The regulators

The controversial decision by the federal government to put five major regulatory bodies under line ministries has been set aside by the Islamabad High Court. The transfer of Nepra, Orga, PTA, FAB and PPRA to their line ministries was considered to be potentially a deathblow to their role as independent regulators in their respective industries. Earlier this year, the Lahore High Court had also set aside the same decision and asked the government to decide the matter in the Council of Common Interests (CCI). The purpose of creating these regulators, in the 1990s, was to create an autonomous mechanism of checks-and-balances between the government and the independent companies involved in various sectors. The role of the regulator is to ensure that private interest and public interest exist in the right kind of balance. Last year’s decision to place the regulators under the federal government was thought to have been made after a few of the regulators took decisions that may have irked some parts of the government machinery. And the federal government went about changing something fundamental about governance paradigms without proper consultation.

The line ministries had been transferred through a notification, instead of an act of parliament. The decision also excluded the CCI, the appropriate body for such a major decision. According to the IHC, these regulators fall within the Federal Legislative List. It will be hard for the federal government to challenge the legal principle set up by the IHC – which means that it should now do what it did not do earlier: engage in a process of consultation. Decisions such as these cannot be taken in small cabinets or through ordinances. Changing regulatory frameworks might not give an unchecked licence to businesses to profiteer, but there are serious questions over what mechanisms are then used to determine prices and policies in these sectors. Ministries cannot be the ones to decide on their own – unless there is a fundamental shift in governing paradigms. If the concerns are correct, that much of the regulatory changes took place to let a number of new power plants decide their own tariffs, then there is a clear sense that it would be consumers that would stand to lose out the most. Regulatory controls need to be kept independent of government interference. And if that is to change, there should at least be a public consultation over why it is important to change the current regulatory paradigm. The CCI is where this needs to begin, but parliament must also be part of the process.