The new regime
The advantages of effective competition in a market economy are enormous
By Hussain H Zaidi
Markets work efficiently when they are competitive, that is when no firm or a group of firms is strong enough to affect market price, and there are no barriers to entry and exit. Competition not only makes for lower prices, but also helps improve product quality. The existence of a large number of firms also gives greater choice to the consumer

It can be expected that the forthcoming general elections will come to dominate the political landscape from now till January 8 next year, even though lawyers, students, journalists and political activists of various stripes will continue to press the demands of the nine-month old anti-dictatorship movement. Already, newspapers and television channels are dedicating significant time and space to covering election campaigns (and assorted malpractices).

This election focus will intensify even though the vast majority of commentators and political actors -- the PML-Q and its allies aside -- are openly decrying pre-poll rigging, the unbridled use of the state machinery by PML-Q candidates, the muffling of the media, the absence of an independent judiciary and the heavily co-opted Election Commission of Pakistan (ECP).

In particular, the PPP has been going on about the fact that election results have already been decided and that talk of a 'free and fair' elections is completely ridiculous. For all intents and purposes, the PPP -- and the other mainstream political parties participating in the elections -- seem to be engaged in a self-defeating exercise as there does not appear to be any chance that 'a level playing field' will actually be ensured.

Why are they participating in spite of what they already know about the (il)legitimacy of the elections? There appears to be only one plausible explanation, namely that Uncle Sam is adamant that elections must take place and these elections can only be considered 'legitimate' if the major opposition parties take part. We already knew it, but this latest example indicates the complete lack of autonomy of political parties from the machinations of imperialism.

In this quite perverse calculus, what Washington fails to recognise is the very real possibility that the aftermath of the rigged elections will be even more chaotic than what has transpired in the months after March 9 this year. And it is tragic that the mainstream political parties are probably well aware of the fact that they too will have to adopt a confrontational posture against the state, but are contesting the elections just because Uncle Sam demands it.

It is possible that the PPP, the PML-N and other mainstream opposition parties do not take on the regime after January 8, but given that they do not constitute a very united opposition and the fact that rigging will probably make them even weaker than they proved to be after the 2002 general elections, it is highly likely that they will be forced into a confrontation of one kind or the other.

Of course if and when such a post-election scenario materialises, the mainstream parties will be faced with the same quandary they have been facing over the past few months. Do they want to buttress an obsolete political system that is simply waiting to collapse? Or do they want to contribute to the building of a countervailing power to the establishment that pushes the agenda of structural change?

Let us assume that at some point sooner rather than later they will have to choose the second option, having proven to the White House that they have made all possible attempts to reconcile with the Musharraf junta to no avail. In such a scenario, just how capable are the mainstream political parties of building a mass movement? It would be instructive at this juncture to take a concrete case in point.

Since November 3, arguably the most conspicuous aspect of the resistance to martial law has been the emergence of students -- admittedly in limited numbers -- as another front of agitation alongside lawyers, political workers and journalists. Most importantly, student protests were non-existent before the imposition of martial law and constitute a huge moral problem for a regime that has been intent on representing protests against it as being limited to a relatively small group of professionals.

Student protests have been relatively small till now, but there can be little doubt that they represent an opportunity for a reinvigoration of political activism on university and college campuses. One would think that our mainstream political parties would be very interested in exploring the opportunities of making inroads into the student community and encouraging more far-reaching mobilisations in the future.

Notwithstanding the fact that the students that have become involved over the past few weeks should jealously guard their autonomy and insist on working with political parties rather than for them, the fact that there has been no meaningful engagement of the political parties with students seems to indicate that the former are either unwilling to match the radicalism of the students' demands or simply do not consider student mobilisations very significant, or both.

In any case, this reflects the crisis that our political parties face inasmuch as they are unable to relate to people's demands and regenerate the kind of organic links that at least some political parties shared with ordinary people in a bygone era. There do exist student wings of political parties, but they are neither autonomous nor are they popular. Political parties that are committed to rebuilding a vibrant political culture should recognise the need for new student organisations, which are fiercely independent and articulate a clear political voice.

In thinking about what is wrong with our political parties, it is always important to not fall into the trap of engaging in indiscriminate criticism, because -- as some writers have rightly pointed out in recent times -- political parties are irreplaceable as the vehicles of change. However, it is also true that over the past few months, new social forces have emerged to demand political space; and it is important that the existing political parties treat these forces as allies in the struggle against the long-entrenched oligarchic system of power rather than view them with suspicion and trepidation.

Given the demographics of Pakistani society -- more than 60 per cent of our population is below 25 years of age -- political parties should welcome the re-emergence of student activism, and should make any and all attempts to encourage the revival of student politics across the country without trying to instrumentalise the fledgling student movement for their own parochial purposes. After January 8, political parties will be forced to pay heed to such looming questions and the choices they make will determine in large part how successful the movement for democratisation will be.

Balochistan comprises over 40 per cent of Pakistan's land mass, but has less than 6 per cent of the country's population. This demographic factor means that Balochistan has very little representation in the National Assembly, which, under the 1973 Constitution, has the exclusive right to approve the federal budget and other money bills. Given this fact, the case for the allocation of more resources for the development of Balochistan has tended to go by default.

This is one of the main reasons why Balochistan is the country's most neglected and backward province, despite containing large reserves of gas and huge mineral deposits, including copper and iron ore.

A more equitable dispensation requires, first of all, an amendment to the Constitution that would make it mandatory for all money bills to be passed not just by the National Assembly but also by the Senate, where all four provinces have equal representation. Such an amendment would give Balochistan an equal say in determining how federal development funds are spent.

In recent years Islamabad has allocated more development funds for Balochistan than ever before. These funds have been used to build several major infrastructure projects in the province, including the Mekran Coastal Highway and the new deep-water commercial port at Gwadar. But a great deal more needs to be done to bring Balochistan on a par with other parts of the country.

Balochistan has millions of acres of potentially arable land. The Water and Power Development Authority (WAPDA) has identified more than 600 sites in Balochistan where check-dams could be built on river-beds to store rain-run-off water for irrigation. The recently completed Mirani Dam, built on the Dasht river at a site some 50 miles north of Gwadar, will store enough rain-run-off water to irrigate 36,000 acres of land. But many more such schemes need to be built to boost the province's agricultural output, including fruit and horticultural produce -- which could become significant export earners for the country and improve the standard of living of Balochistan's people.

A land of huge horizons and wondrous landscapes, Balochistan could become Pakistan's new economic frontier within the next decade or so if all the multifarious development schemes that are now under way or planned in the territory, as well as in other parts of the country and the region around it, start gelling together and become a reality.

One of the key elements in realising this dream relates to what is happening in western China today, the region bordering Pakistan. Beijing has announced plans to spend $ 500 billion on infrastructure projects alone in western China over the next 10 years and another $ 500 billion in bank loans to industry and commercial enterprises to boost economic growth in the region and bring it on a par with other parts of China.

China's eastern seaboard ports are 3,500 kilometers away from Kashgar, western China's main city, whereas the distance from Kashgar to the Pakistani coastal town of Gwadar, on Balochistan's Mekran coast, is only 1,500 kilometers. Given this fact, there is an obvious huge cost advantage for China to use Gwadar as the gateway port for its western region.

China is now a major importer of oil from the Gulf states. The country's oil imports have to be shipped all the way across the Arabian Sea, Indian Ocean and the South China Sea to reach its eastern seaboard ports -- a distance of more than 15,000 kilometers. Oil imports destined for western China have then got to be transported overland across China for another 3,500 kilometers. Thus, oil imports from the Gulf states destined for western China have to be transported a total of 18,500 kilometers. By contrast, the distance from Gwadar to the western Chinese city of Kasghar is only 1,500 kilometers. There is, thus, an obvious huge transportation-cost advantage for China to use Gwadar as the port for oil imports from the Gulf destined for western China. There is also a huge transportation-cost-advantage for western China to use Gwadar as a gateway port for other imports as well as exports.

Beijing provided nearly $ 200 million worth of funding for building Phase I of Gwadar's port. It has also agreed in principle to provide $ 500 million worth of funding for building Phase II. Phase I was completed in 2005 and is now operational. Work on the port's second phase is expected to begin by the middle of next year. Meanwhile, China has announced plans to build a $ 5 billion oil refinery at Gwadar to refine crude oil imports destined for western China. The 650 kilometers Mekran Coastal Highway from Karachi to Gwadar was completed in 2004. It was built by the Pakistan Army's Frontier Works Organisation (FWO).

Islamabad and Beijing are now discussing the possibility of Chinese financing for a highway-link from Gwadar to the central Balochistan town of Khuzdar, on the Regional Cooperation for Development (RCD) Highway connecting Karachi and Quetta. They are also discussing Chinese financing for upgrading the existing road-link connecting Quetta to the Indus Highway via Loralai and Dera Ghazi Khan. From Dera Ghazi Khan the Indus Highway heads north through Punjab to Islamabad, which is already linked to the Karakoram Highway (KKH).

Beijing has also agreed to help Pakistan upgrade and widen the KKH on the Pakistani side to make it an all-weather highway capable of easily handing heavy truck traffic. The two countries have also signed a memorandum of understanding under which China would build a 90 kilometers highway-link connecting the Chinese side of the KKH to the Russian-built highway network that already connects all the five Central Asian Republics of the former Soviet Union.

Once all the elements of this regional highway network are in place, there will be a direct overland trade route linking the new port at Gwadar to western China and the landlocked Central Asian Republics.

Pakistan stands to reap enormous economic benefits from this overland trade route. All the export and import trade of western China and the five Central Asian states could then flow through Gwadar, enabling Pakistan to earn millions of dollars a year in port and bunkering charges, stevedoring and cargo-handling fees, and other imposts.

Pakistan's road transport industry would also earn millions of dollars a year in freight charges for carrying import cargoes from Gwadar to the Central Asian Republics and western China and export goods from that region to Gwadar for shipment to international markets.

first person

During the inauguration of a housing finance workshop earlier this month in Karachi, the deputy governor of the State Bank of Pakistan (SBP) emphasised the significance of adequate housing provision for poverty reduction. He highlighted several statistical references to show the below par performance of the country on this count. There cannot be two opinions about the importance of housing in the context of socio-economic development of the masses. For low and lower middle income households, a house is the most important asset usually acquired only once in a lifetime. Also, it overwhelmingly contributes to financial stability and domestic progress of peoples associated with it. But the last decade has witnessed a sharp decline in the capacity of a sizable proportion of people to access even the most basic type of housing for survival. Many factors have contributed to this grave state of affairs.

The foremost issue is the land supply and mechanisms that control it. Historically, land was considered as a communal asset that had to be safeguarded and carefully distributed according to the needs of the people. In other words, distribution of land was a social transaction aimed at satisfying social requirements. Gradually, this equation changed. Due to declining performance in other sectors, such as manufacturing and processing, the power brokers and capitalists focussed on land transactions as an enterprise. This social process, which was governed mainly under welfare considerations, transformed into a financial exchange. New variables of value were attached with this emerging business.

Eventually, new stakeholders also replaced the older ones. For instance, 'need' was a well respected consideration in yesteryears. An ordinary citizen who was in need of land for housing was facilitated by state institutions to appropriate a house. Thereafter only such individuals were entertained who possessed some basic purchasing power, institutional clout or affiliation with the power structure of the state. Land was freely bought and sold irrespective of the 'need' factor. As land is an immovable asset and the risk in the temporal loss of investment is limited, it soon became a roaring business.

The result was obvious -- land transactions soon freed themselves from the confines of legal and regulatory considerations, urban and rural planning pre-requisites, and the criterion of social justice. They were governed only by the market economy principles and procedures. The weaker but needy groups in the society, who required housing for primary social sustenance, were elbowed out. This saga is continuing with expanded intensity.

As a sector, housing has to be governed by properly formulated policies. In usual routine, a policy is based on the consensus objectives and working strategies based on tangible options. Sadly, housing policies have been formed to satisfy the ritualistic needs of the politicians and bureaucratic cadres. These documents are also cobbled together to vie for donor funding. The policies also do not provide answers to many chronic issues. For instance, Pakistan is facing social, political and economic dislocation of population at a massive scale. Recently, natural disasters have also contributed to this critical mass to a sizable extent.

With the exception of housing works undertaken in some earthquake-hit areas, no strategy worth the name has been worked out to address the plight of millions of affected people. Demographic changes in the society also demand a befitting response for housing provision. Natural growth and a sizable young population have a direct bearing on the cumulative need of housing. Changing family dynamics in the form of rising nuclear families also enhance the housing requirements. This factor may be taken up seriously because unavailability of proper housing often leads to psychological disorders in the affected people.

As per applicable conditions, there is a moratorium on the access of credit for purchase of land. This is done to curb the widespread speculation, especially by the high-profile credit worthy clientele. However, it has also adversely affected the possibility of lower income groups to obtain housing finance for any available options. In the present dispensation, the cost of land is so high that a significant section of population cannot afford it. There are many innovative approaches demonstrated at the pilot scale where poor have been facilitated to acquire land / housing in an acceptable format. For low-income households with some basic wage earning capabilities, the concept of incremental housing development has proved to be most appropriate.

This approach was pioneered by Tasneem Ahmed Siddiqui -- an eminent civil servant -- who piloted it in Hyderabad, Gharo, Karachi and many other locations. The main ingredients of this approach include housing access to the needy groups, complete removal of bureaucratic hurdles in the provision of land for housing, reduction of cost by lowering developmental standards, gradual provision of infrastructure and continuous support to communities through partnerships with other organisations. This housing model, which became an internationally acclaimed success story, was also included in the National Housing Policy of 1994.

Saiban -- a non-governmental organisation (NGO) working on shelter-related issues -- has been actively promoting the concept and its application in different parts of Pakistan. The effort and initiative of the state, which are needed to scale up this useful approach, is conspicuous by its absence ever since. It must be noticed that the approach was successful in eliminating speculation from housing provision, which was the root cause of failure of almost all housing schemes launched by the successive governments. It would be sad if the government chooses to ignore this useful option, which has the potential to benefit Pakistan's urban poor in a big way.

It may be noted that the lower middle and middle income groups also face many handicaps in their pursuits of housing acquisition. Absence of reliable information mechanisms about the private sector, very limited availability of rental housing, cumbersome documentation procedures for formal credit, limited availability of technical advice and diminishing locational choices are a few major issues in this regard. In this backdrop, the facilitation of housing to the needy middle income households needs a serious consideration and the government must take corresponding measures on war footing.

Spiralling speculation on housing must be controlled through taxation measures. The ingress of black money, both in the construction of and investment in privately-built housing schemes, should be checked. Fresh scales of property taxation must be put in place to stall the tendency of trading in land and housing beyond logical limits. When opportunities of investments in other sectors will be opened up, the speculative pressures on housing shall be automatically controlled. Similarly, creative strategies for housing finance must be worked out.

The present schemes are too cumbersome, leading to ineffective access by the potential target groups. With the banks filled with ample liquidity, different types of options can be experimented. For the formal sector, employer-guaranteed credit packages may serve as an appropriate measure for encouraging housing finance institutions to play a more active role. This is also in line with the recommendation of the SBP, which advised commercial banks some months ago to play an active role in housing finance. It must be realised that after food and clothing, housing is the most important human need. Any hindrance in its access can lead to social unrest and upheavals. It we want Pakistan to become a country of content people, appropriate emphasis must be laid on accelerating housing provision for all those who do not have access to it.

Pakistan can substantially curtail its oil import bill, turn the wheel of economy, create thousands of new jobs -- and can in the process also alleviate poverty to some extent -- if it opts for the commercial exploitation and industrial use of its vast coal reserves.

Pakistan's 'lignite' coal reserves, exceeding 184,656 million tonnes, are many times more than the total reserves of oil and natural gas put together. Despite being one of the biggest sources of fuel reserves, the indigenous coal largely remains untapped and unutilised for reasons best known to the authorities. However, former Sindh chief minister Dr Arbab Ghulam Rahim held the vested interests responsible for non-use of coal. Addressing in Karachi, on October 30, he pleaded for an upfront tariff reasonable enough to attract investment in coal-based energy projects, shunning the negative approach where the quarters concerned were "prepared to offer over 13 cents on furnace oil and 10 to 12 cents for wind and sugar mills, but not willing to accept 7.0 to 9.5 cents for coal."

Pakistan's biggest coalfield lies in Thar in Sindh, where the reserves are estimated to be over 175,506 million tonnes. Seven other coal fields in Sindh have 8,617 million tonnes of coal reserves. These include Lakhra, Sonda-Thatta, Jherruck, Oagar, Indus East, Meting Jhimper and Badin with reserves of 1,328 million tonnes, 3,700 million tonnes, 1,323 million tonnes, 312 million tonnes, 1,777 million tonnes, 161 million tonnes and 16 million tonnes, respectively.

Other major coalfields in the country contain reserves of more than 533 million tonnes. These include Khost-Sharig-Harnai, Sor-Range-Degari, Mach-Abagum, Duki and Pir Ismail Ziarat in Balochistan with reserves of 76 million tonnes, 34 million tonnes, 23 million tonnes and 12 million tonnes respectively; Salt Range and Makerwal-Gullakhel in Punjab with reserves of 234 million tonnes and 22 million tonnes respectively; and Hangu in the NWFP with reserves of 81 million tonnes. In addition to these major fields, there exist minor coal deposits at Badiuzai, Bahol, Bala Chaka, Bhalgor, Johan, Kachh, and Margot in Balochistan; Cherat in the NWFP; Choi in Punjab; and Khilla (near Muzaffarabad) and Kotli in Azad Jammu and Kashmir (AJK).

In 2000, the government constituted a task force to develop the coal industry in Sindh, where bulk of the country's coal reserves exist. Headed by the then chief executive General (r) Pervez Musharraf, the members of the task force included the governor of Sindh, federal minister for Industries and Production, and representatives from the Ministry of Finance, Board of Investment and Water and Power Development Authority (WAPDA).

Earlier, the same year, the then federal minister for Petroleum and Natural Resources Usman Aminuddin announced that coal fired electricity generating plants of 3,000 megawatts will be installed in Thar over the next eight years, while 240 megawatts of electricity will be generated from coal reserves in Sonda and Jherruck. After 10 years, he said, the government planned to meet 20 per cent of its total demand for energy through coal.

The optimism expressed by the minister in 2000 seems to have been based on the interest shown by a couple of foreign companies, including two from China and one from the United States, in setting up coal based thermal power stations in the country. However, for one reason or the other, those companies lost interest with the result that no tangible progress seems to have been made in that direction so far.

Meanwhile, to promote investment in Thar coal, Pakistan has invested over three billion rupees on development projects in the area. Today, even the remotest corner in the Thar district -- Nagar Parkar -- is linked to Karachi; and more than 29 reverse osmosis units are likely to become functional in the area in the near future, providing pure water both for domestic and industrial use. In addition to power generation and use in process industries, like cement and sugar production, coal can also replace kerosene oil and firewood as domestic fuel and thus save the precious forest wealth from depletion.

China meets 80 per cent of its energy needs from coal, the US 60 per cent, India 40 per cent, while globally 38 per cent power is generated through coal. However, Pakistan is currently producing hardly five per cent of power through coal. Taking the year 2000 as base, the global energy demand is expected to increase by 50 per cent by 2020 and a large portion of this, about 50-60 per cent in Asia, according to experts, will be met from coal. In fact, new technologies are now making coal more attractive and it is no longer considered to be a dirty fuel.

Further, oil and gas reserves available in Pakistan are expected to last for only 8-9 years and 20 years respectively, whereas the coal reserves are expected to last for over 100 years. The estimated value of Pakistan's coal reserves is about $ 5,540 billion.

The introduction of railways in the Indian subcontinent created the demand for indigenous coal. One of the first efforts for obtaining the local coal was made by the colonial government, when it took up coal mining operations in the Salt Range in Punjab. By the end of the nineteenth century, several coal deposits were identified, both in Punjab and Balochistan. However, mining operations here remained limited and the total coal production in Pakistan was less than 200,000 tonnes in 1947-48.

In spite of large-scale industrialisation during 1947-1960, the annual coal production in Pakistan remained limited to 400,000 tonnes up to 1960-61. At that juncture, the authorities felt that the country would need 1.5 million tonnes of coal annually by 1965. For achieving this target, the government initiated necessary measures, granting liberal tax concessions and incentives for importing mining machinery and trucks. The private sector took advantage of those concessions and production by it alone increased to 1.5 million tonnes of coal during the year 1965-66 against a target of 0.40 million tonnes. However, the public sector failed to achieve its targets.

In later years, the successive governments neglected coal mining industry because only the brick kilns were using the indigenous coal as far as its industrial use was concerned. However, in view of the uncertainty surrounding the prices of petroleum products and the tremendous amount of foreign exchange involved in the import of oil, the present government decided to exploit the indigenous coal for power generation as well as for use in process industries and gasification, including community-based small gasification plants.

Being a much cheaper source of energy than electricity and fire wood, commercial use of coal offers tremendous potential for accelerating economic growth by creating thousands of new jobs and also making Pakistani products more competitive, thereby helping in giving a boost to the country's exports. In view of the uncertainty surrounding the prices of petroleum products and the tremendous amount of foreign exchange involved in their import.

(The writer is an

Islamabad-based freelance columnist.

E-mail: alauddinmasood@gmail.com)

Coal provides for about 25 per cent of global primary energy needs and generates almost 40 per cent of global electricity. On the other hand, in Pakistan -- despite vast reserves of this natural resource -- coal makes up merely one per cent of the total electric power generation. Coal is primarily classified into four major categories or 'ranks': 'lignite', 'sub-bituminous', 'bituminous' and 'anthracite'. The most valuable content of coal is carbon, a combustible material (that can be burned to provide heat or power). Other factors like the content of moisture, ash and sulfur also play an important role in determining the quality of a particular coal.

The discovery of coal in Balochistan during the late eighteenth century led to its commercial use -- mainly reserved for railways during the British era. Till the mid-1960s, mainly coal was used to cater to the needs of railways and power plants, besides in the production of cement and fertilisers. With the discovery of gas at Sui in Balochistan and the accessibility of furnace oil around this period, the demand for coal reduced substantially in the following years. As a result of lower demand, the developments in coal technology at the international level were not incorporated in the local coal sector for the next two decades, resulting in stagnation of this natural resource's production. Since the 1980s, however, increase in construction activities has provided a much-needed boost to the local coal sector and the production of coal has increased to some extent.

At present, Pakistan's total coal reserves -- including the recently discovered low-sulfur coal deposits at Thar in Sindh -- are estimated to be over 200 billion tonnes. Of these, only 3.3 billion tonnes are currently being used; while about 11 billion tonnes are 'indicated' reserves, mainly in Sindh. Pakistan's coal varies in quality, and mainly falls in 'lignite' and 'sub-bituminous' categories. Some coal fields in Sindh, such as Lakhra and Sonda, have relatively higher content of moisture, sulfur and ash; while the coal reserves at Thar are rated superior on account of their lower sulfur content and better combustibility.

The potential of coal mining, despite being one of the oldest industries in the country, has not been exploited fully in Pakistan. Though coal mining is undertaken in all the four provinces, each is faced with problems of its own in this regard -- varying from higher cost of production to lack of infrastructure. Only improving the related infrastructure, which entails huge investment, could reduce the cost of mining. The attempts to attract foreign investment for coal exploration, especially in Sindh and Balochistan, have also failed largely on this account.

The Sindh Arid Zone Development Authority discovered the coal reserves at Thar back in the 1980s. In 1991, the Geological Survey of Pakistan (GSP) and the United States Agency for International Development (USAID) confirmed these vast reserves. The coal reserves discovered at Thar are spread over an area 9,000 square kilometers, out of which an area of 356 square kilometers has already been studied in detail by the GSP. These reserves are estimated to be about 185 billion tonnes, which are sufficient to meet the country's energy requirements for centuries. Also, because of their high quality, these coal reserves can be used very effectively for power generation and industrial purposes. Accordingly, different projects are being considered to develop this 'black gold'.

The exploration of vast coal reserves at Thar will enhance the country's existing energy production as well as boost its overall economy. The coal to be extracted from these reserves is distinctive, as it not only has higher calorific value but also is environmental-friendly with low sulfur content. The development of basic infrastructure required for coal extraction at Thar will take three to four years, after which the natural resource could be made available for use. The most appropriate consumption of such quality coal will be to use it as an alternative to hydro projects aimed at power generation.

There are plans to develop the coal reserves at Thar for power generation on priority basis to overcome the existing energy crisis in the country. "By using only two per cent of the existing coal reserves, we could generate around 20,000 megawatts for almost 40 years," according to deputy chairman of the Planning Commission of Pakistan. These estimates have also been confirmed by the feasibility studies conducted by Chinese and Russian experts. China has also shown interest in helping Pakistan in developing these vast coal reserves.

Earlier this year, the government approved a feasibility study for coal mining at Thar and the contract to conduct it was awarded to M/S Rheinbraum Engineering (RE) of Germany. In addition to the feasibility study, M/S Shenhua Group of China has also conducted detailed geological and hydro-geological investigations of the area to prepare the feasibility for setting up of a 2x300 megawatts coal-fired, mine-mouth power plant.

Coal exploration can also provide a boost to the local production of cement by helping in reducing the basic costs. However, considering the present state of coal mining in the country and the conversion requirements of the cement industry -- estimated to be around three to five million tonnes of coal -- this may not be possible in the near future. Also, the availability of natural gas has resulted in reduced demand of coal for the production of energy -- from 60 per cent at the time of the country's independence to the current six per cent.

Brick kilns currently use more than 80 per cent of the locally produced coal, while most of the remaining is being used in the cement industry. Only one per cent is used by the coal-based power stations. Though the cement industry has started shifting from natural gas and furnace oil to low-priced coal, this has so far had little impact on the local coal production -- only high-quality imported coal can be used in the cement industry; at the maximum, locally produced coal is blended in it to reduce the cost of production.

The switch over of process industries to coal is dependent largely on the uninterrupted supply of processed quality coal, while the local miners are not willing to increase the production unless there is an increased demand. According to some experts, the demand for coal can be enhanced by making its use obligatory in the manufacturing of cement and for power generation plants. In this regard, the government should also assist both coal miners and users, by providing them subsidies and waiving off duty on the import of required machinery.

Besides this, coal can also be used as an important raw material in the production of a number of chemicals. For instance, refined coal tar can be used in the manufacturing of chemicals like pitch, creosote oil, naphthalene, phenol, pyridine, benzene, toluene, xylene, ethylene, propylene, polyesters, plastics, synthesis gas, acetic acid, acetic anhydride, etc. Moreover, by using coal as fuel in the sugar industry, the country could save about nine million tonnes bagasse that can then be used in the production of medium-density fiberboard, which is a suitable replacement of furniture-making wood and would help save the fast-depleting forests.

The usage of coal can be increased by improving the availability of and access to this natural reserve. For that, there is a need to reduce the mining cost by upgrading the technology being currently used for this purpose. The use of coal may be made obligatory for various process industries, to enhance its demand in the local market. There is also a need to invest in the infrastructure for coal transportation; for instance, by enhancing the Pakistan Railways' accessibility to the mining areas.

Cooped up in their houses and deprived of their basic rights, women of Malakand division in the NWFP are barred from using their constitutional right to vote for decades. No serious steps have been taken at any level for their participation in the electoral process, despite the government's tall claims in relation to women's empowerment in Pakistan. Women constitute almost half of the population in seven districts of the Malakand division -- Upper Dir, Lower Dir, Chitral, Buner, Swat, Shangla and Malakand -- but had been kept out of the voting process in most of these areas for long.

Past record suggests that only Chitral has been the exception, as women here cast their votes in all elections without any fear. Women are in particular not allowed to exercise their right to vote in the twin districts of Dir and in majority of constituencies of Buner, Swat, Shangla and Malakand districts. The situation in Upper Dir and Lower Dir districts has been the worst, as women voters have never been allowed to participate in the electoral process here. Though desirous of taking part in elections, women were not allowed to cast even a single vote in the general elections held from 1985 to 2002.

The twenty-first century also did not bring any positive change vis-a-vis women's rights, as evident from the 2002 general elections, and local bodies' elections of 2001 and 2005. None of the 69,102 registered women voters was allowed to cast her vote in these elections. The most regrettable thing is that all political parties enter into agreements, either written or unwritten, for barring women from casting their votes in elections. In these agreements, all political parties, both religious and liberal, 'pledge' to keep the women voters out of the electoral process and to bar them from contesting in elections.

In the 1977 elections, the women of Dir did cast their votes but the turnout was low. However, in that election too, women polling stations were dismantled with a view to stop them from casting their votes, resulting in clashes among rival political parties. Since then, women had never been to the polling stations owning to fear of the so-called religious parties, who had been issuing threats against the same. The disenfranchisement of women of Dir continues unnoticed. Interestingly, religious parties do not object to women voting in other parts of the country but in Dir it is termed against Islam. The increase of 19,953 registered women voters in the new electoral rolls seems to be a futile exercise, as there is no hope of women going to polling stations in the forthcoming general elections, due to be held on January 8 next year.

"It is the matter of excluding 50 per cent population from the electoral process, which is a great deficit for democracy. Democratic governments are elected by people, including women, and not only by men," remarks Barrister Muhammad Islam Khan, a human rights lawyer. He says keeping women out of the electoral process has no place in today's world. He views that since the Muttahida Majlis-e-Amal (MMA) nominated women on reserved seats in the outgoing National Assembly, the party must not oppose women voting.

"Political parties should play a positive role in giving to women their constitutional right to vote, otherwise it will only weaken the already fragile democracy in Pakistan. Women feel frustrated and demoralised when deprived of voting, thinking they cannot contribute to the development of the country," Hidayatullah, a resident of Dir, comments. Shoaib, a member of a religious party, says when women teachers could be sent to far-off schools, there was no harm in bringing them to cast their votes. "It will give them strength," he stresses.

"I have been in Lower Dir district for the last one decade -- and have conducted general, local bodies' and by-elections -- but women were never allowed to cast their votes," a government official says on condition of anonymity. In 2005 local bodies' elections, only one woman voter could cast her vote in Mayar area of the district out of thousands of registered women voters. During these elections, all political parties entered into an agreement, barring women from filing nomination papers for contesting elections.

Also, unelected men in the Upper Dir district represent 'elected' women councillors. The husbands, fathers, brothers and sons of 'elected' women councillors still brazenly enter the councils, sign the rolls and take part in discussions on their behalf. In the Shangla district, women voting takes place at only five polling stations of Chagam-Poran, Aluch, Damorai, Dandai and Meera. The turnout, however, remains dismally low. In Swat, women votes are polled only in Mingora (PF-80), Matta (PF-84) and a couple of polling station in Khwazakhela (PF-86). However, women remain out of the voting process in Udigram (PF-81), Barikot (PF-82), Kabal (PF-83) and Bahrain-Kalam (PF-85).

"After the terror unleashed by the maulvis in Swat, we fear that women who previously polled their votes will not participate in polling in the forthcoming general elections even in Mingora," a candidate for NA-29 Swat apprehends. He says his party wants to bring more women to polling stations this time, but it was pushed further backwards in these efforts. Similarly, only one per cent of the registered women voters (1,280 out of the total 100,317) could cast their votes in the Buner district in 2001 local bodies' elections.

An official of the Election Commission of Pakistan (ECP) says on condition of anonymity that they cannot drag women out of their houses to participate in voting. "It is the job of political parties to bring them out," he contends, adding the ECP's role is to facilitate the elections. Analysts hold political parties, the ECP, civil society organisations working for women's rights and men responsible for this situation. Supposed to bring out maximum voters, political parties rather encourage the initiatives banning women voting and even enter into agreements in this regard. In the Swabi district, for instance, political parties even signed a written agreement in the 2001 local bodies' elections, barring women from casting their votes.

"Political parties, both the so-called moderate and religious ones, are responsible for keeping women out of the electoral process," Rakhshanda Naz of Aurat Foundation alleges. She maintains that when political interests of the religious parties suited women voting, they allowed it. Naz was referring to the by-elections in the Malakand district in 2004, when women were allowed to cast their votes. "We believe that the elections cannot be free and fair under emergency. As a protest, our organisation will not carry out any campaign for mobilising women to participate in the elections," she informs.

Markets work efficiently when they are competitive, that is when no firm or a group of firms is strong enough to affect market price, and there are no barriers to entry and exit. Competition not only makes for lower prices, but also helps improve product quality. The existence of a large number of firms also gives greater choice to the consumer

In practice, however, markets are generally characterised by imperfect competition -- monopolies or oligopolies -- where firms can manipulate price by reducing output. This combination of higher price and lower output breeds inefficiency and harms consumer interests. Businesses also collude to fix prices, divide markets, create shortages or supply sub-standard goods. There is thus the need for a powerful competition regime to curb the powers of monopolies and collusive behaviour of oligopolies, and promote competition.

Does Pakistan have an effective competition regime? The country had a competition law entitled Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance 1970 (MRTPO) as amended (the last amendment being in 2002) and a body to administer that law called the Monopoly Control Authority (MCA). However, cartels have ruled the roost in several industries, most notably the sugar, ghee and cement industries.

These cartels create artificial shortages in the market to raise prices and have thereby contributed to the current weave of inflation. In its Annual Report for the financial year 2005-06, the State Bank of Pakistan (SBP) has criticised the role played by these cartels. For instance, referring to the sugar crisis, the SBP observed that sugar mills reduced supply to maintain higher than equilibrium (market) price. There was thus a strong demand to upgrade the competition regime. This has been done through the Competition Ordinance 2007, promulgated on October 2 this year.

The Ordinance, under Section 1, applies to all undertakings, public as well as private, and matters that distort competition. The following practices / agreements are prohibited by the new law: Abuse of Dominant Position (Section 3); deceptive marketing practices (Section 10); and mergers which substantially lessen competition by creating or strengthening a dominant position in the relevant market (Section 11). Undertakings intending to merge will have to seek a prior approval. However, mergers which substantially lessen competition may be allowed if it is proved that this will contribute substantially to the efficiency of the production or distribution of goods or services; such efficiency could not have been achieved by a less restrictive means of competition; and the benefits of efficiency outweigh its adverse effects on competition. Mergers once approved may also be undone.

Abuse of dominant position is defined as practices that prevent, restrict, reduce or distort competition in the relevant market. That may take the form of an explicit agreement or a tacit decision. Section 4 provides an illustrative list of such agreements, which include fixing price or output, dividing markets and collusive tendering or bidding. However, under Section 5 read with Section 9, an exemption may be granted to a particular practice or agreement if it substantially contributes to improving production or distribution of goods or services, promoting technical and economic progress while allowing consumers a fair share of the resulting benefit or the benefits of that arrangement outweigh its adverse effects on competition.

The Ordinance sets up an independent, quasi-judicial body: the Competition Commission of Pakistan. The Commission shall have its own fund to be called 'CCP Fund' to meet its expenditure. The CCP has powers of a civil court in enforcing the attendance of any person or production of any document, and the power to enter or search any premises for the enforcement of the Ordinance.

The Commission is empowered to initiate proceedings, make orders in case of contravention, and conduct inquiries into the affairs of any undertaking, and take all other actions necessary to carry out the purpose of the Ordinance. This power is broad enough to curb all-anti-competitive practices. The Commission is also empowered to award penalties up to Rs 50 million for contravention of any of its orders and up to Rs 1 million for non-compliance. The failure to comply with any order of the Commission is a criminal offence punishable with up to one-year imprisonment or fine up to Rs 25 million.

Any order made by a member or officer of the Commission can be challenged in the Appellate Bench of the Commission, comprising no less than two of its members. The Appellate Bench order can be challenged in the Supreme Court. Thus the provincial high courts have no jurisdiction over competition cases, as was the case under the old law. Presumably this has been done to expedite disposal of cases.

The new competition ordinance represents a marked improvement over the previous one. To begin with, under the old law, monopoly power was justified if, inter alia, it contributed to growth of exports. This provision gave leeway to monopolists, because it was not difficult for a monopolist firm to show that its monopoly power was contributing to increase in exports. The new law does not have such provisions. Secondly, the old law did not provide for mandatory pre-merger notification. The MCA had only the power to undo mergers and acquisitions -- a power which can only be exercised after mergers have taken place. Hence, it was not possible to prevent such mergers as might have the potential of distorting competition.

The new law however provides for mandatory pre-merger notification so that potentially anti-competition mergers cannot take place, thus nipping the evil in the bud. Thirdly, contravention of the old law was only a civil offence punishable with fine up to Rs 1,00,000. This penalty was ridiculous and failed to constitute a strong deterrence, because it was only the big, powerful firms that contravened the provisions of the law. Under the new law, not only has the penalty been increased to Rs 50 million, but the violation of the law has also been made a criminal offence punishable with imprisonment. These provisions make the Competition Commission far more powerful than the erstwhile MCA.

The Competition Ordinance gives a lot of discretion to the Competition Commission. For instance, as mentioned above, mergers which substantially lessen competition or agreements among firms which prevent or reduce competition may be allowed in certain cases. How independently this discretion is exercised will substantially influence the effectiveness of the new competition regime.

According to an official press release, the Federal Board of Revenue (FBR), under the recently approved National Tax Audit Plan (NTAP), has decided to focus "on development of quality measurement standards in Pakistan." The NTAP is an eyewash; mere rhetoric rather than any concrete strategy to combat the issues of tax non-compliance and fraud. It is a matter of record that the FBR (which till recently used to Central Board of Revenue or CBR) during the last many years has miserably failed to prioritise its audit resources to focus on key areas of non-compliance, tax fraud, high-risk, high-income taxpayers and unreported income.

On the contrary, its audit selection criterion is aimed at harassing the existing taxpayers, without having any tenable evidence of tax fraud, under-reporting or non-compliance against them. Their only fault is that they have claimed refunds, which the FBR does not like to pay as it will have a negative impact on its so-called 'record' revenue collection.

According to the FBR press release, the tax authorities in the coming days "along with the gradual resumption of taxpayers' audit countrywide' would develop 'a process to ensure uniformity in interpretation and application of the law." The FBR has reportedly planned to "allocate experienced audit staff to carry out a pre-determined set of quality checks by random sampling of completed cases." According to the FBR, the following 'auditing standards' for checking the quality of audit in the field formations would be applied:

Pre-audit analysis and scoping: The procedure would evaluate the extent to which an audit is warranted. The inspection of returns vis-a-vis audit conducted and adequacy of record would be analysed.

Probe of unreported income: The system would examine the auditors' observations on the questions pertaining to taxpayers' standard of living, tax return information, as well as the information contained in record.

Depth of audit and records audit: The depth of audit would be determined through inspection, inquiry, observation and analysis of the appropriate documents, ledgers, journals, oral testimony, third-party records, etc to ensure full development of relevant facts for verification of data.

Audit findings are supported by law: It would be seen whether the findings of the auditors are legally covered. The adequate consideration of applicable law, regulations and court cases to support technical / factual conclusions would be examined.

Penalties properly considered: One of the auditing standards is to judge whether the auditor has proposed application of penalties on the taxpayers.

Documentation-work papers support conclusions: Another auditing criterion is to review the documented checks applied by the auditors during the entire process. The work-papers provide the principal support for the officer / auditor's report and document the procedures applied, test performed, information obtained, and the conclusions reached in the audit.

Report writing procedure: This would judge whether the auditor has followed the report writing procedure and all necessary information is contained in the report for clear understanding of the adjustments made in the audit report. The reasons for making these adjustments should also be specified.

Audit time span is appropriate: The auditing standard would also give due importance to the time period of audit. It would disclose the time used on a specific case and reasons for any lapses. The scope / complexity of audit, condition of books and records, and taxpayer / representative cooperation would be documented. Moreover, the efficient utilisation of automation will also be used.

Case administration: The criterion would analyse whether the administrative matters pertaining to audit cycle time, statute controls, case assembly and closing procedures were followed or not.

A cursory look at the 'audit standards' adopted by the FBR shows that these fall short of required standards and needs of a productive and useful tax audit in Pakistan. The purpose behind any tax audit should be to check potential cases of non-compliance or tax fraud rather than threatening the existing taxpayers or to penalise the people claiming refunds. The FBR has yet not come out of conventional methodology of ignoring or protecting the tax evaders and punishing those who file returns, though they may not be reporting their correct incomes. The priority should have been to first nab the non-filers and then go after those who under-report their incomes. This requires establishment of 'Tax Intelligence System', but the FBR has failed to even lay down its foundation, though enormous money has been borrowed from international donors to reform the tax system.

The FBR needs to adopt a rational and holistic strategy representing a new direction for its audit / compliance efforts. It must conduct research and do planning to work out a new approach that has focus on high-risk areas of non-compliance. The audit exercises must aim at new and enhanced efforts on several priority areas, including: high-risk, high-income taxpayers, abusive schemes, high-income non-filers, unreported income and a National Research Programme.

Increased resources for audits -- also known as examinations -- should be devoted to these areas. The new strategy must reflect the innovative way of doing business at the FBR. Plans such as the National Research Programme need to be adopted to reflect innovative approaches to tackle long-standing tax problems. The FBR's reform agenda must allow key departments to work together in ways they did not previously. For example, the new audit initiative must include similar emphasis for the FBR's collection area. And new levels of cooperation and coordination should be under way on initiatives that involve both civil actions and criminal investigation.

(The writers are tax advisers.

Email: www.huzaimaikram.com)