Profit E-Magazine Issue 231

CON TENTS

09

09 Karachi Electric: Financial | misstatements?

14

14 Jo Banain Gai Khain Gai

18 Chicken and affordable protein

21 In the war of imports, Daal and Roti face the banning block

26

26 Mass transit may become the only sustainable way to travel in Pakistan

Publishing Editor: Babar Nizami - Joint Editor: Yousaf Nizami

Senior Editors: Abdullah Niazi I Sabina Qazi

Chief of Staff & Product Manager: Muhammad Faran Bukhari I Assistant Editor: Momina Ashraf

Editor Multimedia: Umar Aziz - Video Editors: Talha Farooqi I Fawad Shakeel

Reporters: Ariba Shahid I Taimoor Hassan l Shahab Omer l Ghulam Abbass l Ahmad Ahmadani l Muhammad Raafay Khan

Shehzad Paracha l Aziz Buneri | Daniyal Ahmad | Ahtasam Ahmad | Asad Kamran l Shahnawaz Ali l Noor Bakht l Nisma Riaz

Regional Heads of Marketing: Mudassir Alam (Khi) | Zufiqar Butt (Lhe) | Malik Israr (Isb)

Business, Economic & Financial news by 'Pakistan Today'

Contact: profit@pakistantoday.com.pk

Karachi Electric: Financial misstatements?

The name of the electric company has been making the rounds in several newspapers after a former board member wrote a letter to the Pakistan Stock Exchange (PSX) concerning Karachi electric. In response the company has initiated a case against the former for defamation

By Asad Ullah Kamran

On January 10 this year, the Securities and Exchange Commission of Pakistan (SECP) received a letter from one Asad Ali Shah. The letter alleged that KE, the company that holds a virtual monopoly over Karachi’s electricity generation, transmission and distribution, has been fudging their numbers.

“There are material misstatements in the financial statements of Karachi Electric (KE), which render them misleading,” reads the letter that has stirred up quite the storm in Pakistan’s energy sector. What kind of misstatements in the financials is Mr Shah alleging? In his letter he states that in financial statements for the period ending September last year, “the

aggregate amount of revenue and receivables recognised in respect of write-offs amounted to Rs 53.5 billion.”

These “write-offs” are the tariff differentials that the government of Pakistan pays to companies like KE. Since there is a difference between the electricity tariff paid by consumers and the allowable costs of electricity utilities determined by the regulator, NEPRA, the centre ends up paying back this tariff differential.

In short: the letter is claiming that KE has written up a higher bill for the federal government than is due and has also overstated cumulative profits by a massive amount of Rs 53.5 billion. What makes the letter so deadly? For starters, Asad Ali Shah formerly sat as director on the board of Karachi Electric and his concerns have been seconded by another

board member by the name of Naveed Ismail. On top of that, Shah is former president of the Institute of Chartered Accountants Pakistan (ICAP) and managing partner at Deloitte Pakistan — meaning he has a professional understanding of the numbers and balance sheet.

How has KE responded? First by asking for time to respond from the Pakistan Stock Exchange (as a publicly listed company it has a duty to its shareholders to keep them informed about such allegations) and then by suing Shah in the Sindh High Court for damages to the tune of Rs 5 billion.

While the court has restrained Shah from continuing his crusade and expressing his concerns while the case is heard, the issue at hand thus concerns the management of a company that controls the electricity supply to Pakistan’s largest city which is home to more

than 16 million people and is a vital cog in the national economy.

More about the letter…

The letter states that, for numerous years, KE has engaged in improper recognition of revenue and receivables from the government in relation to its write offs of trade receivables — which the KE management claims are to be paid by the government as a tariff differential subsidy.

To get a better understanding of what we’re talking about first we must understand the tariff differential subsidy. According to a definition from PIDE it is essentially the difference between the electricity tariff inclusive of certain surcharges paid by consumers and the authorised costs of electrical companies as defined by NEPRA.

For further simplification look at it this way; NEPRA sets the price of a unit of electricity for the distribution company at say Rs 20 based on estimations and forward looking calculations for the cost of energy. However, due to any number of reasons the cost of electricity in real time rose to Rs 25, however, the distribution company is only allowed to charge Rs 20.

This is an oversimplified explanation of the Tariff Differential Subsidy. The difference between the two prices [Rs 5] is then paid to the distribution company by the government in the form of this subsidy.

In the most recent quarterly financial statements produced by the company for the period ending September 30, 2022, the total amount of revenue and receivables recorded in respect of write-offs for the tariff differential subsidy was Rs 53.5 billion, according to the letter written by Shah.

The foundation of Shah’s argument is that a significant portion of the receivables claimed by KE are not valid and do not meet the legislative standards of the NEPRA consumer service manual or are not recognised under the criteria of International Financial Reporting Standard (IFRS) 15.

What is IFRS 15 you ask ?

According to the official definition published on the foundation’s website, “IFRS 15 establishes the principles that an entity applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer.”

These standards have been written so that “entities have common accounting rules that allow financial statements to be consistent, reliable, and comparable between every

business in any country.”

This essentially means that according to Shah, KE has allegedly been publishing exaggerated figures for revenues and receivables inconsistent with international practices. This would in turn hype up the share price of the company.

The write-offs for the tariff differential subsidy basically point to the amount that is unrecoverable from the customers of KE for electricity already supplied. This amount is then to be collected from the government through multi-year tariff adjustments and, therefore, is recorded as a “receivable” which is a current asset in the financial statements of the company.

Profit reached out to several sources in regards to this matter however officials preferred not to go on record considering the fact that the matter is a legal case. In essence Shah says that the receivable from a consumer, does not meet the legal or accounting standards to be recognised as such in the financial statements of the company.

According to an industry expert while talking to Profit on the condition of anonymity stated that this practice props up the receivables of the company artificially which in turn gives an inaccurate share value, if the allegations have any substance to them.

He further went on to explain that both parties can have something to potentially gain given the precarious nature of the case. The source further went on to mention the recent saga of Adani and Hindenburg.

Furthermore, Shah in his letter argued the recording of “hook connections” or more commonly known as kundas in the amounts relating to the write off claims is “clearly illegal” referencing a letter from NEPRA to KE in February of 2014. The letter according to Shah rules that these connections were illegal, and in violation of terms and conditions of the tariff.

He supported his argument in the letter by quoting KE own accounting policy, stating the 2021 annual report of the company Shah writes that, “revenue is recognised on supply of electricity to consumers based on meter readings”. Obviously hook connections aren’t metered, therefore, cannot be recorded as a revenue.

The IFRS argument…

Shah explains in the letter that according to applicable accounting rules of IFRS-15, it is prohibited to recognise revenue without first determining the customer’s ability and desire to pay the dues.

“In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer’s ability and intention to pay that amount of consideration

when it is due.” [IFRS 15]

Furthermore, before this happens the customer has to be first identified so a legally binding contract can be in place. If we take a look at the section of “Revenue from Contracts with Customers” in the IFRS-15, this is a five step model that has to be followed prior to the recognition of revenue and receivable. The first step reads, “Identify the contract with the customer”.

To allegedly bypass this rule, according to the former board member, “a very complex policy of write offs of receivables was made by the management, approved by the board in consultation with the auditors…”. Within this policy the definition of the consumer given was “illegal and illogical” according to Shah.

Conclusively, if you can’t identify a consumer then you can’t sign an agreement with them which can be litigated in a court of law in case of default. This in essence would mean these revenues and receivables cannot be recorded in financial statements.

The KE definition

“The consumer/customer will primarily be the premises to which the electricity was supplied and in certain cases would be the person who actually consumed the electricity (mainly in the case of tenants).”

Shah in his letter argues that a consumer cannot be a premises under the fundamentals of contract law, NEPRA law, or accounting standard of IFRS-15, for the simple reason that you cannot have a legal contract with a premises.

Because electricity, like any other supplier, must be based on legally enforceable contracts, therefore the question of misrepresentation emerges.

NEPRA Service Manual argument…

The NEPRA definition

“Means a person or his successor-in —interest who purchases or receives electric power for consumption and not for delivery or re-sale to others, including a person who owns or occupies a premises where electric power is supplied;”

Furthermore, Shah has contested the billing of claims to the government for which the power company lacks the necessary customer identification documents or agreements of electricity supply, and related documents as stipulated in the consumer service manual.

Casting further doubt on the matter, Shah goes on to state in the letter that these claims aren’t valid due to the simple fact that

they do not meet the legal requirements prescribed in the NEPRA consumer service manual that also define the consumer as a “person”.

Shah also mentions that a more responsible approach would have been to not recognise such claims in the financial statements unless NEPRA officially approved such sums post due procedure.

Write off claims to NEPRA

Now these write-offs have to be determined and vetted by NEPRA before the government of Pakistan pays the subsidy to the company. However, these claims have been pending determination by NEPRA since 2019, when the regulator wrote the first of multiple letters to the company that “further deliberation is required in respect of the above mentioned claims before these can be allowed as an adjustment in tariff”.

The issue of the admissibility of KE write-off claims has been ongoing and “waiting determination” by NEPRA for several years. This reinforces the fact that its chances of recovery are slim. One of Shah’s arguments in the letter is that despite this, KE has continued to recognise such revenue and receivable in full, which are also in contravention of IFRS 15 core principles.

The auditors

A.F. Ferguson & Co (AFF) are the official auditors of KE and are a part of the global network PriceWaterhouseCoopers (PWC). They are considered to be one of the largest professional services firms in Pakistan, and regarded as one of the most reliable.

Shah states in his letter that, “I was personally trained with, and worked in this firm for eight years from 1981 to 1988.” He went on to say that due to the credibility of the firm he and other directors “accepted the explanation regarding appropriateness of revenue recognition of write-off claims in the initial period.”

The former board member expressed serious concerns in the letter about how AFF handled this audit, as it appears to have ignored the “material misstatements in the financial statements, clearly in violation of applicable accounting standards and have been issuing inappropriate audit reports stating that KE financial statements gave a true and fair view.”

In the letter Shah expresses that there was a “conflict of interest and independence” when it came to the auditor. The fact that the auditor was providing both valuation services and consultation in determining the policy of write offs and working out the figure to be written off as well.

Furthermore, the former board member says that “AFF… had acted as advisor and represented KE before NEPRA, doing the advocacy work, including KE’s request that all its write-offs should be allowed as part of the tariff”.

This role of AFF providing both auditing and consultation services is peculiar, especially considering the fact that the company was able to earn enormous amounts of money from this, explains a source requesting anonymity. According to Shah, the company’s “audit fees was Rs 28.5 million whereas its aggregate fees for verification of write offs amounted to Rs 765 million, or 27 times of normal audit fees.”

Additionally, in the former board members investigation, he was able to learn that “approximately Rs 70 million was paid to AFF for such advisory services.”

KE responds

Following the letter written by Asad Ali Shah on the 10th of January, KE initiated a case against the former board member for, “libelous content being shared and circulated by the defendant (Asad Ali Shah) with ulterior motives…”.

According to the case filed by KE, the company has also claimed that the allegations levelled by the former board member were, “solely aimed at adversely affecting the investor confidence”.

The company also pointed out that the former board member approached the Pakistan Stock Exchange and not the Securities and Exchange Commission of Pakistan regarding the allegations of financial misstatements is “glaring proof that the letter and emails have been issued with mala fide intent and with ulterior motives”.

The company further went on to say that the allegations levelled by the former board member are “neither in the public interest as the bare allegations are unproved and unsubstantiated and instead of approaching the relevant regulators by following the due

process…”.

Complementing this point, KE also pointed out that, as a board member Asad Ali Shah had signed a written agreement acknowledging his “understanding and acceptance of the contents of the [KE’s] code of conduct”. This means that the former board member was obligated by law to the “duty of confidentiality”, even after the conclusion of employment for a period of five years.

The IFRS argument

The company in response to allegations relating to the recognition of consumers through proper documentation like CNICs etc. in line with IFRS-15, is “impractical”. This according to the company had been communicated to NEPRA as well.

Thereafter, the authority had specifically removed the CNIC condition for claiming write-off in the multi year tariff in its decision from July of 2018. Therefore KE is not in violation of the IFRS-15 as the write-offs can be claimed by the company even in the absence of proper documentation like CNIC’s.

Treatment of write offs

According to the filing by KE, in response to the allegation pertaining to the treatment of bad debts, the company references NEPRA’s decision from March in 2017 stating “that the Authority considers that actual write off against private sales, is genuine cost of petitioner’s business”.

Therefore KE argues that these “write offs were recognised as a genuine cost of the business as per the Nepra’s decision”. Hence the argument that these claims were invalid is debunked through Nepra’s own orders as per the company’s claim. The conditions of these write-offs as per the Nepra letter are as follows.

KE states that the write off policy is based on these conditions after consultations with stakeholders and auditors of the company. Furthermore, answering the violation of the IFRS-15 rules, the company quotes the accounting principle of accrual which states “that revenue should be recorded when due rather than when received”.

Person or premises?

According to the Shah letter, the definition of a consumer in the KE policy is fundamentally “flawed and illogical”. The former board member had argued that the policy is not limited to a “natural person and extends to premises”.

Rebuking this claim, the company states that due to the nature of the power utility business in Pakistan, “electric supply is associated with the premises as occupants of the premises keep changing in the form of owners/tenants”.

The definition in the manual provides some room for ambiguity in the definition when it states, “...including a person who owns or occupies a premises where electric power is supplied”.

This is further supported by the authority’s service manual which states that, “the consumer who sells their houses, shops, industries, seasonal factories, etc. without making payment of electricity bills, KE shall recover the arrears from the new occupants of the defaulting premises”.

Kunda (Hook) connections

As far as Hook connections are concerned the company explains that these connections are divided into two broad categories, firstly are the contractual connections which are essentially registered hook connections and secondly are the ones that count as unidentified theft.

According to the KE explanation the first category of connections are registered and sanctioned through documentation. This is done by allotting consumer numbers to consumers of temporary supply, street vendors etc who do not have a fixed premises.

Whereas in the second category, the connections are unregulated and unregistered without the knowledge or permission of KE. The company elaborates on this saying that it only recognises the connections that fall in the first category, where a valid contractual relationship exists. The implication the revenue is being recognised for unidentified electricity theft is false according to the company.

“Mala fide” intentions of Asad Ali Shah?

The phrase Mala Fide is derived from Latin;’mal’ means ‘bad’ and ‘fide’ means ‘faith’. Mala fide refers to bad faith. A mala fide action is one that is undertaken with dishonest intent; a person tries to mislead or deceive.

According to the suit initiated by KE, the company expresses that the former board member “has not only maligned the reputation of [KE], but has also tarnished the reputation of one of the oldest established accounting firms in Pakistan…”.

The company also pointed out the fact that these allegations have been levied by a former board member which a “layman” not familiar with the technicalities and nuances of the law is likely to believe as opposed to allegations by a stranger.

The company goes on to say considering the fact that proper channels of communication concerning anomalies were not followed are a telltale sign that these allegations were disseminated with the intention of creating “feelings of animosity and hatred amongst the public against [KE]”. This claim by the company is supported by the fact that “no formal complaint was made by [Asad Ali Shah] before any relevant authority or forum” prior to the letter written to the PSX.

The company goes on to say that, “this letter has been issued by [Asad Ali Shah] for the purposes of market manipulation…”, the practice of market manipulation is considered to be illegal according to the law.

The most interesting fact to notice in this

entire situation is that Shah apart from being a board member of KE was also on the board of directors at SECP. While talking to Profit sources close to the matter also noted that the commission is the primary body concerned with regulation and it was not approached by the former board member either, which leaves some unanswered questions.

A. F. Ferguson & Co.

As a general practice, auditors don’t discuss any cases or policy related issues with the media, due to obvious potential legal repercussions. Having said that, Profit still reached out to the company for comment but failed to get a definitive response.

To make matters worse, auditors don’t even have a communications department to handle such situations, which makes it difficult to formally contact the company for a comment. However, Profit was able to talk to a former employee of the company. According to Ahtasam Ahmed, former senior associate at the company, “matters pertaining to estimations and provisions are subject to the auditor’s judgement.”

He further went on to say, “therefore, it is quite possible that two professionals might not see eye to eye when it comes to treatment of such accounting matters. Yet, in line with standard audit procedures, these matters are disclosed in the audit report as Key audit matters while for listed entities, a quality review partner is also engaged to ensure that significant matters are dealt according to the applicable financial reporting and auditing standards”. n

Jo Banain Gai Khain Gai

As our standard of living faces a collapse, the main focus of our economic policy should be efficient production of exportable goods and agricultural products

By Abdullah Niazi

Inflation has well and truly breached our walls. The beginning of the month marked an increase of 32.57 per cent on a year-on-year basis in weekly inflation due to a massive surge in prices of both food and nonfood items, especially vegetables like onions and items like cooking oil, according to the Pakistan Bureau of Statistics. The reasons behind this are plenty and have been discussed, screamed, analysed, and shared Ad Nauseam. Pakistan is at one of its most dire moments in its economic history. Reserves are dangerously low, imports are closing down with energy and fuel both on the brink, and the country is on the cusp of default. And with all this going on, for the first time, it seems that Pakistan is truly alone on the world stage. Friendly countries are not extending a helping hand and the International Monetary Fund (IMF) is throwing everything and the kitchen sink at Pakistan’s negotiators in terms of conditions.

All of this we know. But how do the effects of this manifest on the ground? It happens with the little things. Parents pulling their children out of school because they can no longer afford to pay the fees. Families selling their cars and buying motorbikes instead to get around. Labourers eat one meal a day instead of two. Companies are laying off employees that have been with them for decades because they cannot meet payroll. Working professionals with white collar jobs looking for side hustles like becoming Careem drivers or delivery riders.

In every possible way, as the Pakistani rupee loses its value and the purchasing power of our citizens somehow manages to fall to new lows with every passing day, there is a great drain on the quality of life that the people of this country are living. And it isn’t as if any of this is new. Pakistani fares abysmally on human development indicators as it is.

Pakistan’s Human Development Index (HDI) value for 2021 is 0.544 – which puts the country in the Low human development category – positioning it at 161 out of 191 countries and territories. Between 1990 and 2021, Pakistan’s HDI value changed from 0.400 to 0.544, a change of 36.0%. Meanwhile, the Gender Development Index (GDI), which measures gender gaps in achievements in three basic dimensions of human development: Health, education, and standard of living, shows a massive gap.

So what do we do? Immediately, there is little we can do but watch as over hapless negotiators plead with the IMF. But in the longer run there is an important milestone we must target: self-sustainability. For Pakistan

to come out of this quagmire of difficulties it must focus its vision on one thing and one thing alone: growing its own food and making its own products.

A simple equation

For a very long time, Pakistan has been in a bad relationship with debt. And like all toxic relationships, it is a boom-and-bust cycle of taking a loan at a bad time, getting into bad habits, having a falling out, pretending to go through a period of change (symptoms may include political instability, jingoism, and reliance on religious symbolism), before finally becoming desperate enough to once again go back to the debt equation.

According to Raza Agha, a macroeconomist and sovereign debt strategist, Pakistan faces severe external financing challenges with rampant domestic political instability and higher rates in developed markets hitting capital inflows on the one side, while on the other rising commodity prices pump-up the import bill to unsustainable levels at a time when the country’s largest export markets in advanced economies are facing recession. “As a result, SBP reserves have declined rapidly while Pakistan’s dollar needs - projected at $120bn or so over FY23 to FY26 by the IMF - have never been higher. Although the government has been trying to arrange external financing via the IMF and “friendly countries”, the intervening period has led to severe foreign exchange shortages in the market with the rupee falling to unprecedented levels in the interbank and the kerb premium rising sharply,” he writes for Profit

What that means, essentially, is that as prices rise on the global market Pakistan is left vulnerable. Since we rely majorly on exports, we need more dollars at home to buy commodities. And since the American federal reserve is in Washington and not Karachi, the only way to get those dollars is to earn them by selling our products on the international market. Except, since our exports are low, Pakistan is left to deal with a constant double-whammy. Ideally, a major loan from a body like the IMF should be followed by introspection and serious structural reform that leads us to greener pastures. However, that has not been the case. But what would this scenario look like?

This is what it boils down to. The simple fact is that in the absence of borrowing all we are left with is what we as a nation can produce. This means that all the accountants, journalists, marketing professionals, video editors, HR managers and other members of the services industry are useless to what we can call the very basic core of what we as a nation must produce. So what does that leave

us with?

This is a very basic economic equation but at the end of the day, what we produce we consume ourselves and then send the excess of our production to the world to earn dollars and trade with other countries and get products we can’t produce as imports. Our manufacturing sector and our agricultural sector produce the goods that we can consume.

As things stand currently, we have been living beyond our means by consuming more than we produce. In an op-ed published back in June 2021 in Profit warned that we make up the difference between our imports and exports by external borrowing or by foreign exchange remittances from our workers from abroad. “The problem is that we have borrowed for decades. Our level of debt is so much that our net new borrowing ability is being diminished. At the same time our foreign exchange liabilities are increasing. This loss in new borrowing ability is the reason that we are worried about a GOP default for the first time. As a result it’s becoming more and more important that we live within our means. We have to balance our budget and trade deficits. The solution seems simple: increase your production of industries and agriculture and cut down on your imports.”

The agricultural part of the equation

This is where things get even more excessively obvious. Pakistan’s manufacturing industry has a long way to go to be competitive on the international market. But perhaps one of the fields in which Pakistan has the potential, the raw materials, the space, and the natural inclination to succeed is the agriculture sector. And more importantly than that, for a food insecure country like Pakistan, focusing on agriculture gives us the added advantage of regaining our food security and self-sufficiency.

In an international ranking of the Global Hunger Index (GHI) this year, the country ranked 92 out of 116 nations, with its hunger categorised as ‘serious.’ Pakistan currently faces a scenario in which it is largely food sufficient but not food secure. Despite Pakistan being ranked at 8th in producing wheat, 10th in rice, 5th in sugarcane, and 4th in milk production, a 2019 report of the State Bank of Pakistan (SBP) showed that nearly 37% of households in Pakistan are food insecure.

At the end of the day, this is what it essentially boils down to. In a country like Pakistan, food sufficiency is the most important thing there is and at its core is the agriculture issue. In the three years since the SBP’s report, matters have only worsened. Food price inflation in Pakistan has been in double digits since August 2019. The cost of food has been 10.4-

19.5% higher than the previous year in urban areas and 12.6-23.8% in rural areas, according to figures published by the Pakistan Bureau of Statistics. So how does a country with one of the largest agrarian economies in the world find itself unable to sufficiently provide food for nearly 40% of its population? For decades, agriculture has been neglected and people’s earnings have been hit by one economic crisis after another. On top of this, particularly in the past decade or so, climate change related disasters and changes in the environment have resulted in our already neglected agriculture becoming less competitive.

Just take a look at one crop to understand how bad the situation is. As things stand, there is a lot that needs to be covered. Just a few days ago, reports began to emerge indicating that at a time when the government is desperately trying to save dollars by curbing imports, cotton might also have to be imported into the country because there was not enough production.

The textile sector has raised concerns that the country was facing an alarming decrease in cotton production which is unlikely to cross the five million bales mark. The figures by Pakistan Cotton Ginners Association (PCGA) revealed the country produced over 4.76m bales by Jan 31, against over 7.42m bales produced by the same time last year — a dip of 35.8pc or 2.66m bales.

Before this, things had gotten so bad that left without sufficient locally produced cotton and unable to import the raw material due to LC restrictions placed by the central bank, Pakistan’s textile manufacturers turned to the United States Embassy, demanding that the ambassador take their case to the federal government.

As the letter to the ambassador explained, Pakistan’s domestic cotton production has declined to a historic low this year, dropping to 5 million bales for the current year mainly due to heavy rains and floods. The estimated cotton production losses have been worth more than $2 billion. “This domestic cotton production is significantly shorter than the textile sector requirements as the textile industry of Pakistan consumed nearly 15 million bales of cotton last year, and the current

season anticipated demand indicates that about 10 million bales will need to be imported,” reads the letter.

And that is just one example. Take edible oil for example. According to a report of the central bank, Pakistan’s palm and soybean-related imports stood at US$ 4 billion in FY21, rising by 47% year-on-year, compared to compound average growth of 12.3% in the last 20 years. And in addition to edible oil, these seeds fulfil another crucial purpose: providing feed for livestock including for chickens. What the recent GMO oilseed saga has proven more than anything is that Pakistan needs to be able to grow its own oilseeds rather than being dependent on imports for such a basic caloric input.

To sum it up, Pakistan’s agriculture has suffered from a lack of attention for decades. The country’s natural resources, soil fertility, and robust rivers have kept Pakistan in the running as a solid agrarian economy for almost its entire existence. However, shortsightedness has meant that successive governments have been very comfortable allowing things to run as is without investing in the future. As the population has increased, climate change has dug in its claws, and water scarcity has started hitting farmers, it is quickly becoming apparent that we have fallen behind. Immediate attention is needed, but only time will tell whether decision makers realise the urgency before it is too late. After all, this is not a question of just our agriculture. It is a question of what we are willing to do to survive. n

The simple fact is that in the absence of borrowing all we are left with is what we as a nation can produce. Our manufacturing sector and our agricultural sector produce the goods that we can consume

Pakistan faces severe external financing challenges with rampant domestic political instability and higher rates in developed markets hitting capital inflows

Ammar H. Khan OPINION

Chicken and affordable protein

The price of broiler chicken has increased to more than Rs 400 per kg lately, largely due to supply chain constraints, and a complete breakdown in the supply of animal feed, that eventually leads to production of chicken, and eggs – whichever comes first remains up for debate.

Adjusting for seasonal, and supply-shock related spikes, the price of broiler chicken has consistently remained in the range of Rs 150 to Rs 200 per kg over the last 10 years, as it became the affordable, and sought-after animal protein given increase in prices of other animal proteins. After adjusting for inflation, and in real terms, the price of broiler chicken has also stayed within a range, and as of December 2022, it remains lower than December 2013, despite elevated supply shock driven price levels.

Even though a significant proportion of animal feed for the poultry industry is imported, in a competitive market, little influence of government in setting arbitrary prices, lower barriers to entry and exit has led to creation of a thriving market for poultry. Although the industry remains susceptible to external shocks, such as diseases that may wipe out flocks across the board, the supply continues to increase in-line with increasing demand. Furthermore, the ability to scale up production has allowed market participants to benefit from economies of scale, eventually resulting in lower prices for the final product for the consumer.

Despite significant broad-based and food inflation across the board during the last 10 years, the increase in price of broiler chicken remains considerably lower than other items. It may also be noted here that in the case of other animal protein, such as mutton or beef, the price has continued to increase, and real prices have moved upwards, whereas for chicken, the real prices have either declined, or

remained stable adjusting for any supply shocks. Beef and mutton supply is scattered, and cannot leverage any economies of scale.

Due to absence of any disease free zones, and lack of information regarding vaccination, beef and mutton never really scaled up, due to which they could not benefit from any potential gains in productivity, and efficiency. Before the depreciation of the Pak Rupee, the beef and mutton produced locally was not even competitive, while also not meeting base level quality requirements for export markets. There exists a case to enhance efficiency in production of animal protein, such that the country can start exporting the same, while also reducing prices of other animal protein in real terms.

The country’s population will continue to grow, and so will demand for protein as increasing income levels will increase demand for protein, as it becomes a greater part of the nutrition pie. The productivity and efficiency gains in chicken that have led to stable prices in real terms can also be replicated for other proteins, while also opening potential avenues for export. There exists a strong case for indigenising animal feed sources as much as possible to enhance competitiveness for the final product.

There also exists a case for development of more resilient supply chains, whether that is through development of disease-free zones, or through enabling tracking of proteins, and setting and enforcing vaccination, and other phytosanitary standards. A resilient supply chain is not just restricted to infrastructure, but also to the resilience of financial infrastructure, as can be seen in prevailing circumstances where inability of market participants to import basic inputs led to a ripple effect in supply chains, eventually leading to higher protein prices for the consumer.

There needs to be a deeper focus on how food security needs to be ensured, and through what levers. Food security should not be just about ensuring availability of product, but also its affordability, and the productivity gains that can be unlocked. If we want to feed our population, we need to rethink food supply chains, and productivity – without which we will be forcing the population towards a more intense sustenance and nutrition crisis in the times to come.

The writer is an independent macroeconomist and energy analyst.

What is luxury? And who gets to enjoy it in a regime of controlled markets?

By Shahnawaz Ali

hat do you think of when someone says the word luxury? Is it silk robes, satin gowns and marble floors befitting a Roman Emperor? Or is it finely cut Italian boots, long cars with leather seats and a serving of albino caviars on a cruise yacht?

The word itself has a problem — there are no set limits to what is and what isn’t luxury. In Pakistan, for example, the definition of luxury may be a Toyota Fortuner, lamb chops,

IMPORTS

and throwing away gold coins at a wedding. Yet when the government gets involved, the definition of luxury becomes very important for one major reason: imports.

WAs Pakistan’s reserves have withered away and the economy has entered dire straits, the government has been trying everything other than concrete measures to plug the gap. One of these measures has been restricting imports. The only problem is, while stopping Baskin Robbins ice cream, cars, or Happy Cow cheese from entering Pakistan to save dollars is well and good, how many dollars is this really saving us? And more importantly, are there possibly crucial items that are imported in Pa-

kistan and cannot be categorised as a luxury?

Look at it this way: The import component in a meal of daal fry with roti and a cup of chai is upwards of 85%. It is important to note that the aforementioned meal is the simplest meal any Pakistani has grown up thinking of. This is not luxury and how Pakistan got to a point where we became so insecure in our staples is a whole different yet relevant question. Items as basic as feminine hygiene products, medicines, wheat, daal, and petrol. Pakistan was able to shrink its current account deficit for the first half of the fiscal year, by 60%, in December 2022. This figure was achieved by first banning luxury imports and

Dr. Aqdas Afzal, Professor of Economics, Habib University

then later monitoring the import of goods, case by case. Having achieved a low figure of current account deficit, has Pakistan really achieved the goals of economic austerity? And what do banned imports mean for a free market economy?

But more importantly, who gets to define what luxury imports are? What is the mechanism that is followed in categorising luxurious imports? What portion of our imports can in fact, be categorised as luxurious? How does a ban spill-over into the market, at large? And is this really the solution to the problem(s) that is faced by Pakistan?

What is the problem with importing?

Acountry requires foreign exchange to import stuff. To put it simply, a country, much like a household, has a current account. Wherein, what it buys, has to be justified by what it earns. These earnings are shown in the terms of that foreign exchange, or in this case dollars. Pakistan earns this foreign exchange by either exporting goods and services, and receiving dollars in return, or through deposits and remittances.

When a country spends more than it earns, it runs a Current Account Deficit (CAD). Contrary to popular belief, running a current account deficit is not the problem, the problem is how big that differential is and how it is going to be sponsored. If a country cannot readily afford to run a CAD, it generally falls in a Balance of Payments crisis.

Pakistan has been running a current account deficit for the last few years. And it has increasingly become difficult to fund that deficit. There are two ways to reduce this deficit. One is that you start exporting more and start receiving more in remittances. And another way to reduce this gap is to reduce imports.

Much like a household, whenever a higher CAD is run, the people often get lectured by the higher ups to bring moderation in their spending habits. A minister of state went on

record to tell people that their tea drinking habits might actually be responsible for the country’s economic woes. Now imposing restrictions on your own kids might be easier, but treating a population in excess of 220 million as children is a different ball game. Regardless, in the greater interest of the country, the government decided to impose these restrictions. But this gives rise to another, more fundamental question. One that was asked at the beginning of this article, what is luxury? What started off as a ban on some “luxury” goods in May, later turned into more and more bans. To the point where everyone importing anything had to get an approval of necessity, from the central bank. Semantically, what is not necessary could effectively be deemed as a luxury.

How are imports categorised?

In Pakistan, goods are categorised under the Pakistan Imports and Exports Control Act, 1950. This is a “Harmonised Commodity Description and Coding System” (H.S Codes), known as Pakistan Custom Tariff/ PCT codes. These goods are clubbed together with their individual codes under hundreds of groups of commodities from a customs clearance perspective. The nature of the division is such that most of the codes don’t differentiate between high ticket and low ticket items. For example, the Custom PCT code number 02.01, “Meat of bovine animals” has 3 subcategories, Carcasses and Half Carcasses, Other Cuts with bone, and Boneless. The distinction is based on size and bone presence, not on the basis of, say, wagyu meat and a common cut of beef.

In April 2022, at the onset of the new government, Pakistan adopted a new imports policy where Import Policy Order 2022 was imposed. It was later amended to be much more strict on the 19th of May. The SRO 598, issued on the 19th of May, prohibited the import of different products under 85 groups of

commodity description as per the PCT codes. Some of the prominent members were. Mineral Waters, Auto CBUs, Carpets, Chandeliers, Chocolates, Sanitary and Washroom products, and Pet foods etc. Within days, the government realised that what they had done was going to have impacts beyond their current account goals.

Eleven days later the ministry issued another SRO, announcing that any raw materials in the earlier order were exempt from the ban. A month and a half later, another SRO stated that any imports that had already reached the ports would be cleared, imposing a 5-15% surcharge on the clearance. On the 23rd August, all CBUs and machinery were also allowed to clear subject to a 100% surcharge (these imports are being processed over time).

In October, Pakistan’s foreign reserves dropped to dangerously low levels. This resulted in an even tighter control on imports by the State Bank itself. But before that, by the looks of it any sizable import was allowed through (at a cost) and the ones left behind were the items not as desirable. Which begs the question, whether the impact these items create is big enough to reduce Pakistan’s imports? And was it this “categorization of luxury” that led Pakistan to an even bigger liquidity crisis?

How big is luxury consumption: Food’s share of the pie

Apopular group that was hit by the import bans is food. Be it Pastas, confectionery , fish, chocolate, processed meat, fruits and dry fruits. But here is where it gets tricky. When we look at Pakistan’s import payment receipts, the largest portion of food imports does not go to kit kats and salmon rolls. It goes to palm oil, wheat, pulses and soybean oil.

As appropriately pointed out by an economist Ammar Habib Khan in a tweet, the import component in a meal of daal fry with

Since the exports are not going up in the short-run, it seemed necessary for the government to keep the exchange rate stable by running a break-even current account so that prices remain in check. But it is not something that can be done as a medium to long term strategy. Even high ticket items like cars, when stopped manufacturing, cause massive unemployment

roti and a cup of chai is upwards of 85%. It is important to note that the aforementioned meal is the simplest meal any Pakistani has grown up thinking of. This is not luxury and how Pakistan got to a point where we became so insecure in our staples is a whole different yet relevant question.

To make matters simpler, we look at the import payment receipts by the state bank, these commodities are divided into 8 groups. The 8 groups are Food, Machinery, Transport, Petroleum, Textile, Agriculture, Metal, and Miscellaneous. For the last one year, an average 9% of our imports every month have been pulses. Similarly, 40% as Palm oil, and 6% as Tea have been consistent whereas wheat, sugar, vegetables, spices and even dried fruits make guest appearances every other month based on the newest agricultural crisis. The combined proportion of all the other foods that have been imported in Pakistan in the last 1 year is close to 20%. It is important to remember that all these other food imports have a total of at least 100 groups in the PCT codes, each one of which has further categories. Banning 10 of these groups raises serious questions in impact evaluation.

Despite the many administrative measures, the import payments for food between Jun-Sep 2022 ($2,647,013,000) was almost identical to the previous year’s Jun-Sep bill ($2,659,280,000), a 0.4% decrease.

The reason for that was that any reduction that could have been observed was eaten up by wheat, soybean, and sugar. The real impact is seen afterwards, since the scrutiny on the release of Letters of Credits was increased by the State Bank in October. Only necessary imports were cleared and unnecessary ones were stopped, despite all the categorization done earlier. This helped achieve the num-

23,696,958

bers for reduced imports but also reduced the export number. This caused supply chain disruptions, causing industries to shut down and producers to withdraw.

Another thing with food is the age-old law of averages. This gets clearer when you look at the pricing of buffet menus. When it comes to food, there is only so much a group can consume, both in terms of quantity and nutrition requirements. After a certain upper cap is reached, adding or subtracting dishes does not make a difference in the total price of the buffet, because whatever a person might miss out on in one dish, he will wake up for, in another.

That is something that can also be observed in food in general, specifically in the case of diversified PCT codes of “All other food imports”. With a growing population, this food bill is bound to grow. If cut down from one side, the impact will become visible in another item. A packet of Italian cheese may be an expensive import, but is the alternative food completely homegrown? So while aiming for high ticket value might be the best myopic solution, food will always be a problem as long as we import components of all the food that we eat. A more pertinent way to look at this problem could be by decreasing the imported percentage of the most highly consumed food, or simply by disincentivizing the consumption of imported staples. And this is where the question of political popularity with the masses pops up. A deal-breaker.

Non-Food Imports

The argument for non-food luxury sounds saner in comparison. That is, if the person who makes it, also stands by it. Most of the Auto

23,490,002

CBU imports, up until August have been cleared under legal guise, the processing of which is being done over time. The only victim was the consumer or in this particular case the Auto industry.

Similarly, machinery imports were reduced during the same period, by almost 29%. But the LSMI during the Jul-Nov period in 2022 has also been down by almost 4% YoY, wherein, November alone saw a hit of 5%. The data for December onwards has not been released yet, which would be drastic considering the major industries closed after that.

Despite imposing bans on luxury on the 19th of May, Pakistan imported its biggest consignment of petroleum fuel worth $2.8 billion, in June 2022. To jog our memory, a subsidy on fuel had yet to be completely taken off throughout the month of June. The reasonable explanation of this import decision is as unreasonable as political gains.

Although there was a huge decrease in the transport group and the machinery group, that effect was totally subsided by the imports of staples like petroleum, wheat and pulses. This was to an extent that the difference between the total imports of both the periods in their respective financial years was 0.87%.

The non-luxurious impacts of banning luxury

When the government intervenes to an extent this great in a market, there are bound to be problems. This ban started

Total Change after import ban: 0.87% decrease

No investor would want to invest in a country that doesn’t even provide them with the basic freedom to import raw material. Creates yet another hurdle in the way of incoming FDI

Dr. Ikramul Haq, Advisory Board Member PIDE, Visiting Faculty Member LUMS

from a child’s unfulfilled wish to consume a Milky Way bar, but has now come to our ability to afford Chicken and daal. A simple case of soybean containers is a prime example of how intervention causes havoc across the industry. And there is more than one cost to be borne when restricting imports. It can range from reducing competition to disturbing supply chains. Even if we ignore the impact of the problems caused by monitoring of the LCs, in the last 3 months. The banning of some imports alone, results in lack of productivity in the current markets. With decreased competition and protection available, the local

producer will always target the lowest common denominator of quality. This phenomenon can be observed in large scale manufacturing already and is all set to trickle down into small businesses.

It is also extremely detrimental to investor confidence in any market, “No investor would want to invest in a country that doesn’t even provide them with the basic freedom to import raw material. This creates yet another hurdle in the way of incoming FDI”, says Dr. Ikramul Haq, Advisory Board Member PIDE and Visiting Faculty Member at LUMS.

Total change: 0.4% decrease

Conclusion

There is a subjectivity that surrounds categorization of goods as luxury or non-luxury, one that was referenced in the start. Cat feed becomes a luxury when your vantage point is a 4-canal bungalow in Gulberg, but a rural shelter might still need some of that feed for its under-nourished cats. Pasta looks like a luxury when eaten at an expensive restaurant, but not when you eat sawaiyan at home on Eid.

A leading group of people are of the opinion that a ban is something that Pakistan has had to do as a last resort. Dr. Aqdas Afzal, an economist at the Habib University, told Profit that, “Since the exports are not going up in the short-run, it seemed necessary for the government to keep the exchange rate stable by running a break-even current account so that prices remain in check. But it is not something that can be done as a medium to long term strategy. Even high ticket items like cars, when stopped manufacturing, cause massive unemployment”.

And no country wants to paralyse its industry. There is a lot of weight in the arguments for controlling imports, as of January 2023. But was this the case 4 months ago? Political war-mongers will get away by quoting a reduced CAD figure. But as of now, the industry, which is our only hope out of the BoP crisis, is choked for production.

There is a long standing consensus on the issue of imports and that is import substitution. Almost all the political leaders, and experts agree that this problem can only be solved if substituted, but that cannot be done without providing breathing space. Because what other option does the government have? Do we change how and what the people eat? What do they wear? Do we change our consumption habits overnight? As wishful as it sounds, even if the people stop consuming one thing, in a failed state, the then adapted substitute will also have to be imported eventually. There is room to come out of simplistic notions and strawman arguments. If Pakistan is to look towards a long term solution the short term solutions should not be cutting the very branch that we are hanging from. n

Mass transit may become the only sustainable way to travel in Pakistan

As distances rise, so does the possibility of earning. Access to personal mobility, through bikes or cars, has been a distant dream for the working class, and now even those who earn six figures are looking for alternatives

By Momina Ashraf

Two years ago, Ezza Fatima brought immense pride to her family by getting admitted to NUST, Islamabad after passing with flying colours in the entrance exam. Her parents were happy, Fatima was content, and the future looked bright. Except for one hitch: Fatima lives in Bahria Town Phase 8 which is approximately 23 kilometres or an hour away from NUST.

In another household, Mohammad Akram’s wife, Saba Kiran, one evening proudly boasted to her friends that her husband got a permanent government job as a driver in the Ministry of Defence. No matter the rank, in Pakistan a government job brings stability, prestige, yearly appraisals and access to many other perks. The couple lives in Khanna Pull, Rawalpindi and Akram’s workplace at the Pak Secretariat is approximately 12 kilometres away from his residence, an enormous distance but manageable with his CD 70.

Given that the latest petrol rate since January 29, 2023, is Rs 250 per litre, let’s look at the daily expense for both Fatima and Akram. Fatima’s car gives her an average of 12 kilometres per litre, which means she spends at least Rs 500 on her one-way ride to university. So on a daily basis, she spends Rs 1,000 just to attend university. On the other hand, Akram’s bike gives an average of 35 kilometres per litre, which means he spends about Rs 85 on his one-way ride to his workplace. On a daily basis, he spends Rs 180 every day visiting his office.

Both Fatima and Akram are in a long-distance relationship with their dreams. The relationship turned toxic, as fuel prices saw a surge. Although Fatima and Akram come from very different socioeconomic backgrounds, both have found a solution in the Metrobus, which costs them Rs 80 (40+40) for a round trip to university and work, respectively.

With the current price hike, the fuel burden has reached a historic high. It’s no longer a matter of affordability for an ordinary citizen, but it is also a heavy burden for an already cash-strapped government. According to the Pakistan Bureau of Statistics in December 2022 30% of Pakistan’s total imports were spent to buy fuel only. The import bill is likely to go upward as fuel prices reach a historic high, and the dollar peg is removed. Such difficulties for the government are manifested in the lives of ordinary citizens, as they are the ones repaying the debt through high energy costs to fill the fiscal gap.

In this scenario, a lot of people are looking for alternate options. Mass transit, which argues in favour of affordability, mobility and environment preservation may become the safe haven for the plunging economy. To understand this, let’s explore it further.

Pakistan’s BRTs

The Metrobus (MBS) was inaugurated in Lahore in 2013, and marked Pakistan’s first bus-rapid transit (BRT). As described by Gulraiz Khan, an urban

“Our city designs don’t provide what we call the last mile trip, the short travel from home to station and vice versa. The roads don’t have dedicated sidewalks, enough lights or security measures to increase walkers’ confidence, especially women. The streets and roads are designed for cars which makes walking quite

design practitioner in Karachi, the MBS is designed on the criteria laid out by the New York-based Institute for Transportation and Development Policy. It’s modern and smart; with barrier control, an automated fare system, air conditioning, wifi, segregation, information systems and a precision bus-docking system synchronised with sliding, automated glass doors that give it the look and feel of a subway station. Initially from just Rs 20, the comfortable MBS ride can cover a distance as long as 27 kilometres. The consequent BRTs, MBS Islamabad-Rawalpindi, MBS Multan, Orange Line Train Lahore, Transpeshawar, Green Line and the brand new, women-exclusive Pink Peoples Bus Service in Karachi follow similar or improved design and service.

The alternative options for Pakistan’s sprawling middle class are, auto-rickshaw, bike or Hiace, which cost at least two to three times more for distances for which the BRT charges just Rs 30-40. There are and always will be those who will still be able to afford personal cars, but then this mass transit is not for them.

“It’s cheap and comfortable. I have to travel from F-6 Islamabad to DHA Phase II (a distance of 22 kilometres) for my job daily and I can’t afford the luxury of having my own car or pay around Rs 1,500 a day to inDriver so I prefer the Metrobus,” said a female rider, requesting anonymity.

In its first year, Punjab Masstransit Authority (PMA) reported that MBS Lahore received a ridership of 140,000 people per day, more than the projected 120,000 per day. Similarly, Lahore’s Orange Line Metro Train (OLMT) has also been quite successful in terms of ridership. Just two years after its launch, the OLMT made a historic high in a total ridership of 50 million. According to the data revealed by TransPeshawar, the city’s electric-hybrid BRT, Zu Peshawar, also witnessed a surge in ridership. A total of 74 million riders travelled in 2022, of which 30% were females. The number indicates a 45% increase from 2021.

Since February 1, 2023, the country’s first women-only buses have also been inaugurated in

URBAN PLANNING

dangerous”

Naveed Iftikhar, urban planner

Karachi. Known as the Pink Peoples Bus, it takes 50 women passengers and has women conductors and drivers. The bus passes from Malir to Tower at very minimal costs. There are eight buses as of now which run every 20 minutes from 7 am to 11 am and then from 4 pm to 9 pm, and every hour the rest of the time.

These figures clearly indicate that there is a demand for mass transit. Despite that, these projects have often come under hot water for their huge cost. Mass transits all over the world are built from heavy initial funding which run on subsidised rates to provide relief to the customer. In 2013, the metro bus charged a ticket of Rs 20 to travel to any stop in Lahore, including the longest route of 27 kilometres from the city’s outskirts of Gujjumatu to Shahdara. The government, back in 2013, was paying a subsidy of Rs 40 per ticket, which became a major point of contention. But it is worth noting that mass transit costs go beyond just the financial burden. Its usage is essentially a lifestyle change, and the possibility to achieve things which would otherwise not be possible. “Such projects are supposed to repay themselves over time because of ridership,” said Ammar A. Malik, infrastructure and development researcher at William and Mary research lab.

The OLMT was built on a Chinese loan of almost $1.2 billion. Given the project details, the loan is to be repaid in the next 20 years. The data in the Punjab Planning Commission Form-I, commonly known as PC-1, shows that the net benefits of the project will start showing positive figures in its 15th year. These figures only include financial costs such as power, maintenance, labour and benefits in terms of revenue generation. This means that after 15 years, the project will essentially sustain itself.

But with mass transits, there are a lot of latent benefits also which don’t usually account for immediate financial benefits. For example, the OLMT alone projected to create 2000 job opportunities. An officer at PMA

who wishes to be unnamed said the unofficial number was higher.

The documents of PMA also reveal an Economic Rate of Return (ERR) of 13.6%. “Economic rate of return also includes the benefits accruing to society instead of purely the revenue returns. For mass transit, this number indicates job creation, reduction of cars on roads, fuel saving, reduction in carbon emissions and even time savings. This is an international standard and usually, if a project has an ERR of more than 10% it is considered economically viable,” explained Malik.

Walkability

The country’s BRTs cover most of the key metrics of a good service such as ridership capacity, service and operation ability (such as convenience and punctuality). These are some pointers that our BRTs check mark, however, these don’t account for the real-life experience of different people.

Malik, who worked on a research project on street harassment and fear of violence in Lahore said, “We observed that women feel safe on the bus but the fear increases as soon as the ride ends and they have to walk out of the station towards the streets or simply while getting out of the bus as a lot of people try to push and touch inappropriately then.”

This fear prevents many women to ride the bus and take different routes. “I’m able to walk to the station from home during the day because it’s quite near and daytime feels safe. But the station near my office is in an isolated area and the only reason I’m able to take the bus is that we have an office car there to pick us up. Sometimes I take the autorickshaw or an app-based cab which can go up to Rs 300 just for a five-to-six-minute ride,” said the same female rider who wishes to stay anonymous.

Such problems point towards cities more than public transport. “Our city designs don’t provide what we call the ‘last

mile trip’. It is a short trip from home to the station and vice versa. The roads don’t have dedicated sidewalks, enough lights or security measures to increase walkers’ confidence, especially women’s. The streets and roads are designed for cars which makes walking quite dangerous,” explained Naveed Iftikhar, an urban planner.

“Our harassment and street crime project was with smart city Lahore and Punjab police. We built an app to report fear and harassment and observed that in areas where police patrolling was present, the reports were quite less,” said Malik. “But police patrolling duties were not based on areas where fear of reported crimes were high, but it was based on the personal decision of the local police,” he continued.

The city expansion, through housing societies, bridges and highways makes it inaccessible for the common citizen. “The concept of a highway is not meant for within a city but to attach to different cities. In our old neighbourhoods such as Burns Road and Tariq Road, you can see the presence of all age groups of men and women. It’s because they are streets conducive to walking. Compare that with neighbourhoods like DHA where you can hardly find a footpath. Even small errands like getting bread and milk are done on cars,” added Iftikhar.

The year 2022 was a traumatic one for Pakistan in terms of economic and environmental strain. In the expanding cities of a developing country such as Pakistan, the strains fall more heavily on the middle-income and lower strata. As distances rise, so does the possibility of earning. Access to personal mobility, through bikes or cars, has been a distant dream for the working class, and now even those whose pay touches six figures are looking for alternatives. However, the elimination of cars may never become a reality as long as their use is not actively disincentive by the government, or elements of walkability improved. n

Economic rate of return also includes the benefits accruing to society instead of purely the revenue returns. For mass transit, this number indicates job creation, reduction of cars on roads, fuel saving, reduction in carbon emissions and even time savings.

This is an international standard and usually, if a project has an ERR of more than 10% it is considered economically viable

Ammar Malik, infrastructure and development researcher at William and Mary research lab

‘Who is making all these decisions’, asks nation’s chief executive

By The Dependent

ZIMMEDAARABAD – The prime minister on Wednesday came down hard on “those responsible” for executing things that should not have been executed, cautioning that the executive steps taken could have consequences where there should not be any consequences.

The remarks come amidst chaos in multiple sections and segments of governance, with decisions being taken and policies made that are responsible for the volatility.

“Who is taking these decisions?” asked the person elected to head the government responsible for taking these decisions?

“Who is making these policies?” implored the chief exec-

utive of the nation, leading all policymaking for the state over the past 10 months.

The head of the government reiterated that those behind these policies and decisions should know that they are creating a bad name for him.

“How will people remember me in the future, when they think that I made all these policies, just because I was the ultimate authority to make these policies?” the prime minister further queried.

“Those responsible for giving me a bad name, should remember that I will always have bad feelings and emotions for them,” added the chief executive with deep emotion visible on face.