Govt clears 19 projects as austerity takes a back seat

Despite scarcity of resources, CDWP clears over one and a half dozen new projects costing Rs54b

ISLAMABAD:

Despite scarcity of resources, the federal government held two meetings within 72 hours to approve over one and a half dozen new projects costing Rs54 billion, some of them were cleared in violation of Planning Minister Ahsan Iqbal’s own instructions.

The Central Development Working Party (CDWP) - the body responsible for clearing the development schemes - met again on Thursday to take up seven development schemes costing Rs28.2 billion. In its Monday’s meeting, the CDWP cleared 12 schemes worth Rs26.4 billion.



The CDWP is holding meetings at a time when the federal government was already struggling to finance the earlier approved projects due to limitations imposed by the International Monetary Fund. The approval comes at a time when there is a grave shortage of funds, raising questions over central planning.

For the current fiscal year 2015-16, the National Economic Council had approved Rs700 billion Public Sector Development Programme including Rs100 billion for security enhancement and Temporarily Displaced Persons (TDPs).

Against the half-year target of Rs280 billion, actual development spending remained at Rs158 billion from July through December, a reduction of Rs122 billion or 43%.

Projects cleared

According to standing instructions of Planning and Development Minister Ahsan Iqbal, the CDWP will not approve any project that does not have allocation under the annual PSDP. However, Iqbal, in his capacity as Chairman of the CDWP, approved on Thursday three projects in violation of his own instructions.



He cleared Rs15.9 billion project for provision of coal conveying system from terminal to Railway Network at Port Qasim. The project was not part of the federal PSDP 2015-16 approved by the NEC and the National Assembly in June last year.

He also approved the Rs265.6 million worth project meant for enhancing information technology export through an industry support programme and Rs1.5 billion establishment of GSM network in Azad Jammu & Kashmir. Both projects, not part of the PSDP 2015-16, were cleared by the Minister in violation of his own instructions.

On Monday, the Minister had also cleared Rs72.3 million special project cell for Afghan projects despite it being not part of the PSDP. This project will be administered by the Ministry of Planning and Development. This also raises question over setting up a special desk when the ministry can perform the task without incurring additional expenses.

During a press conference held on Monday after the meeting, Iqbal had defended the approval of the project, saying Rs72.3 million was a nominal amount.

However, he overran his own instructions and approved a roughly Rs16 billion project. The transport and communication section of the Planning Commission had some serious observations against this project. It noted that in July last year, the Ministry of Ports and Shipping had gotten the Prime Minister’s approval at Rs4.2 billion at a total length of the system at 5 kilometre (Km).



However, just seven months down the line, the project cost increased by 278% to Rs15.9 billion while the system length was reduced to 4.5 Km.

The project was aimed at transporting coal from the terminal to Railways and loading on the wagons for onwards transportation to Punjab.

Defence

The Minister’s instructions were not feasible, as these can only be implemented during the first half of the fiscal year, said a senior ministry official. His argument was that if the Planning Ministry does not approve such projects during the January-June period of the fiscal year, next fiscal year’s PSDP will comprise of unapproved projects.

Former deputy chairman of the Planning Commission Dr Nadeemul Haque wrote in his blog that projects were often approved without due diligence, would seldom be completed on time, frequently had large cost overruns, focused on brick and mortar and their quality was poor.

He argued that consequently, the realised gains from projects were far less than what was originally envisaged.

Published in The Express Tribune, February 12^th, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.