Constitutional economics studies the role of constitution in forming and implementing various economic policy measures. Every developed as well as developing nation provides legal and constitutional cover to its economic institutions and different regulatory authorities. The regulatory authorities and different economic institutions smoothly run through this system. In this regard, the Government of Pakistan also formed different regulatory authorities. PEPCO, NEPRA and OGRA are common examples of the regulatory authorities.
The basic responsibility of these independent regulatory authorities is to regulate the prices of different energy products so that the consumer sovereignty cannot be disturbed and the producer’s profit margin should also remain at a satisfactory level. For instance, the Oil and Gas Regulatory Authority (OGRA) sets the prices of various petroleum and natural gas related products on a monthly basis. Similarly the National Electric Power Regulatory Authority (NEPRA) sets the electricity prices on a monthly basis. The role of these regulatory authorities became vital after the involvement of private sector in the energy sector. As it’s pertinent to mention that almost 60 percent of electricity has been produced with the help of oil and gas, the monthly fluctuations of the oil prices at the international do play a significant role. So it is necessary for the regulatory authorities to work efficiently to protect the consumer sovereignty and producer’s profit.
In a recent development, the incumbent government has snubbed the independent authority of these regulatory authorities. The federal government has issued a notification, which said the National Electric Power Regulatory Authority (Nepra) had been given under the control of the Water and Power division; Oil and Gas Regulatory Authority (Ogra) under the Petroleum and Natural Resources division; Pakistan Telecommunication Authority (PTA) and Frequency Allocation Board (FAB) under the Information Technology and Telecom division; and the Public Procurement Regulatory Authority (PPRA) under the Finance Division according to which all of these regulatory authorities will now work under the relevant ministry. This does affect the independent working of the regulatory authorities. Another important moral illegality has been done via this notification. The Prime Minister has issued the notification without taking the consent of four Chief Ministers in the meeting of Council of Common Interests (CCI). This is something worse when it comes to democratic norms. The democracy evolved around the people and it’s essential to get consent of the representatives of the people.
In the past few years these regulatory authorities had challenged the government on different reports. The NEPRA’s famous reports on the Nandipur power station were eye opening. In these reports, the government’s inefficient way of working had been criticized. In another report under the PEPCO, it had been revealed that the problem of electricity shortfall cannot be resolved with the current old transmission system of power.
On the other hand, the OGRA had asked some very serious questions to the ministry of petroleum over the agreement of the import of LNG from abroad. In this regard, it’s also important to recall that the governing body of the OGRA had been dissolved over the issue of the import price of the LNG, which was very high as compared with other neighboring nations’ import rate.
In these circumstances it’s clear that government has shown some kind of bad intentions through this regulation. The government had been able to get the majority vote on the promise that they would eradicate the problem of electricity shortfall from the nation in the coming five years. In this process, the current government is giving special importance to the electricity projects, which can be developed in the short time period and the problem of electricity can be resolved. These short run solutions are bit costly; the import of LNG has been started to run LNG specific power plants. Yes, it is a need of the hour to deal with the problem of the electricity short fall, but it is also important for the policy makers to ensure the consumer sovereignty because increasing price of the electricity is also a very serious issue.
The role of regulators and regulatory authorities becomes vital in this regard, as in a developing nation like Pakistan, where consumers are already playing in the hands of small producers and sellers of the grocery items, due to poor regulatory process. The private sector works on the motive of profit seeking. The involvement of private sector simply implies the need for a strong and independent regulatory authority.
The governments across the world work for the welfare of the people. The current government should also rethink about this ordinance, so that the common people of Pakistan can enjoy some kind of relief.
The writer is a freelance columnist and visiting faculty member at Department of Economics, GC University Lahore. He can be reached at [email protected]