Federal development priorities

The government needs to concentrate on infrastructure development in energy, water and communication sectors.

After devolving 18 divisions — dealing largely with social and production sectors — to the provinces, the federal government is expected mainly to focus on physical infrastructure. Its Public Sector Development Programme (PSDP) should concentrate on upgrading the rapidly deteriorating assets in energy, water and national transport. One of these sectors, energy, is experiencing intensified public protest. Sadly, the PSDP 2011-12 is prioritised differently. Of the total allocated amount of Rs300 billion, Rs36.8 billion are earmarked to keep the aid-funded projects running. This is dictated by the desperate need for foreign exchange, not necessarily by any sense of priority. Another Rs10 billion go to the Earthquake Rehabilitation and Reconstruction Authority. No special mention is made of flood projects. Discretionary political programmes, Peoples Works Programme I and II, claim Rs33 billion, which is 45 per cent higher than the revised allocation last year. Out of the 33-odd divisions still left with the federal government, only four handle infrastructure. At a time of grave infrastructure shortages, the practice of doling out development money to all divisions continues.

Infrastructure gets 57 per cent, not quite commensurate with the responsibilities of the federal government after the Eighteenth Amendment. Within infrastructure, the major share of Rs62.6 billion is reserved for transport and communications. Power gets Rs54.4 billion and water Rs38.5 billion. The National Highway Authority is the main player in the transport and communications sector. It gets Rs39.9 billion out of a total sectoral allocation of Rs62.6 billion, 89 per cent of which is for ongoing projects. The remaining allocation includes Rs15 billion for railways, Rs3.6 billion for provincial roads and Rs1.5 billion for defence production division.

The emphasis on the water sector reflects the structure of political power. Priority is given to irrigation, drainage and enhancement of storage capacity. The raising of Mangla Dam, the largest water sector project, has been given the largest allocation of Rs6 billion. The Right Bank Outfall Drain from Sehwan to Sea (RBOD-II) gets the next big allocation of Rs2.6 billion. With Chinese support, three ongoing and three new small dams are also part of the programme.

The Annual Plan 2011-12 recognises that substantial resource injection is required in the energy sector to achieve growth targets of agriculture, manufacturing and services. The budget allocates Rs32.5 to Wapda and Rs20.2 billion for nuclear power projects under the head of power. Wapda and Pepco must finance the balance of the total programme cost of Rs137 billion themselves — a big ask by any reckoning. Being mostly semi-public or private, less than a billion is allocated for petroleum and natural resources. The bulk of the allocation is for long-term projects. Immediate relief is not in sight. The promise of providing 1655 MW last year and another 2110 MW by December 2011 has to be taken with a pinch of salt.

It is claimed that the PSDP has been formulated to implement the Planning Commission’s New Economic Growth Framework (NEGF) that seeks to push reform rather than projects. The energy sector, where reform could push conservation and efficient utilisation of capacity for quick additions to supply, fails the test miserably. Short of the NEGF rhetoric, the Annual Plan 2011-12 is no different from what these plans have always been.

Published in The Express Tribune, July 15^th, 2011.