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Financing,
Infrastructure, Investment and Maintenance
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Group
Coordinators |
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1. |
Mr. Fida Ali Miza, Financial
Controller, GAC Shipping (Pvt.) Ltd. |
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2. |
Mr. Mansoor H. Khan, Legal Consultant,
Khan & Associates |
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3. |
Ms. Fowzia Husain, General Manager (Credit & Marketing), Orix
Investment Bank. |
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April
20, 2001 |
Draft
Transport policy is submitted from review. Click
here to read.
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Financing:
- Federal financing should be in the form of grants and loans as a percentage of the Project, with co-financing by the provincial and local bodies.
- Distribution of financing among various sectors must be equitable.
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Cost Recovery:
- The users must pay service charges to the extent of their affordability.
- Government subsidy should be considered only in well-defined cases of social welfare such as urban transport and PSO of Railways.
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Organizational structure:
- All the transport related agencies must have proper institutional arrangements for quality control, monitoring, research, etc to ensure improvements in delivery of services as per their charter.
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Financing :
Financing is one of the most potent tools in the hand of the federal government to ensure implementation of its transport policy. Unfortunately, in the past this tool has not been effectively used. As a result, the federal government was not able to secure implementation of its policies. There has been two serious problems in this regard. Firstly, federal government has been generally providing 100 percent financing for individual projects and secondly, distribution of available finances among approved projects has not been equitable. Since in a democratic set up "Planning by Directives" is not feasible, financing is the only instrument through which voluntary implementation of the policy is assured. This is generally achieved by using financing as an incentive for wider acceptance of policy
objectives.
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Cost Recovery:
Transport improvements are generally not self-sustaining. Nevertheless, as a principle, users should pay costs incurred on transport improvements, which must be kept to the minimum by making the scope of work confined to bare minimum required to meet the genuine demand of the users. Government subsidy should be considered only in well-defined cases of social welfare such as urban transport and Public Service Obligations of the Railways, etc.
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Organizational structure :
The various federal transport agencies such as National Highway Authority, Karachi Port Trust, Port Qasim Authority, Railway Board, Pakistan National Shipping Corporation, National Tanker Corporation, Pakistan International Airlines, National Logistic Cell, and Civil Aviation Authority do not have the required organizational structure to bring about the desired improvements in delivery of services as per their charter. The most glaring deficiency is the absence of quality control, monitoring and research.
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Resource
Constraints
The Public Sector Development Program (PSDP) is unable to meet the
needs of the public transport sector. The level of investment by the
government is insufficient to meet the competing demands of the
different transport sub-sector and as such, some sectors have been
neglected. There is also growing pressure on the the government to rescue
its non-development (recurrent) expenditure. This results in lack of
recent years the allocations for other sectors like SAP has also
impacted the amount of funds available for the transport sector. |
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Inappropriate Investments
The funds that have been available have not always been spent wisely
or in accordance with the needs of the sector. There is need to priorities. |
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Political Stability
Political stability and
continuity was a pre-requisite for a secure investment climate and
for building investor confidence. The implications of an Islamic
economy for private sector investment needed to be clarified. A
great deal of uncertainty had been generated as a result of the
Supreme Court ruling on interest. This uncertainty was not conducive
for investments of any kind.
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Private
Sector Participation
There is need to encourage
private sector participation in the transport sector. There has been
deterioration in the investment climate as a result in the transport
sector and provide incentives to encourage private sector
participation. There is need to provide a balance between individual
and national interests as well as economic and financial rates of
return. |
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Indivisibility
of Investments
A major issue that the
private sector faced with respect to land transport was the
indivisibility of investment. Vehicles had to be built with a
capacity in the first few years of operation. There was no effective
capacity management or pooling program to deal with some of these
issues of investment. |
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Financing
Arrangements
There is need to consider
innovative financing arrangements for the transport sector. A line
of credit for the private sector and the establishment of a
development bank are some of the options that can be contemplated
and developed. Other financing mechanisms that could be considered
are the active involvement of the DFIs and partnership of the
government thought equity in kind.
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Simplification of Procedures
There was a multiplicity of
organisations that a potential investor or entrepreneur had to deal
with. There was a need to simplify procedures and institute concepts
such as one-windows operations. |
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Foreign Exchange Regulations
There was a need to
liberalise controls as well as provide up-dated and accurate version
of the Foreign Exchange Manual. |
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April
2001 |
The World Bank, in conjunction with MOC, NTRC is organising
a Transport Workshope from 24 to 26 April, 2001. Find
more click here. |
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