Power Play
This week saw the Karachi Stock Exchange (KSE) plummet by record levels because of the HUBCO crisis, the Government of Pakistan (GoP) having filed various criminal charges against the management. Subsequently GoP went ahead and cancelled the power contracts of HUBCO and Kot Adu Power Company (KAPCO), with National Power Company of UK playing a prominent role in the management of both. The ongoing negotiations with IMF may be affected, foreign direct investment may be a long-term casualty. A great majority of professionals, particularly in the financial field are decrying the heavy-handed tactics of GoP, led in this case by Senator Saifur Rahman of the Ehtesab Bureau (EB). Their contention is that the tough tactics mechanism of using FIA and police will deter foreigners from any financial commitment to Pakistan. On the other hand GoP seems to have done its homework in being confident about applying the stick rather heavily, HUBCO seems to have been a roller-coaster profit ride based on amendments contrary to the spirit and content of the original contract. These additional clauses gave them windfall profits, allowing HUBCO’s sponsors to recover their entire equity in less than a year’s time, a “miraculous achievement” even in terms of capitalism gone crazy. That certainly must arouse suspicion if not outright doubt as to the integrity of the entire process.
Like in the case of Ms Benazir Bhutto whom he has by the short hairs, Senator Saifur Rahman needs to be commended for a job being well done in the case of HUBCO and KAPCO. One may not agree with Saif on a great many issues but HUBCO and KAPCO are great scams which needed to be exposed as they would have otherwise looted the Pakistan treasury bare. In existence from the 80s HUBCO scam was actually engineered by ex-World Bank official Ebrahim Elawan in connivance with senior power officials in Pakistan, a Singaporean named Brian Cheng joined the looter’s bandwagon later. The expensive consultancy which was being financed by USAID against Pakistan’s account was given to K&M Engineering, a US firm that had no track record of such a great project. Mike Kappas (for K) and Charles Menendez (for M) were ex-Bechtel employees who formed this new company specifically to get this lucrative running contract till the project came into being. For many years this was the only cash cow the Washington-based Consultants had to keep afloat. Almost every component of HUBCO has been over-invoiced, when normally the project cost upto 500 MW is US$ 0.9 million per MW and less than US$ 0.8 million per MW of beyond 1000 MW, this project should have cost less than US$ 1 billion for its 1200 MW, how did it end up costing US$ 1.6 billion and where did this extra US$ 600 million go, into whose pockets? As if that loot was not enough, in order that the project recovers the extra cost incurred, the management got a bunch of crooked Pakistani officials to sign off on an Amendment that gave HUBCO astronomical revenues at the cost of the people of Pakistan. No doubt, Pakistan’s ham-handedness looks bad for foreign investment, do they deserve any quarter? Would they be less harshly treated for white-collar crime in the US and UK? Everything said and done, the fact remains we live in an unfair world where merit has no place, in fact merit is a disqualifier. There should have been some finesse in the handling, the perception of gunpoint negotiation could have been avoided for the sake of our economy. Whatever the merits of our case, the long-term implications are adverse. In the power sector, we are seeing power play in real time.
The Federal Commerce Minister flew back in a hurry from Washington to take part in the CA-15 Bill deliberations in the National Assembly. The original draft was a non-starter and it has been diluted considerably though one daresays, it can still be misused by unscrupulous leaders bent on short-circuiting the system. More importantly, Ishaq Dar gave an important Press Conference in which he strongly refuted speculation in the media that IMF talks in Washington with Pakistan had broken down. This perception had emerged after GoP announced a very welcome 30% reduction in electricity tariffs which gave consumers relief across the board. On the other hand it was rumoured that in absolute contrast GoP had agreed to 15% tariff hike as well devaluation of the Pakistani Rupee. There is a perception here of deliberate confrontation adopted by the PM in playing to a populist peoples gallery in the mould of the Bhuttos, late father and daughter. This may not be conducive to smooth understanding with the IMF but rather may be a politician’s ploy to adopt a martyr’s mantle. Analysts across the broad spectrum braced themselves to assume the worst, KSE index fell dizzingly as a composite result. One tends to give credence to Ishaq Dar when he says that IMF seems to have softened its original conditionalities at the insistence of Pakistan. The reason to support this logic is that while policy vis-a-vis conditionalities are firmed up in Washington, for negotiating the actual document the IMF team is due in Pakistan anytime, why should they come to Pakistan if there is an impasse? Certainly there are obstacles but it seems IMF may have come to the conclusion that the consequences of default are far more dangerous for Pakistan’s already precarious economic situation. We are in a deep black hole economically with no lifebuoys in sight. Ishaq Dar being very articulate and forceful in his presentation, one wonders why he is not being anointed as the Federal Finance Minister when he seems to be in the saddle already, at least he would be a better negotiator than the rubber stamp Hafeez Pasha whose total experience may be very knowledgeable but is mostly theoretical. We seem to be in a power play situation full time.
As everyone knows, it is the traditional right in the Army of every Commanding Officer at every level to choose his own crop of close aides and slot in subordinates according to his own perception of what suits his command. With a good crop of Lt Gens to play around with, the selections have been routine, though the media has played it up as would befit a “Kabbadi” match. When one General and two senior Lt Generals retire together, a whole set of permutations and combinations come into play that would normally be routine but the circumstances here are abnormal. This has caused speculation in the general public. Mian Nawaz Sharif has moved his real preference for COAS i.e. Lt Gen Ziauddin, formerly Engineer Corps, using his prerogative as PM to the sensitive post of DG ISI, very much in the manner late Lt Gen SR Kallue was brought in by Ms Benazir even though he was already retired. It should be interesting to see how the new COAS swallows this. In this critical stage, someone like Lt Gen Afzal Janjua, presently Comd 5 Corps at Karachi, with long experience in ISI could perhaps have fared far better. Zia may be a fine officer but could be out of his depth (or worse, isolated) in this vital post. The rest of the Army belongs to the COAS and it is his (and only his) prerogative to shuffle his commanders in the best interest of the Service rather than at any bidding from outside. Professional soldiers do not take kindly to any outside interference, political or otherwise. The present COAS has a reputation as a thinking professional, extremely sensitive to the fundamental perquisites of the uniform which is duty to the nation and the Army, in that order, to the exclusion of everything else. The nation is faced with grave external and internal dangers, for the first time after 1971 the Armed Forces have their work cut out on two fronts, they have to be left alone to perform their professional duties. So instead of speculation in the media or the rumour machine, we should LEAVE THE ARMY ALONE. A power play did take place on Oct 7, 1998 and even though Mian Nawaz Sharif seems to have come out ahead, he should thank his lucky stars he had Gen Jahangir Karamat to contend with, a mild man with a gentlemanly demeanour known not only for his superior intellect but a firm commitment to democracy. If the inclination of the politicians to indulge in power play in the uniformed ranks persists, the PM may well have sufficient cause to remember JK with a lot of nostalgia, sooner rather than later.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment