
federal transfers at Rs183bn this year which will go up to Rs213bn and
Rs249bn in the next two years. The targets for the PORs
are frequently missed for constraints like terrorism that has grievously
impacted businesses in KP and, therefore, resulted in low taxes, the lack
of enthusiasm on part of the taxpayers, the capacity constraints of the
tax collection machinery and the elements of corruption therein, huge
informal sector and most of all the lack of commitment to exploit the
potential on part of authorities. As per the Seventh NFC
Award, provinces were required to streamline their tax collection systems,
reduce leakages and increase their revenues by effectively taxing
agriculture and real estate sectors and develop and enforce mechanism for
maintaining fiscal discipline but this didn’t happen. In an election
year, there could hardly be any worthwhile attempt to increase taxes now. That KP has a limited
capacity to collect taxes was also revealed when it assigned the task of
collecting the GST to the federal board of revenue unlike Sindh which
established and utilised the Sindh Revenue Board for the purpose. Khyber Pakhtunkhwa needs
to focus, especially on stamp duties, motor vehicle tax, land revenue,
electricity duty and agriculture income tax to improve resource
mobilization. These four taxes earned Rs550mn, Rs900mn, Rs915mn, Rs470 and
Rs21mn last year respectively. The share of agriculture
sector has also been minimum though there is a great potential while only
Rs21mn were collected in agriculture income tax last year, with around
4.5mn acres cultivated land in KP, income from the agriculture sector
could have been dozens of billions even if we consider the average annual
income from one acre of land at average of Rs0.1mn. Given the massive
increase in financial resources and additional responsibilities placed on
the provinces in the post-18th amendment scenario, it is important to
revisit the traditional development policies and practices to revamp the
inefficiencies and harness the full productive potential of the economy. The government should
focus on the growth sectors of the economy and concentrate on the natural
resource endowments of KP in hydel power, mining and minerals, oil and gas
and agriculture value addition and agro-processing industries. Under the Provincial
Reforms Programme, KP intends to increase its own revenues and bring them
to 0.9 percent of provincial GDP. Another point of emphasis is to bring
down the current expenditure from 8.1 percent to 7.7 percent of provincial
GDP. During the medium term, the provincial government will keep the
establishment charges at 4 percent of its GDP. But the targets for
revenue growth can hardly be achieved with the existing half-hearted
efforts to increase provincial revenue amid rising security expenditure
and pay and pension budget. KP relies for over 93
per cent of its revenue needs on federal transfers and local and foreign
loans. It must increase its revenue generation potential to ensure
sustained growth of its economy, to offset the negative fallouts of
frequent delays in federal transfers amid growing current expenditure. The province should
bring down its current expenditure by unifying several overlapping
departments, restructuring of Public Sector Enterprises, rationalisation
of government size, budgetary measures, substantial curtailment of foreign
visits and of expenses on public offices, security and energy efficiency
and conservation. The informal economy of
the province, estimated much higher than formal economy, would have to be
brought into the tax-net. The limited private sector presence is further
shrinking as entrepreneurs are shifting to other provinces. This trend has
to be reversed through investors’ friendly environment. The Excise and Taxation
Department collects all provincial taxes except the land revenue or Abiana.
It is the major contributor of revenue to the provincial tax receipts. The
biggest handicap of the department, according to the whitepaper, is the
lack of capacity to collect all these taxes effectively, both in terms of
physical infrastructure and human resources. As per the
recommendations of a special committee of the provincial cabinet, the
Board of Revenue has been given more authority and the post of patwari has
been increased and upgraded. Computerisation of the system is underway. The provincial
government had in 2008-09 prepared a strategy for increasing the PORs
known as Out of Box strategy of Revenue Expansion (OBSRE). “The province has
tremendous water and hydel power resources, lush green forests, great
reserves of gas resources and minerals and human capital. The federal
government is earning from resources of this province but is giving little
to the province. Consequently, KP has to depend on federal transfers.
Also, the out of fashion and traditional strategies for revenue generation
from own resources have resulted in very nominal growth. Every year, when the
provincial government negotiates any loan with donors, it has to defend
relatively weak position of revenue generation as these agencies insist on
much needed reforms in this sector,” states the OBSRE paper. Under the OBSRE, PORs
had increased by over 18 percent in 2009-10 to Rs6414mn as compared to
Rs5430mn in 2008-09, out of which almost 19 percent (Rs183mn) increase was
recorded in the Urban Immovable Property Taxes, land revenue (Abiana) and
Traffic fines (which were also the key focused areas in the OBSRE). Further due to reforms
in the over-all revenue department both from the revenue/tax structure
perspective and human and physical capital improvements, the recovery
against the budget estimates also improved. For example the UIPT shown an
astonishing 130 percent achievement, Abiana 97 percent, traffic fines 106
percent and over all combined it had shown 113 percent achievement of its
targets against 67 percent, 51 percent and 35 percent performance in
2008.-9. Detailing on the causes
of low revenue base of the province, the paper points out that
rich/revenue generating sectors are federally owned. Further, due to the
lack of tax administration capacity and political commitment deficiency
revenue reforms at sub-national governments do not take place. Again, this
seems less than before mainly due to exemptions in flood and war on terror
stricken areas, had they been included then the performance had been much
better. Similarly, to increase
its own revenue receipts and decrease the burden on provincial exchequer,
KP has established several investment funds that have earned dozens of
billions by investing the funds in treasury bills, investment bonds and
other investment opportunities. The general provident
investment funds, where the money deducted from the monthly pay of the
provincial employees is kept and on which the government gives a profit of
11 per cent every year, opened with just Rs200mn has now over Rs18bn in
its account despite the fact that Rs6.75bn have been released to employees
from the fund thus far. Similarly, the size of
the pension fund which was Rs4bn in 2006 is Rs12.4bn by June30 this year
though Rs6.85bn were released from it. Again, the Hydel development fund
opened with Rs50mn has now increased to over Rs24bn despite the fact that
over Rs16bn released from it for financing different hydro power projects
in the province. The CPF opened with Rs50mn has now around Rs3bn while
Rs2.4bn have already been utilised out of it.
Putting
it plain and simple While the United States
and Great Britain are doing whatever they think best to preserve Pakistan
— naturally in their own interests — Pakistan is doing its best to
destroy itself. Or so it seems. At some point Pakistan,
its government, its parliament and its citizenry must realise that the US
— and in fact the rest of the world — does not awake each morning,
scratch its head, and ask ‘Huh, I wonder what Pakistan is up to
today?’ No, the world has much with which to more than fully occupy
itself. It is Pakistan that
wrongly assumes it is the centre of the world, that it possesses some
extraordinary ability which makes it the universal ‘victim’ and which
provokes others to attempt to destroy it or at the best to do it down. It
imagines itself surrounded by enemies for which reason it does everything
to survive! Since its birth Pakistan
has displayed great adeptness in manipulating its hand in international
affairs. It extracted an invitation from Moscow in 1949 only to goad
Washington into dispatching an invitation to Prime Minister Liaquat Ali
Khan, which was promptly accepted. The Russian invitation was ignored even
though some diplomats insist that it was not formalised. Pakistan’s history is
replete with similar instances. It used friendship with China as a
countervailing factor against the US when Washington refused to support it
in the 1965 conflict with India. Russia came in handy at Tashkent in 1966
when a foreign mediator was needed. Pakistan took advantage of its
friendship with Beijing to facilitate Henry Kissinger`s secret trip to
China to win US goodwill during the 1971 crisis. Recently, Pakistan
garnered an invitation to the Nato Summit in Chicago under the garb of
re-opening the Nato supply routes to Afghanistan. The supply routes are
now open after Washington apologized for the Salala incident. The eight month impasse
between Islamabad and Washington broke abruptly when the later came to
know about Russian President Vladimir Putin’s visit to Islamabad later
this year (of late Moscow and Washington are positioning themselves on
opposite sides in global politics). Apart from Pakistan’s
despicable politics, another aspect is its armed forces’ obsession with
the ‘traditional enemy’ and the ‘core’ issue which sadly will
never go away only to feed and succor the 65 years of status quo with
India. Never mind that they have provoked and lost three wars through
arrogance and poor abilities. The nation has accepted
all that happily and readily allowed them to become the richest, most
powerful and leading industrialists of the country. It has forgiven
multiple sins and transgressions and with a couple of hiccups here and
there never failed to back them. This is Pakistan’s
biggest problem that it easily forgives and forgets. Ralph Peters, a
retired American army officer who was posted in Pakistan in the 1990s
rather said it with elegance that “Pakistan knows only a wretched past
that keeps repeating itself in a deteriorating cycle.” While moving in
this deteriorating cycle it has created monsters and undoing such creation
is not a simple task — it will require ruthlessness for which the nation
is neither willing nor ready. Pakistan’s another
problem is that it has always created misplaced interests. It tends to
forget that it cannot stake national survival on policies which is
permanently clouted with short term interests of the country’s tiny
kleptocratic elite. Pakistan forgets that no country can be an astute
player on the world stage if its power base is weak. Indubitably, national
power never comes from military strength. It comes from cohesive
populations that are educated, healthy, economically productive and show
tolerance and acceptance of political plurality and socio-cultural
diversity. This is possible only
when governments set the stage by introducing and managing a sound
political and socio-economic system based on democracy, moral integrity
and social justice. A country where one province is torn by civil war and
others are decimated by violence cannot be considered strong. What happened to the
country in 1971, when a big chunk of it broke away to set up the new state
of Bangladesh, which is by all accounts doing so much better than
Pakistan? East Pakistan was lost because political differences with the
Awami League could not be resolved. Pakistan is doing the same today as
the country moves towards destruction brought on by its own domestic
failures. Unchecked by any
law-enforcement agency or military might, the local Taliban have crawled
all over Pakistan and are wreaking havoc wherever they can. Pakistan’s
leaders have yet to craft a compelling counterterrorism blueprint and
their past ability to cope with similar threats is no useful guide to what
lies ahead. Fearful of taking on powerful religious forces, no serious
attempt has been made to stop future minds from being molded by fanatics. To criticize
Pakistan’s leaders, however — much though they may deserve it —is to
miss the point. It is ordinary people, locked in a series of personal
Pakistanis, who seem unable or unwilling to unite over the threat to their
nation. Pakistanis will point to the oppressive hand of history or the
machinations of foreign nations to explain their descent into chaos, and
to a certain extent both have played a role. But no one bears more
responsibility for a slow collective suicide than Pakistanis themselves. It is all highly
depressing, and only Pakistan can be blamed for it. While other nations
vie to compete and march ahead; the Pakistani populace gears up every day
to battle within the country. With such people and organisations on the
rise, Pakistan has enough qualified enemies within its borders to
destabilise it. It does not need anyone from the outside. As exclaimed Pogo, on
the famous 1970 Earth Day poster: “We have met the enemy and [it] is
us.” proposal Reports have been making
rounds for the last several months that the federal government may
introduce local government institutions in the Federally Administered
Tribal Areas (FATA). After the situation
remained fluid for a considerable time the federal government eventually
decided to put in place elected local government councils in the tribal
areas. The authorities
concerned have already prepared a draft of proposed FATA Local Government
Regulation 2012. Federal Law and Justice Minister, Farouq H. Naek, has
reportedly discussed the draft with Prime Minister Raja Pervez Ashraf. After which President
Asif Ali Zardari is all set to promulgate an ordinance introducing local
bodies in the tribal areas. The President has exclusive authority to
introduce and make changes in the existing laws in FATA. Recent developments have
raised hopes FATA would get local government structures as announced by
the federal government. However, when it comes to tribal areas nothing can
be said with certainty. For instance, President Asif Ali Zardari extended
Political Parties Act to FATA in August 2009 but the order remained
dormant until he again announced the order in August 2011. At a time when the rest
of Pakistan has been awaiting revival of the LG System for the last four
years the proposal to have local government structures in FATA is not only
welcome but is of profound political, economic and administrative
significance. If the federal
government is able to put in place LG structures in FATA it would be
extensively consequential not only for the tribal areas but also for the
entire Pakistan given the fallout of the adverse security situation and
the long-existing legal-political vacuum in FATA on the whole country in
recent years. The introduction of
local government bodies in FATA, unlike the rest of Pakistan, is of
profound significance as they could be instrumental in transforming the
near stateless nature of the region. Equally important is the role which
elected local government councils in FATA could play in detribalizing and
developing the areas. The finer details of the
draft FATA Local Government Regulation and the procedures it envisages
have not been made public so far. However, according to the available
information the local bodies in the proposed regulation would comprise of
elected municipal councils. Each of these municipal councils would be
headed by a “chairman” to be assisted by a “vice chairman”. In order to hold
elections for local municipal councils one block of population census
would be considered as one ward, an electoral tier. The governor would be
authorised to divide a local area, within different FATA agencies or
districts, into one or many wards. Obviously this would depend upon the
size and population concentration of the local area. The local council
established for each of the towns would have the status of a municipal
committee. According to the proposed regulation, the governor would
ascertain the number of general members of the local councils who would be
elected through adult franchise. The governor would have the authority to
nominate the representatives of traders, women, farmers, artisans etc. on
the reserved seats. A local council within
three months after coming into existence would devise its rules of
business. However, according to the FATA LG Regulation every municipal
council must have at least one meeting a month. Significantly, these
meetings would be public. “This would go a long way in laying the
foundation of a democratic culture in FATA. It has been behind the doors
consultation regarding the matters of tribal areas which has been a cause
of much problem,” said Imran Khan Wazir, a Peshawar based political
commentator. FATA to date does not
have their own public service structure and most of the top officials that
have hitherto been serving there came from federal or Khyber Pakhtunkhwa
bureaucracy. Keeping this in view the
Regulation envisages FATA United Group of Functionaries. Every local
municipal council would have officials on its disposal from United Group
of Functionaries. But the authority to form this group would rest with the
governor. Local councils in FATA
would deliver a considerable range of services. This include sanitation,
drainage, birth and death registration, managing slaughter houses,
quarantining, fire services. Every municipal council
would also be responsible for devising master plan for the respective
area, serve as building control authority, providing street lighting,
traffic control, provision of transportation services, holding sporting,
cultural and literary activities, controlling environmental pollution,
price-control, looking after graveyards, growing and maintaining gardens,
establishing libraries besides other social welfare services. “These are indeed an
extensive range of services which have been unheard of by the residents of
FATA. The core issue is whether the proposed local council would deliver
them. I think keeping in view the capacity issues we would always find
them wanting. Still we must have to start somewhere,” said Imran. The finances of the
local councils according to the proposed Local Government Regulation would
be raised through funds and grants received from the federal government
and taxes collected locally. Every local council
would have the authority to levy local taxes like toll tax, tax on
property, buildings, land, transfer of immovable property, water, vehicle,
parking as well as professional taxes and birth registration fee. If these
taxes and fees are handled adroitly every local council could raise a fair
amount to run its affairs and make itself self-sufficient. Every local council
would present its annual budget and it could be passed through simple
majority by the members. As these council would not be allowed to get loan
this would go a long way in making the council to look for ways and means
to raise funds locally. The finances would be
spent according to the direction of the governor for special purposes
which should not be at all on the direction of the governor. Because the
governor KP himself cannot pinpoint what kind of civic problems, social
services and development needs a particular part of FATA may have. The civilian bureaucracy
has always had a vested interest in FATA as in the absence of local
government there, FATA has been bureaucracy’s virtual fiefdom. Against
this backdrop, it seems that this clause(s) of getting the governor’s
direction for using up the funding of municipal councils have been
included at the behest of the civilian bureaucracy. The apparent purpose is
to somehow have its stakes in the new regulation. One is apprehensive that
the full regulation would have many clauses which would ensure the
bureaucracy’s supremacy and ways and means to meet its vested interests.
Therefore, the proposed
FATA Local Government Regulation should be placed before the tribal and
civil society leaders particularly lawyers belonging to FATA as well as
researchers and experts on FATA for having their input before its actual
enforcement. The draft Local
Government Regulation for FATA proposed the municipal councils to be
elected on the basis of adult franchise. Electiveness is the most
significant aspect of the proposed FATA. Because for the first time in
history the inhabitants of the tribal areas could have real self-rule as
the members of national parliament from FATA ironically could not make
laws for the tribal areas. Expressing his
reservations on the Regulation, Ijaz Mohmand, who is president of FATA
Lawyers Forum, said, “As far as I know in the proposed Local Government
Regulation Governor has the full authority regarding a number of matters
which should not have been the case. In particular, the
governor has a carte blanche in filling the seats of the technocrats in
the local municipal councils. I don’t think that independent elections
are possible in the present situation in the tribal areas due to adverse
security situation. Even if elections are held for the local councils only
candidates supported by the political administration or civilian
bureaucracy and Members of National Assembly and Senate from the tribal
areas would win.” “We have doubts that
these local councils would be instrumental in brining about systematic and
social change in the tribal areas. The situation could only improve if the
jurisdiction of the Supreme Court of Pakistan and High Courts is extended
to FATA. Many of our friends think that the government has come up with
the plan to introduce so-called local municipal councils to get funds from
western countries and international donors.
However, Mohmand agreed
that introduction of local government system to FATA is in itself a good
development. “In order to make these councils viable and placed on sound
legal and administrative footing, I think those lawyers who are still
living in the tribal areas must be given representation in their
respective areas municipal councils.” It is clear the proposed
Local Government Regulation for FATA may not put into place an ideal
system of local government; however, it would lay its foundation. The government will have
to introduce a full-fledged local government system in the tribal areas.
Because the roots of problem in FATA are in the long-existing political,
legal and systemic vacuum and elected local councils could go a long way
in plugging that vacuum. The
writer is a political analyst and researcher currently working on his PhD
on roots of terrorism and religious extremism in Pakistan.razapkhan@yahoo.com) Crux
of the problem It seems that education
has never been a priority for voters when choosing a candidate. It is
perceived that the elected representatives neither feel the need to
comprehend quality or teachers’ rationalisation issues. From time immemorial
education departments have been utilised and politicised by political
machinery through postings and transfers and teachers for their political
campaigns and polling deities. The elected
representatives have been missing from the informed debate in their
constituencies in the form of political will, children’s learning,
reaching out to parents demands and just as small as a visit to the
school. A political
representative’s meeting was held under the auspices of United Nations
Girls Education Initiative at the National Assembly Hall to understand the
dynamics of KPK province and its some districts. Each parliamentarian
described the current problems in the education system and facilities in
the area with reference to girl education. Meher Sultana from
Malakand, Karak (PML-N) holds education as a central problem. Plagiarism
and cheating have become a new menace. There has been an increase in the
number of private schools and Chakara has become a hub of low cost private
schools. The teacher student
ratio is not ideal and when teachers go for maternity leaves, the school
suffers for two months. PA40 and PA49 are two districts where girls want
to get education but there aren’t any schools. Middle and High School
needs to be constructed and secondary schools should be upgraded to high
school. There should be a
community level engagement so that the families get involved in respect to
their child affairs. Girls are discouraged to pursue education as schools
are distant. KPK is a province with multiple issues in different districts
and the issues have to be dealt accordingly.
Uzma from Lower Dir (JUI)
says her constituency is near FATA and the Afghan refugees are our main
problem. Parents don’t let their girls to school. Higher education
facility is 40 km away and teachers come from Chitral and Swat. A majority
of students are enrolled in the University of Peshawar are from the areas
of Chitral, Swat and Lower Dir. The appointed teachers don’t show up in
schools and there are no teachers for arts and science. Transportation is
a major drawback. Tabassum Shams from
Charsadda Union Council Shabqadar (ANP) says they are facing a lot of
challenges and need to work in the present times and have to yield
positive results. From individual ideology, we need to come up with a
collective solution to these problems. Schools are located in
far off areas or damaged and transportation is a major obstacle. The
current situation of the area is because of the military operations.
Parents are scared to send their children to school. There is bleak law
and order in Shabqadar near the Afghan border. A survey was conducted in
FATA and settled areas and it was found that a majority of the children
work and the programme food for education works well in such situation. Sikander Irfan from
Swabi (ANP) says there are no proper school buildings. Poverty, absence of
teacher training, and missing facilities are a hurdle in the prosperity of
education in KPK. Javed Khan from Swabi (ANP)
says he doesn’t believe in a generalised discussion.
Quality education for girls is indeed a priority. The government
seems more interested in the education for boys than girls. There is a
shortage of staff. There is no provision for sports, especially for girls.
Health and hygiene should be integrated. Member Provincial Assemblies
should have a forum and come up with issues and solutions. Transportation
should be provided to girls. Muhammad Ali from
Charsadda, (PPP Sherpao) says Shabqadar is adjoining Waziristan. Education
implementation is a problem as majority schools have been destroyed by the
Taliban. Population is in thousands and there are only two schools. Seven
schools remain shut. Teacher availability is
an issue due to their postings. To give an example, there is a school of
1300 girls and there are only 10 teachers for them. There are only 18
primary schools. There should be more schools and colleges and hiring of
local teachers. Shagufta from Naushera (ANP)
is of the opinion that awareness is the key to progress. We don’t have
the data to understand the current scenario. No survey or data is
collected in PA-5. Survey should be carried out in particular areas to
gather the required information. Constituency survey should be done for
elected officials. Financial support should
be given to the children to prevent drop outs. Tarogil and Kohistan are
critical areas as no child has reached to grade 10. I would suggest that
we should give Rs1500 to 2000 for students in the tenth grade. The
existing government schools need to be upgraded to high schools. Jaffer Shah from Swat
says terrorist operations and floods have left the area in a bad state.
Ninety percent schools have been washed away due to floods. The schools
which are excelling have a lack of trained staff. For girls, we require
functional literacy and schools in remote areas and transportation is a
must as teachers don’t want to go. Private partnership is gaining
momentum in towns and populous areas. Development in the public sector is
very slow. Noor Seher from Swat
from PPP says 400 hundred schools have been destroyed by Taliban’s. We
should focus on budget allocation for education. Rationalisation of
teachers is a concrete issue. No one talks about the Madressahs and
private sector contributions especially of the government. There are only 3 to 4
classrooms for a school. Major advancement in the district is the women
getting their ID cards made. Girls should be provided security and
respecting the cultural norms, separate schools for boys and girls be
established. Disasters and conflict
areas should be managed accordingly. We should be aware of the demand and
supply. Elected representatives should focus on access and incentives.
Data collection and surveys should be carried out. Social media should
encourage participating in such efforts. Private and government sectors
should join hands together for the pursuit of universal education. Current
development budgets should be utilised for quality education. Summing up the MPA’s
statement, it is evident that KPK is a diverse province and districts
cannot be treated in a generalised manner. Districts suffering by conflict
and disaster and those with normal circumstances should be treated
separately. The notion that the
whole province is conflict driven has to be abandoned. Development in the
public sector is not according to the demands of parents and children.
Parents’ voices are ignored in the process. Budget for girls and
boys’ education should be separately allocated as there is a bias
towards boy’s education. Public data management systems should be
upgraded and made public to the elected representatives according to each
constituency as well as learning indicators. Teacher’s awareness is
central to the problem. Most importantly, there is a silent revolution in
the form of low cost private sector and is very active in KPK. There
should be a serious focus on the public sector for primary and secondary
schools. The elected
representatives and the department of education will have to bring in a
social contract and a platform so we demystify the invocation of why the
public school doesn’t work while the low cost private school in the
vicinity has full attendance. The
writer is Founding Director Children’s Global Network-Pakistan
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