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October 20, 2019

Getting rid of political interference must for strong regulatory institutions

Business

October 20, 2019

LAHORE: Toothless regulatory institutions cannot fulfil their mandate of regulating any sector. The gas and power rates determined by the regulators on solid grounds are subject to the approval of the executive. Power companies cannot apprehend power thieves without provincial support.

Regulatory bodies the world over enjoy full autonomy. The basic rules of regulations are legislated and the regulator of each sector then independently and fairly operates within those rules without any interference from the state.

There is logic in it because if the executive has to take all decisions then there is no need for a regulator. Another aspect in this regard is the appointment of the chief regulator of each institution and his board (commissioners or member).

These appointments are of technical nature and experts are appointed on these posts through transparent and fair process purely on merit. Those joining an institution on merit are highly qualified experts in their field that jealously guard their independence.

Moreover, the tenure of these posts is constitutionally protected. The executive cannot remove anyone having constitutionally protected tenure. This is the reason that economies perform well in countries where regulatory institutions are strong.

As far as Pakistan is concerned, the rules in the book are the same. But in practice the executive always has an upper hand.

We have seen in the past when state bank governors, SECP chairmen or WAPDA chairman were forced to leave the office without completing their constitutional tenure.

Another tradition that is frequently bypassed in our country is to temporarily appoint the head of any regulatory institution after a person completes his tenure.

The retiring regulator may be asked to continue till further order (meaning till the appointment of a new regular) or any senior official of that institution is asked to assume the charge till further order. This practice practically dilutes the independence of the regulator.

The person appointed on temporary basis tries to toe the line of the executive in the hope that he might be given tenure finally. It is very rare that a regulator removed against rules by the executive protests. The executive might not be able to harm the regulator directly, but they can use corrosive methods against close relatives to put pressure to resign or not to protest against removal.

These tactics have been frequently used against almost all institutions in Pakistan, which has made these institutions very weak. Even during the brief tenure of the present government, many regulators have been removed or forced to leave. A few that mustered the courage to challenge their removal got themselves reinstated through courts.

Time has come when we should seriously consider granting real autonomy to the regulatory institutions. The first and foremost requirement in this regard is the appointment on all tenure posts in these institutions purely on merit.

The process of appointment should be extremely transparent. The qualification, experience and age against each post should be clearly stated on government website.

Applications should be invited and scrutinised. Those having the right qualification should be interviewed by an independent panel comprising experts of good repute. An expert from specific institution should also be a member.

No bureaucrat or political figure should be in the interviewing panel. The panel should shortlist 10 candidates for each post on merit order.

The names should be posted on government web. The executive should only have the authority to appoint anyone from the list of those ten persons before the expiry of the term of that post.

In case the one appointed fails to do so, then the person on top of the merit list should be automatically inducted. This will eliminate the ad-hoc appointments and restore the independence of the regulators.

This in fact was proposed by the World Bank in its report during the last PPP government, but the proposal was not accepted because it would have deprived the ruling elite of discretion of appointing their cronies on regulatory posts.

When the government is changed, the new government tries every trick to remove those cronies and the institution weakens with each such effort.

Prime Minister Imran Khan is a vocal proponent of merit, he should start in this regard with regulatory institutions.

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