Daily losses

.. by Dr Farrukh Saleem

Imran Khan wants to invade Islamabad with his ‘two million’ supporters. Fawad Chaudhry is going on about ‘civil unrest’. Sheikh Rasheed is chattering about a ‘civil war’. Our politicians are playing their dirty political games in the midst of a serious economic crisis. If this continues there will be disastrous consequences. To be sure, one of the two has to be buried – bury the ‘economy’ or bury’ talk of ‘civil unrest’.

The biggest burden on the state of Pakistan is the government of Pakistan. The government of Pakistan loses so much money on a daily basis – and if these losses can be managed a majority of our financial problems will disappear in thin air. I will quantify five of these daily losses.

Petrol/diesel: On February 28, ex-PM Imran Khan announced two major subsidies and one tax exemption. That Monday, Imran Khan slashed the price of petroleum products by Rs10 per liter and electricity tariff by Rs5 per unit plus tax exemption for companies and freelancers in the IT sector. The ex-PM said that “there would be no increase in petrol and electricity prices until the next budget” and that “your electricity bills will go down by 20 percent to 50 percent.”

We consume around 20 billion liters of petrol and diesel a year and the ex-PM’s announcement of February 28 would mean a daily loss of roughly Rs3 billion or a monthly loss of around Rs100 billion. This is Rs100 billion that the government does not have.

Gas: As per research conducted by Engineer Arshad Abbasi, around “126 billion cubic feet of gas is lost in this country every year.” This means that the ‘economic value’ of Unaccounted-for-Gas (UFG) is almost $4 billion a year. Lo and behold, we lose $4 billion worth of natural gas a year. That is a daily loss of Rs2 billion a day every day of the year. Engineer Abbasi claims that “plugging methane emissions and leakages would hardly require $500 million.” Yes, if we plug the UFG hole we will not need the IMF.

Electricity: Imran Khan took the oath of office on August 18, 2018. That day the circular debt in the electricity sector stood at Rs1,140 billion. On April 10, PM Imran Khan was ousted as the country’s prime minister following a vote of no-confidence. By April 10 the circular debt in the electricity sector had risen to Rs2,500 billion. That is a loss of Rs1 billion a day every day for the past 1,331 days of the PTI government.

Public Sector Enterprises (PSEs): There is a bloodbath going on in our PSEs – PIA, Pakistan Steel, Pakistan Railways etc. PSEs are taking on additional debt of Rs700 billion a year. The government doles out roughly Rs900 billion a year in what the government calls ‘grants’. On top of that, the government hands out around Rs200 billion a year on what the government calls ‘subsidies’. In 2018, PSEs accumulated losses were estimated at Rs1,400 billion. The same has since doubled. That is a loss of Rs1 billion a day every day for the past 1,331 days of the PTI government.

Commodity operations: Pakistan Agriculture Storage and Services Corporation (PASSCO) claims that it provides “food security at national level….undertake import/export of different food grains…carry out agro business…” Whatever PASSCO does, at the end of the year it loses around Rs180 billion a year. That is a daily loss of Rs500 million. Solution: There already is a $300 million World Bank supported ‘Strengthening Markets for Agriculture and Rural Transformation (SMART)’ programme in place. SMART calls for disbanding PASSCO.
The only way out for the new government is to get rid of these daily losses.

The writer is a columnist based in Islamabad. He tweets @saleemfarrukh and can be reached at: [email protected]

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