The implementation of a Council of Common Interests decision hangs fire because of the failure of the 20-member task force to finalize it. The decision, which involves auctioning off 35 percent of all new gas discoveries to the private sector, is expected to bring in $5 billion in foreign investment. The reason given for delay in a decision made in January is said to be Petroleum Minister Musadik Malik having been absent from a meeting of the Task Force. Dr Malik has said that he was in Russia attending its Energy Week. That suggests a faux pas by the meeting’s convener, who seems not to have checked with Dr Malik, as would have been done if his presence had been deemed so important. The potential investor is from the Middle East which makes the matter so important that it is being treated with kid gloves. Though gas is not one of the priority sectors targeted by the Special Investment Facilitation Council, it goes without saying that friendly countries in the Middle East have an abiding interest in hydrocarbons. Hydrocarbons, specifically gas, are causing some headaches. The cutdown in supply of gas to Captive Power Plants in the textile industry are going to have an impact on the entire gas system, because the government’s decision to shut down supply to the CPPs is meant to make textile units go back to using power from the national grid. It is the same spirit in which the oil lobby opposes solarization, to keep money coming to the distribution companies so that they can pay the IPPs capacity charges. Obviously, this was an IMF direction.
The government is finding that it has ceded more space to the IMF than it realized. Apart from the gas-fired CPPs, it has already run into trouble raising the revenue it has committed. The Central Board of Revenue is jubilant over its first-quarter collection of Rs 2.56 trillion, but it still fell short of its IMF-determined target by Rs 93 billion. The jubilation was because initial assessments were for a shortfall of as much as Rs 200 billion. There may be a certain fitness in the IMF having ther handling of the micromanagement of the economy if it does have the macromanagement, but the CPP decision impacts the textile sector, which is the backbone of our exports. The IMF’s decision-making seems to have no regard for exports, which is the only way out of the mess which forces recourse to the IMF.
