07-08-2013

Close to collapse? Iran-Pakistan pipeline

IS it dead, or is there still some life left in it? The Iran-Pakistan gas pipeline project appears to have been dropped by the Sharif government, though no formal intimation has been made. If that is in fact the case, it is an unnecessary capitulation by the government to US, and perhaps even Saudi Arabian, pressure. Two matters are relevant here. First, is the IP pipeline a sanction-able project? If a robust legal defence and a hard look at the language of the sanctions suggests, as some in the Foreign Office have argued, that the IP pipeline is permissible under existing sanctions, then Pakistan is needlessly giving up a right to do business with a neighbouring country. Even if the pipeline project does make sanctions possible, are they automatically applicable and to what extent would Pakistan`s business relations with the outside world be harmed?
The simple reality is that Pakistan has an acute gas and energy crisis. Any project that can help bridge the supply-demand gap in relatively quick order ought to be given urgent consideration. The IP pipeline certainly fits that bill and what`s more, the Iranian government has been very serious about supplying gas to Pakistan. The project on the Iranian side of the border is near complete andthe Iranians have offered a number of concessions to cushion the fiscal impact of construction on the Pakistani side. To allow such a seemingly viable economic idea to collapse at the altar of international relations is a travesty and a disservice to the Pakistani people. It appears the Sharif government would rather focus on the potential fallout of Washington or Riyadh`s annoyance with Pakistan than close a deal with Tehran which is there for the taking.
Is that bargain necessary or the only one that Pakistan can make? The starting point of the sanctions on Iran is to open up its nuclear programme to international inspectors to ensure it remains within the realm of a peaceful and civilian nuclear programme. As this paper has argued before, sanctions are not the best way to achieve Tehran`s cooperation and instead exact a terrible toll on Iranian society and economy. Starting from that first principle and then moving through the chain of questions such as whether the IP pipeline is even subject to automatic sanctions, the Pakistani government can and should push harder to have the project reach fruition and on time. The passive approach is equivalent to outsourcing Pakistan`s economic security and foreign policy and is entirely unnecessary.

Necessary increase: Power tariffs

THE new increase in electricity prices for industrial, commercial and bulk consumers is prohibitive. But it is a bitter pill they are required to swallow if the economy and power sector are to be fixed. The price rise will eliminate the differential between the power companies` cost of generation and taking electricity to the industrial consumers, and the amount that is actually recovered from them. For some inexplicable reason, the power sector, however, has stopped short of recovering the `full cost` from commercial and bulk users that are also often alleged to be involved in power theft. In the second phase, the government also plans to raise domestic electricity prices from October. The hike in power tariffs will raise the high cost of doing business, especially in Punjab, and will lead to further inflation at the expense of ordinary people who are already trying to cope with the soaring cost of living and shrinking real wages. Many consider the tariff increase unjust and punitive because the government is actually transferring the cost of its failure to prevent power theft, to cut massive transmission and distribution losses and to fully recover bills on to honest consumers. They have a point indeed.
The government, for its part, believes that `rationalisation` of electricity tariffs is necessary if the power sector has to be reformed and shortages ended. The current power price increase will save it Rs169bn. The full transfer of power costs to all consumers, including domestic users, is projected to cut down its subsidy expenditure by Rs396bn. It plans to spend this money on establishing new power stations to increase generation, change the expensive energy mix and reduce consumer prices to below Rs10 a unit over the next three to four years. So far the government has shown its determination to revamp the power sector. Whether it will be able to maintain the momentum and deliver on its promises remains to be seen. The cost of failure for both the economy and consumers will be very high.

Not quite a terrorist act: Pir Sohawa has its day

THE peculiarities of Islamabad make the capital doubly susceptible to getting into a kerfuffle. Karachi and Quetta may be wracked by violence and Rawalpindi may have seen the deaths of three prime ministers, but it is Islamabad where the air swirls thick with rumour. Such proved to be the case on Saturday night. The city was already nervous: Interpol had issued a global security alert and by the time residents started making iftar plans, they had already knew that security had been tightened at the Benazir Bhutto International Airport and Adiala Jail. So when people heard that something was happening at Pir Sohawa, it is hardly surprising that the collective interpretation was a terrorist attack. Neither is it difficult to understand why they turned for information to the social media: Islamabad`s elites have learned to raise the draw-bridge at the first hint of trouble given that it could be anything from a coup downwards. In this country of strategic assets, it was decided on Twitter and Facebook that Monal, a pricey restaurant at Pir Sohawa, must also be one and therefore a target.
There is a sort of logic to that. The high-end restaurants in Pir Sohawa are certainly more the sort of thing that Islamabad`s managers think it needs as compared to the sheds that once used to sell barbecue to the common man there. But Saturday`s altercation, it turned out, was a mere storm in a teacup. One restaurant claims that the other was trying to steal its iftar customers; certainly, a traffic jam occurred, both eateries sent down guards to clear it, and the guards got into a confrontation. All`s well, we must suppose, that ends well; as long as we don`t put our faith in the social media.

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LAIS-AL-INSANA ILA MA SA-AA