Economist Khaqan Najeeb's analysis of another "crisis" in Pakistan
Economist Khaqan Najeeb's analysis of another "crisis" in Pakistan
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00:00Mr. Khakhan, let's continue with this and then we'll talk more about it.
00:03You were saying that all this has happened because of the need for surgery.
00:07But what will happen to the public until surgery?
00:10First of all, the seriousness of this is that we can't fix it by reforming it.
00:14We can't fix it by restructuring it either.
00:16A complete reorganization of this needs to be done.
00:19The state is currently making electricity.
00:21The state distributes electricity and also does wheeling.
00:26It also determines the price and also determines when and who will make how much electricity.
00:31Now you tell me that after such a big role of the state, we are causing a loss of Rs. 600 every year.
00:40So, first of all, make a map of a complete reorganization of the boats, what is that map?
00:45To say that we will make boards.
00:47I worked in the government for the first time in 2008.
00:50So, I said that we should make boards, we should bring chief executives.
00:54Believe me, it is very difficult to do this.
00:56Even now, there is a state of Lahore High Court that has made boards.
01:00The purpose of saying this is that this is an old model.
01:04Now go to a new model.
01:05The new model is the following.
01:07Light touch state's role, light touch regulation.
01:11First of all, NEPRA and OGRA have made one regulator.
01:14I keep saying that there are four sources of energy in Pakistan.
01:18Petroleum, gas, water and electricity.
01:20Consider these four as one source of energy.
01:24Make Pakistan as the number one energy regulator.
01:28For policy, make a complete organization called Energy Ministry.
01:31And give the operations to the private sector.
01:34Now you will say that I have put forward very difficult things.
01:37Believe me, if there was any other solution, then any government would have done it in the last 10 years.
01:45It would have done it in the last 20 years.
01:47Here, let me be honest and say that multilaterals have a very big hand in this.
01:51Sir, but explain one thing to me.
01:53If you ask as a common man, is electricity becoming expensive because of its production cost?
02:01Or different means are used to generate electricity.
02:04We used to say that we should have more dams.
02:08Or like Kalabagh or Bhasha Dam, if they were built, electricity would have come to 3,600 and 4,500 megawatts.
02:15And if it was cheaper, then people would get it cheaper.
02:18Is it related to this or is it more related to the IMF?
02:24If we talk about electricity tariff, it is becoming more expensive because of that.
02:27Ashfaq, let's be clear.
02:29You know, this whole thing that we are stuck in is that the IMF says to increase electricity.
02:36On the 1st of July, your regulator, whose name you have named NEBRA,
02:41you have made it, it has generated electricity for Rs. 5, i.e. Rs. 35 on average.
02:47The authorities themselves said this.
02:49Now tell me, where does the IMF come from?
02:51Either you have to pass it on or you have to give a subsidy.
02:55This decision is also with the authorities.
02:57But the authorities, of course, are not in the fiscal space, so they will pass it on.
03:00Now, if you don't do all the work that you have put forward,
03:04if electricity is home-grown, what does that mean?
03:07Indigenous, i.e. water, solar and wind are the indigenous resources of Pakistan.
03:13If electricity is made from this, then LNG will not be imported, coal will not be imported.
03:18If this system is not imported, then obviously the cost will come down.
03:23But secondly, if you are causing so much loss, the inefficiencies will be so big,
03:30no market will be competitive in Pakistan.
03:33I talk about electricity very passionately because it is hampering our growth,
03:39plus the domestic sector is in trouble.
03:42Okay.
03:42Doctor, please stay with us because I want to know,
03:46you also said on one occasion that there is no other option.
03:50In our region, the highest electricity fee is being taken from us.
03:54I am talking about Pakistan.
03:56What is happening in other countries?
03:57If you stay with us, we will show our viewers and you
04:01how much the other countries in our region are paying in units.
04:04Okay, so this is in front of us.
04:06Doctor, you must have seen,
04:08why are we giving so much electricity to the expensive people and what is the issue in the rest of the region?
04:13A comparison is that why is it not like this in other countries and why is it like this with us?
04:19Because the system of electricity all over the world has gone to the competitive market.
04:23Pakistan is still a state-run disco, state-run soya company, state-run generation company.
04:30A regulator in which we have never been able to bring regulatory experts who are not even present in Pakistan.
04:38And it has simply become a parking place that, you know, there are people who are generalists there and they come and park.
04:47If you run this system and you are still on the same system that you are not able to understand that these are disco-independent companies,
04:54it means that their board should be of a good private sector, it should be owned by the private sector,
05:01it should be responsible for their losses.
05:04Even if I go to this board on behalf of the government, what happens?
05:08I don't have a penny, so I don't make the effort of reforming.
05:13Okay.
05:14So try to understand this.
05:16The big problem of electricity is that you have a supply of 40,000 to 45,000 megawatts.
05:26In winter, you are asking for 10,000 megawatts and in summer, you are asking for 29,000 megawatts.
05:32You are also giving the capacity of the rest, which is why the price is high.
05:36That capacity is not even being used.
05:38So your tariff reform is to use more electricity.
05:42They are not able to do that either.
05:43They are not able to do that either.
05:44We have to renegotiate the debt with the IPPs that we have taken financing from,
05:49so that again the cost of doing business is reduced.
05:52I would just like to request you to leave this electricity issue.
05:56Talk about the real issues that we have put in front of you in today's AAY program.
06:02The regulatory institutions, the institutions of operations, the institutions of policy-making,
06:07the institutions of the power ministries and other ministries that are working in Delhi.
06:13Are you ready to do this?
06:16And this is not a one-year or two-year job.
06:18This is a 5-10 year perspective.
06:21And who has such a long thought?
06:23This is also a very interesting point.
06:25In such a situation, free units are being given to people.
06:28Is that still going on?
06:29That is still going on, Mr. Shahid Haqqan Najeeb.
06:32If the burden is being placed on the people, then why can't the nobility be made a part of it?
06:38The second thing is that in the immediate, the provincial governments can help in such a way
06:44that wherever there is theft, wherever there is a lot of damage,
06:47the police and administrative efforts can help to increase the recovery.
06:52Yes, yes, a plan for that has also been thought of.
06:54We had read somewhere, in fact we had heard,
06:56that they are planning something like this,
06:58that they will obviously collect and give them a percentage.
07:02One thing was that the strike of the petroleum dealers,
07:05regarding this we were going to discuss with you that there is a strike going on all over the country
07:09and they are saying that if we pay an additional tax of 50,000 for 10,000 litres,
07:14then what will we have left?
07:16Double taxation against the law.
07:18Yes, they are talking about double taxation, that this is against the law.
07:21The salaried class has never thought about it, but they are thinking about it.
07:24So you must have studied this, what is this matter?
07:27Is this really being done to them, or to the petroleum dealers?
07:31Look, when we make a budget, because I am involved in this exercise in Pakistan,
07:35then there are many anomalies, that is, many mistakes are made,
07:37because so many processes are going on in front of us.
07:41If this has happened, I have not read the clause in great detail,
07:45then we form a Tax Anomalies Committee, which was also formed this time.
07:49So why was this matter not decided in the Tax Anomalies Committee?
07:52And if it was not decided in the Tax Anomalies Committee then,
07:54then now form a Tax Anomalies Committee and decide it.
07:58Look, Pakistan cannot tolerate at this time that we strike and run that country,
08:04which we are trying to run by asking money from the IMF at this time.
08:08So, you know, we have to think deeper.
08:11I think the budget that has been made this time,
08:13I still say that there are many things in it,
08:16which can be improved for Pakistan and for the authorities,
08:20but the IMF should also understand that
08:22by imposing such an indirect taxation, the country will not be able to move forward in terms of growth.
08:28Okay, thank you so much.