World bank and the Corruption Stakes
President James Wolfensohn is visiting Pakistan, his mission is to evaluate personally the whole gamut of Pakistan’s economic situation as well as examine WB assistance and cooperation in the health, education and other sectors.
In a recent report WB has noted with satisfaction the progress made in Pakistan’s power sector “where private investment of $5 billion has been committed.” On the other hand, the report simultaneously identifies areas of corruption, inefficiency, bureaucracy and politicization, with the Government and public sector organizations as the major hurdles. While James Wolfensohn is a welcome activist against corruption, the question one would like to ask is what has been the role of World Bank in the recent past in this regard? Or to be put more bluntly, have they effectively played a somewhat similar role as have the Pakistani functionaries engaged in lining their pockets or even being supportive of the acts of some of the so-called investors/contractors?
Facts are, World Bank has virtually spearheaded Pakistan’s aggressive adventure in the energy sector. Anything that has gone on in the energy sector has gone with their full knowledge and active participation, if not wilfull connivance of World Bank officials. Projects were selected, partners were chosen, even the contractors were identified with very active participation of Bank officials.
Evaluation which needs to be done are viz (1) should Pakistan have ventured in fuel generated electricity or concentrated more on investments in hydel-generated power? What has been World Bank’s role in this regard? (2) The capacity installed (or is in the process of installation) — is it really required by the country at this stage, the price commitment to procure the generated capacity by WAPDA being pretty stringent and costly? (3) Profile of international/national sponsors and contractors -it is common knowledge that a number of them have got track records which could easily embrace the world’s worst con-men. The conduct of World Bank’s own past and present employees in this regard needs to be closely appreciated and evaluated (4) The World Bank has very actively supported and promoted the cause of energy projects and its successful installation, managing and manoeuvering all sorts of concessions for these projects at the cost of WAPDA, KESC, PSO and other public sector organizations. By this conduct it gives clear cut signal that the Bank’s mandate was dictated by those so-called investors rather than Government of Pakistan’s (or its public sectors entities) interests. Why this contradictory attitude by Bank’s functionaries? (5) Total emphasis by World Bank on installing more power generation capacity rather than improvement in power collection- Why was the tariff collection sector neglected? World Bank should have made this as a condition precedent to WAPDA and KESC before venturing into new projects (6) Cost factor-some impartial analysis must be made to determine the Mega Watt Cost of a unit installed in Pakistan vis-a-vis the correct cost. Stop comparing the cost with other Third World countries, one should be realistic. The cost of machinery and equipment is a well established international reality. The rest of the cost must be taken for comparison’s sake. In Pakistan land cost is nearly nil, labour is very cheap, Government duties were withdrawn for such projects, legal cost of foreign lawyers has been exorbitant (why?). Pre-development costs is again unreasonably high (why?), Design and Consultancy work once again incurred mainly on foreign companies has been colossal (why and how?), turnkey contractors costs absolutely unrealistic and unsubstantiated (these need thorough analysis), selection of turnkey contractors (has the selected company ever undertaken such a venture?) (7) Conduct of monitoring agencies. It has been established beyond doubt that the performance of Pakistani-based monitoring agencies has not only been hopeless but often they were mere helpless spectators. They were often made to rubber stamp directives coming from the top which effectively spelt long-term economic disaster. As against this what was the role of Bank officials? One keeps on hearing with regular frequency that on more than one occasion World Bank officials were instrumental in backing of foreign sponsors of various projects as well as the contractors working on the projects to bring about pressure on public sector officials to accept agreements which were detrimental to the interests of the country. In this regard the Bank also needs to look into its post-audit function, whereby whatever audit was undertaken was mostly conducted by a company whose credentials are already under suspicion because of the conduct of its associate companies on other assignments in this country. What has come out of that audit or was that audit also an eyewash?
Pakistan today has costly power plants whose production capacity is being fully paid for but remains unutilized to certain extent. There is virtually no improvement in energy tariff collection. Hubco is a top performer in the country’s stock exchange whereas WAPDA, KESC are on the brink of bankruptcy. Hubco has secured its commercial interest by obtaining substantial guarantees for the performance of PSO and WAPDA, however these guarantees are detrimental to the interest of PSO and WAPDA and were given under duress by these organizations. The private sector power production companies are well satisfied but at the cost of public sector organizations. Whose side the World Bank has been all this time seems quite apparent. End result is that these organizations have suffered substantial financial loss and their employees are now being investigated by Ehtesab (Accountability) Cell and other agencies like FIA. The crime of most of these functionaries may at most have been to be docile accomplices of what was being dictated to them by their ruthless masters. Today Pakistan is at a crossroads because of its corruption-induced economic apocalypse and unless the WB President turns his activism against corruption into actual deeds by going after the corrupt with a vengeance, we will lose all hope for the future.
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