Funds for dams

The Pak Banker - - FRONT PAGE -

There has been a great deal of crit­i­cism of the dam fund set up by the Chief Jus­tice of Supreme Court and later the prime min­is­ter's join­ing the ini­tia­tive. Both en­joy the rep­u­ta­tion of be­ing free of cor­rup­tion, and just about ev­ery­one seems cer­tain about the well-mean­ing in­ten­tions be­hind the cre­ation of this fund. There­fore, there is no crit­i­cism re­gard­ing in­tent and char­ac­ter.The crit­i­cism per­tains to the eco­nom­ics and pub­lic pol­icy of it. First of all, the size of fi­nanc­ing re­quired to build Di­amer-Basha and Mohmand dams has to be kept in mind. The former has an es­ti­mated cost of about $14 bil­lion or about Rs1680 bil­lion; the lat­ter costs, ac­cord­ing to 2010 es­ti­mate, about $1.4 bil­lion or Rs168 bil­lion at cur­rent cur­rency con­ver­sion rates. That's nearly Rs1900 bil­lion com­bined. To put this in con­text, to­tal direct tax col­lec­tion in FY18 was Rs1563 bil­lion, whereas to­tal fed­eral PSDP was Rs750 bil­lion.

The pace of col­lec­tions has in­deed in­creased to an av­er­age daily col­lec­tion of Rs108 mil­lion in the last few weeks.How­ever, the ad­vo­cacy for dam fund is not go­ing to last for­ever; there is some­thing called do­na­tion fa­tigue. The cur­rent CJ is sched­uled to leave of­fice at the start of third quar­ter FY19, whereas the PM and his fi­nance team will have far more on their plate, leav­ing them with less time for ad­vo­cacy for the dam fund. Even if one as­sumes an av­er­age daily col­lec­tion of Rs108 mil­lion for the rest of the fis­cal year, to­tal amount col­lected in FY19 would be no more than Rs33-34 bil­lion, which would still be peanuts given the scale of re­quire­ment.Granted that in­fra­struc­ture projects like these may have mul­ti­ple fi­nanc­ing sources: local ver­sus for­eign; debt ver­sus eq­uity; with to­tal fi­nanc­ing raised over a pe­riod of 2-3 years and even longer. But even af­ter three years, to­tal fi­nanc­ing raised through these funds may be about Rs100 bil­lion. By that time, the es­ti­mated cost of com­ple­tion of the pro­ject would have moved north any­ways.

To avoid los­ing the mo­men­tum, and to give a sense of plan to those con­tribut­ing to the dam fund, the fund man­agers would do well to present a dam fi­nanc­ing plan and within it a tar­get amount to be col­lected from the now-merged Supreme Court and PM dam fund. A col­lec­tion tar­get with an over­all fi­nanc­ing plan can cre­ate more drive and in­spire more con­fi­dence than a drive with no col­lec­tion tar­get. Here one strat­egy could be to have three or more rounds of cam­paign, each hav­ing its own tar­get rather than hav­ing one big, open-ended cam­paign.The char­ity model has its lim­its. Pre­vi­ous stud­ies on the sub­ject, by Pak­istan Cen­tre for Phi­lan­thropy and some oth­ers, in­di­cate that char­ity in Pak­istan is mostly given for re­li­gious rea­sons. Sec­u­lar ed­u­ca­tion, sports, house con­struc­tion, etc. are not the sec­tors that at­tract huge sums of char­ity.

The dam fund is not to be con­strued as char­ity; it is a ' self­help' ef­fort to­ward a greater col­lec­tive cause. This is no easy task, con­sid­er­ing that in this coun­try even business cham­bers and as­so­ci­a­tions that work to­wards col­lec­tive business in­ter­est also strug­gle with fi­nanc­ing for their ef­forts.The cam­paign for rais­ing money through dam funds can­not raise to­tal fi­nanc­ing for the dams, or even sig­nif­i­cant fi­nanc­ing. But it has, and can even more, raise the much-needed aware­ness, which also de­fines the limit of this laud­able ef­fort. The test of pa­tri­o­tism and con­fi­dence on the new gov­ern­ment would be fix­ing pub­lic fi­nance and gov­er­nance aspects of wa­ter man­age­ment - of which build­ing and main­tain­ing dams is only one part.

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