There’s good and bad news on the 3G auction front. The good news is that bureaucrats are willing to stare down the government where they feel they’re being forced to do something unethical. The bad news is that the government is yet to get over its plan of filling its electoral war chest and staving off default on its foreign obligations with the spoils of the 3G auction.
Meanwhile, the people that the decision stands to affect the most – the investors at telecommunication companies – are just watching the drama unfold. The reservations of the two members of the PTA and NAB’s investigation of the appointment of the foreign consultants are clearly justified. The 3G auction plan gathered dust on the shelf for years because initially the PTA didn’t see the need for having a consultant and then later because they – surprisingly – couldn’t find a credible consultant.
Given this history, the shotgun appointments and the sidestepping of Public Procurement Regulatory Authority rules makes little sense. Further, now that the Supreme Court freely dispenses smacks on the wrist for obeying illegal orders and executing shady deals, this circumspection by PTA’s directors may well be wise. In the meanwhile, with elections rolling around and large foreign debt repayments due in February, the government is desperate for cash.
The forex reserves held by the State Bank of Pakistan have already slipped below the $10 billion mark. The funds expected under the Coalition Support Fund are agonisingly slow to materialise and the runaway currency printing spree by the government is already creating problems. While the estimated revenues from the auction are publicly pegged between $1billion and $2 billion, privately, the country’s economic managers are willing to go as low as $800 million.
Consequently, the pressure is on the PTA to deliver an auction. Caught in this volatile mix are the telecom companies. Before the Rs47 billion scandal erupted, these companies freely criticised the government for delaying the auction. But now, with the Rs47 billion albatross hanging around their necks and the threat of investigations into their withholding tax payouts, they dare not make a peep. With such a potent cocktail of justifications, accusations and counter-accusations and now the NAB investigation, this 3G auction crisis is unlikely to blow over anytime soon.