Pervez Zamurrad Janjua (ed.): Policy Framework for Public Utilities Management: A Case of Pakistan.
Subject: Electric utilities
Author: Mahmood, Zafar
Pub Date: 09/22/2009
Publication: Name: Pakistan Development Review Publisher: Pakistan Institute of Development Economics Audience: Academic Format: Magazine/Journal Subject: Business, international; Social sciences Copyright: COPYRIGHT 2009 Reproduced with permission of the Publications Division, Pakistan Institute of Development Economies, Islamabad, Pakistan. ISSN: 0030-9729
Issue: Date: Autumn, 2009 Source Volume: 48 Source Issue: 3
Topic: Event Code: 200 Management dynamics Computer Subject: Company business management
Product: Product Code: 4910000 Electric Utilities NAICS Code: 2211 Electric Power Generation, Transmission and Distribution SIC Code: 4911 Electric services
Accession Number: 249960127
Full Text: Pervez Zamurrad Janjua (ed.) Policy Framework for Public Utilities Management. A Case of Pakistan. Proceedings of the International Seminar. International Institute of Islamic Economic (International Islamic University, Islamabad), Higher Education Commission (Islamabad), Friedrich Naumann Stiftung fur die Freiheit (Islamabad). 2008. 178 pages. Paperback. Price not given.

Pakistan has a rather long experience of managing public-owned utilities, state-controlled enterprises and nationalised industries. Unsatisfactory performance of these utilities and enterprises has forced the government to adopt a policy of privatisation, denationalisation and divestment. The objective of this policy shift was to make these entities sustainable and efficient, capable of providing quality goods and services and access to all. The policy-makers, while making the paradigm shift, were mindful that given the size of the Pakistani market, monopolies and oligopolies will have to be accommodated. Accordingly, to take care of the distortions, independent regulatory bodies were established to achieve the objectives of the new policy. To-date, there is little understanding of how these regulatory agencies operate, how effective these are, and whether these bodies have met the goals set for them. These are some of the issues addressed by the book under review.

Regulating public sector utilities and privatised firms by establishing different authorities is a formidable task. At the same time, writing on the regulatory bodies is equally challenging in view of the complexity of issues involved and the pace of their change. The papers and proceedings of the Conference on Policy Framework for Public Utilities Management in Pakistan, published in this book, will prove useful in this respect as they examine their policy frameworks. The book also presents the proceedings of a panel discussion on 'How effective are the regulatory bodies in Pakistan'.

The opening address by the editor of this volume, Pervez Zamurrad Janjua, lays down the theoretical underpinnings of the policy framework for the management of public utilities. Next, the inaugural address by Salman Shah, the then Advisor to Prime Minister for Finance, covers the seven point growth strategy of the then government. Dr Shah takes up WAPDA and KESC and deals with the two at length to explain the line-losses being experienced by them and the subsidisation of the power sector by the government. Dr Shah states that, since 1992, the restructuring of the power sector has been underway through measures to end their monopoly. He admits that the government was still struggling to complete the task of fostering a competitive environment in this sector, which was essential to attract investment. He argues that a competitive environment in the sector will make power available to the industries at reasonable rates, and thus enable them to compete in the international market. The address, however, remains short of any strategy to complete the restructuring plan.

A. R. Kemal in his paper gives substantive analysis of the main theme and provides the theoretical background and rationale for regulation as well as a critical account of the existing regulatory bodies in Pakistan. He argues that the regulations are indispensable to avoid market failures and to ensure equity. Dr Kemal lays stress on introducing transparent regulations to enhance competition, boost efficiency, stimulate innovation and improve competitive strength of the firms in the global markets. He also puts forth prerequisites for the success of the regulations in terms of autonomy and transparency.

The next two parts of the book deal with the management of water, power, energy, environment and the mass media. The paper by Izhar ul Haq emphasises the need to manage the water reservoirs in Pakistan. He offers a valuable overview of the reservoirs and suggests various options to construct new dams and reservoirs. The paper does not suggest some policy framework to improve the practices for the management of existing water reservoirs and development of new ones. Amir Malik's paper provides a useful overview of the status of water-conservation in Pakistan. The paper also highlights the role of community institutions in the conservation of water, while making policy recommendations in this respect. Dr Malik lays stress on efficiency, economy and equity in the use of water through cooperative management of watersheds and command areas, conjunctive use of water, transfer of water from rainy season to dry season, sustainable ground water exploitation, and dissemination of information on various aspects of water conservation and its efficient use.

The paper by Saleem Arif quantifies the demand-supply gap for electricity in Pakistan. While analysing the measures adopted so far and their impact, he summarises the main issues being faced by the power sector but does not offer any solutions. Tahir Hijazi's paper deals with solar systems--active as well as passive. The paper is a survey of literature on the subject. Rehana Siddiqui's paper sheds light on the relationships among environment, poverty, population and gender. Based on her empirical findings, she offers solutions to protect, conserve and restore Pakistan's natural environment. The paper concludes with emphasis on the need to strengthen the institutional and regulatory framework. Gul Wahab's paper, the last one in the book, is a well-structured critical analysis of the electronic media and its social consequences for the Pakistani society. The paper offers some solutions to cope with the situation.

The final part of the book covers the views expressed by the three panelists on "how effective are the regulatory bodies in Pakistan?" A. R. Kemal, argues that before privatising any establishment, the decision-makers need to know the kind of environment in which the enterprise would function post-privatisation--competitive or monopolistic. If privatisation introduces greater competition then, cetrius peribus, the efficiency would improve. This situation 'favours de-regulation'. On the other hand, if privatisation would result into monopoly under the private-ownership then the entity must be regulated.. The author believes that a market failure, in the absence of government intervention, makes a private-monopoly worse than a public-monopoly. The author contends that the final outcome of regulation, in either case, would of course depend on whether the regulators are competent and follow a transparent process. He also emphasises that the outcome depends on the method of regulation. In this context, he presents pros and cons of different methods used by the government. Finally, Dr Kemal highlights the problem of governance in regulatory authorities including corruption, lack of merit, lack of transparency and lack of autonomy in making appointments to the public sector.

Faiz Bilquees, discusses mismanagement in the working practices of major regulatory authorities. She argues that most of the problems that are being faced by regulatory bodies have to do with the way they were created. She also points out that while introducing certain policy measures, the stakeholders are rarely consulted by the authorities. Likewise, authorities seldom take to task the public sector entities for their failure to control wastage. Dr Bilquees goes on to even question the very existence of the

plethora of regulatory bodies. In a nutshell, her viewpoint is that the regulatory regime has to be carefully redesigned and more competently implemented.

Shakeel Ahmed, presents a brief history of the Cable Television Network in Pakistan. He concludes that the concerned Authority enjoys the mandate to ensure that broadcasting sector enjoys access to information and that the information is not used by the sector against the State or the masses, and that the sector does not instigate religious factions.

This discourse could have been more useful with some discussion on the Competition Authority and suggestions about a policy framework for regulation which was the main theme of the Conference. Moreover, none of the papers examines the compatibility of the regulatory frameworks used by different authorities with the legal framework of Pakistan. Unless the two are consistent, it would be difficult to imagine the effective functioning of the regulatory bodies. Yet the book contains very useful contributions to a field which has hitherto received scant attention in Pakistan. It can help in designing an appropriate and pragmatic regulatory framework for guiding the management of public utilities and privatised firms.

Zafar Mahmood

Pakistan Institute of Development Economics, Islamabad.
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