Financial arrangement: HDF act amended to allow fund’s use for any purpose

Province can use money for not only other energy projects, but all financial needs

PESHAWAR: The provincial government has amended Hydel Development Fund (HDF) Act, 2006 through an ordinance and enabled itself to use the money available to meet any financial needs.

According to the ordinance, a copy of which is available with The Express Tribune, the title of the ordinance has been changed to K-P Energy and Power Development Ordinance, 2016.

The ordinance legally permits the energy and power department to utilise the funds available under the HDF head for hydel and other energy development projects. It also allows the provincial government to use the money for any purpose.

Behind the system

To utilise the funds, the government has to obtain permission from a board which the ordinance defines by amending Subsection 1 of Section 4 of the HDF legislation. The board will comprise 11 members. The chief minister of K-P or his nominee will be the chairperson of the board. However, nobody below the rank of a provincial minister will be the chairperson.

Other members of the board include K-P finance, energy and power ministers, chief and additional chief secretaries as well as energy and power and finance secretaries. Other members will be Bank of Khyber managing director, president of any leading public sector bank or development financial institution stationed in Peshawar and Pakhtunkhwa Energy Development Organisation and Khyber-Pakhtunkhwa Oil and Gas Company Limited chief executive officers.



Suiting needs?

Officials privy to the matter told The Express Tribune the energy and power department wanted to amend the HDF act through a legislative bill passed by the K-P Assembly. However, the finance department asked the government to include a provision to allow the government to take money from the fund when needed.

Under the original HDF act, which was created by the federal government before the 18th Constitutional Amendment, the funds were restricted for the use of hydel development. The fund was created through an ordinance, which later turned into an act, for the development of hydel energy projects.

"We needed the fund to develop energy and non-energy projects, but the finance department asked for the money for its needs," an official said. "The finance department raised the issue at a Cabinet meeting after which a provision was added to enable the government to draw the money from the fund for any purpose." The official added the government had Rs32 billion in the HDF and the finance department borrowed Rs15 billion of it after the ordinance was promulgated in April.

In an earlier cabinet meeting, it was also suggested the government will return the funds at a decided markup. However, that never materialised and the money will be given back without interest.



"At least the K-P government will not need to borrow money from banks,” the official said, defending the move. “The HDF money was also the government's money, but it could not use it.”

He said the government amended the law via an ordinance and not through a legislative bill from the assembly due to fear of an opposition uproar in the house.

The ordinance has been sent to the assembly and will be turned into an act. The government has assured it will be passed in the coming budget session.

He added if the assembly did not legislate the ordinance and it lapsed after 90 days, the department would resend it. However, this time the provision to use the funds for “everything” would be removed.

Published in The Express Tribune, June 4^th, 2016.