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February 16, 2020

The real disease

Opinion

February 16, 2020

Pakistanis consume 24 million tons of wheat a year and are paying Rs70 for a kilogram of flour. The price of flour outside of Pakistan is the equivalent of Rs45 per kg. Why do we have to pay Rs25 per kg more than what others are paying around the world? Collectively, we end up paying Rs600 billion a year over and above what consumers outside of Pakistan pay for the same thing. Why?

Pakistanis consume more than five million tons of sugar a year and are paying Rs85 for a kilogram of sugar. The price of sugar around the world is the equivalent of Rs52 per kg. Why do we have to pay Rs33 per kg more than what others are paying around the world? Collectively, we end up paying Rs200 billion a year over and above what consumers outside of Pakistan pay for the same thing. Why?

Pakistanis consume over 100 billion units of electricity and are paying Rs20 for a unit of electricity. A unit of electricity around the world costs the equivalent of Rs11 per unit. Why do we have to pay Rs9 per unit more than what others are paying around the world? Collectively, we end up paying Rs900 billion a year over and above what consumers outside Pakistan pay for the same thing. Why?

Lo and behold, the Government of Pakistan fixes the price of wheat, buys around eight million tons of the commodity every year and issues quotas to flour mills. The provincial food departments borrow around Rs1 trillion a year to undertake their so-called ‘commodity operations’. The Government of Pakistan also determines the price of sugarcane and the price of electricity. Our wheat sector is in a mess. Our sugar sector is in a mess and our power sector is in the deepest of all messes. Question: Why do we have frequent wheat crises? Answer: Because the government controls the wheat sector. Question: Why do we have frequent sugar crises? Answer: Because the government controls the sugar sector. Question: Why is our power sector in the deepest of all messes? Answer: Because the government controls the power sector.

Government control over wheat and sugar has proven to be cancerous. And now the government is trying to treat that cancer with aspirin: “Cabinet approves Rs10 billion package for relief of the people”. Imagine: Rs10 billion means a relief of Rs4 per Pakistani per month. The wheat crisis is a symptom. The disease is government control. The sugar crisis is a symptom. The disease is government control. A relief package amounts to trying to suppress symptoms as oppose to curing the disease. We need to cure the disease not just suppress the symptoms.

On February 5, Reuters reported: “India’s Reliance Industries purchased an LNG cargo via tender on Wednesday at $2.80 per mmBtu.” On February 11, The News reported: “The new price of RLNG for SSGC system has been fixed at $11.1943 per mmBtu, which was $10.4602 during the last month.” I really do not understand the huge price differential.

Solution: the government must cure the diseases not just try and suppress the system. The government must restrict itself to governance and leave the rest to the private sector.

The writer is a columnist based in Islamabad.

Email: [email protected] Twitter: @saleemfarrukh