Sensible decisions

It is a welcome change to see the administration making development spending decisions with a cogent plan.

It is a welcome change to see the current administration making development spending decisions with what appears to be a cogent plan. The most recent example of this was the approval given by the Executive Committee of the National Economic Council (Ecnec) for seven projects worth over Rs86 billion. The highest economic decision-making body in the government, Ecnec seemed to have a clear focus: increasing Pakistan’s economic competitiveness by improving the country’s infrastructure and the quality of human capital. The panel approved spending on building new dams, improving the efficiency of the existing power grid and a significant amount for graduate scholarships for students from Balochistan. All of these are sensible programmes that will have long-term economic benefits for the country. For too often, the problem is not the government’s decision to spend money, but rather its ability to allocate funds between its various commitments. Spending, with long-term benefits, is sacrificed for short-term political considerations. Last year, the development budget was slashed because the government did not have the political courage to slash electricity subsidies. It would be ironic if the effort to improve the national power grid — a project that would save the government money — was abandoned because it once again was unable to cut power subsidies.

Experts in the energy sector estimate that there are thousands of places in Pakistan where small dams can be set up. Small dams have much lower initial costs than the larger programmes that the government has focused on, yet their efficiency rates are just as high. Crucially, their efficiency ratios — the rate at which they convert the energy of their fuel to usable electric power — can be as high as 80 per cent, compared to the much lower 45 per cent for what are considered to be highly efficient thermal power stations. As Pakistan searches for low-cost energy, hydroelectric power is one resource that should be explored and so it is encouraging to see Ecnec allocate funds for this. Nothing would help the economy faster than cheaper, reliable power supply.

Published in The Express Tribune, November 14^th,  2011.