Even as criticism intensifies on the National Logistics Cell (NLC) for moving beyond its charter to expand its businesses, the government on Monday approved a Rs35 billion surplus budget for the army’s logistics arm – with a slap on the wrist warning to avoid stepping beyond bounds.
The revenue and capital budget for the NLC for fiscal 2012-13 was approved during a meeting of the National Logistic Board (NLB), which is headed by Finance Minister Dr Abdul Hafeez Shaikh. The budget has been approved at a time when the NLC is coming under increasing criticism for venturing into areas that do not fall under its ambit.
Established with a mandate to provide logistics to the army, the NLC has slowly transformed into a commercial entity. It has been found illegally investing in the stock market, causing Rs1.8 billion in losses to its kitty; and venturing into real estate and construction and other profit-making businesses.
While approving the budget, the government has asked the NLC management to strike a balance between realism and motivation, and not to unnecessarily exaggerate the supposed benefits of its projects.
The NLC’s revenues have been projected at Rs35 billion, while its operating expenses have been estimated at Rs29.6 billion: showing a surplus of Rs5.4 billion. To a question whether the NLC’s revenues also include fees charged from Nato containers transiting through Pakistan, Shaikh claimed that Nato was not paying a fee to any entity in the country. The roughly $235 charged per container was on account of handling, scanning and toll charges, he added.
The NLC director general informed the meeting that the entity has paid off all of its loans and liabilities, and has become a debt-free organisation as of last month. He said the NLC earned 11.2% net profit to revenues last year.
While giving in-principle approval for the closure of a joint venture titled the Karachi Financial Tower Project, the board asked the management to evaluate other options for settlement with the companies working on the project.
The meeting also held lengthy deliberations on the proposed closure of a joint venture agreement between NLC and another company on a construction project in Qatar; and to get full management and financial control of the said projects. The finance minister approved one part of the proposal – of paying off 10 million Qatari riyals to the other company, and to inject fresh capital to start work independently. In this regard, the meeting decided that the NLC should work further on the different aspects of its financial arrangements with the partner company.
On Pakistan Railways’ dues to the NLC, amounting to Rs700 million, for the repair of locomotives, the finance minister asked the finance secretary to hold a separate meeting between Pakistan Railways, the NLB and a Finance Division representative to resolve the issue.
The meeting also approved in-principle the acquisition of an Ultimate Building Machine from Military Engineering Services (MES) at a cost of Rs250 million.
Published in The Express Tribune, August 14th, 2012.