When it comes to money, it seems Islamabad is hell bent on getting its priorities backwards. The latest example of this mentality is the government’s refusal to take up the Asian Development Bank’s offer of a $1 billion loan to finance the installation of smart meters. We find ourselves baffled by the finance ministry’s stance. Why on earth would the government want to refuse money for a project that would go a long way towards reducing electricity theft in the country?
The government’s argument is that it is about to sell the state-owned electricity distribution companies off to the private sector and, therefore, does not want to take on the loan for companies it will soon not own anyway. This argument falls flat on its face when one considers the fact that the government could simply put the loan on the books of these power companies, which would then go off the government’s own balance sheet once the companies are sold. No investor buying the companies would refuse cheap debt that also happens to go a long way towards reducing losses and improving operational efficiency at the company it is about to buy. This loan is a win-win for the government and for any prospective buyer, and the finance ministry’s refusal to take it is a case of incompetence.
One last thing: the government’s argument that it does not want to invest in companies that it currently owns is a highly disingenuous argument on its own. Even if it plans to sell them off, it currently owns them and, therefore, has a fiduciary responsibility to run them as best as it can during the period of its ownership. That the Nawaz Administration is refusing to do so means that its approach is hardly any better than that of its political rivals. The only difference is that the PML-N wants to privatise companies that run up losses instead of keeping them on the government’s budget. That does not necessarily make the party more competent at governing; just a little more realistic.
Published in The Express Tribune, May 18th, 2015.