Column Governing by committee

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: A hike in the retail price of transportation fuels and the containment of subsidies to LPG and kerosene. The consequence could be a sharp electoral rebuff. The dilemma of control versus competition: petroleum is a sector of strategic significance. It cannot be left to the vagaries of the market. Government must have overarching control. But it cannot be denied that state controlled ‘dirigism’ has been the bane of the public sector; that competition is a major driver of technical innovation and breakthrough performance; and that our petroleum companies will not achieve world-class standards if shackled to bureaucratic control.

These are political dilemmas that can only be resolved by politicians. These are also dilemmas that lend themselves to empirical study.

The conventional political wisdom is that a hike in the price of petroleum products will inevitably undermine electoral support. I have no doubt that a stand-alone question to a voter, ‘will you support a hike in the price of fuel’, would indeed evoke a strongly negative reaction. But I wonder whether the reaction would be comparably negative if the question were, ‘would you support small and phased price hikes in return for guaranteed product quality?’. Or to the question, ‘would you vote for the person who ‘promised’ subsidised kerosene but was unable to deliver or the person who raised prices but gave secure supplies?’.

Politicians have knee-jerk negative reactions to any suggestion that involves a price hike. However, against the backdrop of product shortages, black marketeering and quality adulteration—all the consequences of our distorted pricing and taxation structure—I wonder whether the fears of politicians are not simply a reflection of their preconceptions and expectations than of voter reality.

The hard truth cannot be swept aside. We are inextricably connected to the international oil market.and volatile prices. Committees can serve a useful purpose in drawing up the consequential route map. But only if there is the political resolve to consider its recommendations seriously.