Govt’s tight pockets could hamper CPEC projects

Against Planning Commission’s demand of Rs350b, indicated allocation amounts to just Rs124b

ISLAMABAD: Financial constraints may hamper progress on critical projects of the much-trumpeted China-Pakistan Economic Corridor (CPEC), as the Planning Commission has so far indicated an allocation of only Rs124 billion in the next financial year, an amount just slightly over one-third of total demand.

The Planning Commission’s hands seem to be tied, hindering allocation of sufficient funds for CPEC projects, with Finance Ministry’s refusal to increase the proposed size of the development budget being the major hindrance, said officials close to the matter.



The officials added that out of the Rs655 billion share of the Planning Commission in the 2016-17 Public Sector Development Programme (PSDP), it has so far indicated an allocation of around Rs124 billion for CPEC schemes. This amount is just 18% of the remaining financial requirements of these projects.

However, the proposed size is subject to change, as the matter will now come in front of the Annual Plan Coordination Committee (APCC), which is headed by the planning minister, and will then be placed in the National Economic Council (NEC). The APCC will meet today (Friday) while the NEC meeting is scheduled for May 30 and is headed by Prime Minister Nawaz Sharif.

CPEC’s details

The total cost of CPEC infrastructure projects is estimated at Rs820 billion and an amount of Rs693 billion is required during the execution period of these schemes.

Pakistan remains unable to meet its growing financial needs of CPEC projects amid frustration expressed by the Chinese officials over the slow pace of work. The Planning Ministry denies that CPEC projects are facing delays.



During Prime Minister Nawaz Sharif’s recent visit to the Planning Commission, Planning Minister Ahsan Iqbal had demanded Rs350 billion for CPEC schemes. The premier had asked the Finance Minister to sit with the Planning Minister and resolve this issue but both sides could not reconcile.

Budget allocations

For the new fiscal year, the total national development outlay is proposed at Rs1.675 trillion, which is Rs161 billion higher than the outgoing fiscal year’s original national development budget. The federal PSDP is proposed at Rs800 billion - higher by Rs100 billion or 14.3%.

However, out of this Rs800 billion, the share of Planning Ministry-administrated PSDP will be Rs655 billion, as the Finance Ministry has so far rejected the demand to increase this number to over Rs900 billion.

The provincial annual development plan is proposed at Rs875 billion - higher by Rs61 billion or 7.5%.



About 90% or Rs110.4 billion of the so far proposed CPEC allocations are going for infrastructure projects, being administered by National Highway Authority (NHA). NHA’s next year’s total development budget is Rs195 billion.

There are eight CPEC schemes under NHA having an estimated cost of Rs762 billion and proposed allocation is just 17% of the remaining financial requirements. For Multan-Sukkur section of the Lahore-Karachi Motorway, only Rs22.9 billion are proposed for next fiscal year against the remaining financing requirements of Rs247.7 billion. The total cost of this project is Rs298 billion.

For Lahore-Abdul Hakeem section, Rs34 billion have been proposed for next fiscal year against the outstanding requirements of Rs130.7 billion. The total cost of this project is Rs150.7 billion.

For the construction of recently approved Burhan-Hakla motorway of western route, the Planning Commission has proposed Rs25.1 billion. The total cost of this scheme is Rs124.2 billion and the Ministry has allotted Rs10 billion spending for this fiscal year. For compensation to the people affected by Burhan-Hakla road, the government has proposed Rs2 billion, which will cover the full cost of this scheme.



For the construction of Thakot-Havelian road on eastern route, the government has proposed Rs14 billion against the remaining requirements of Rs116 billion. For land acquisition of this project, the government has proposed Rs1.8 billion.



For construction of Burhan-Havelian Expressway, the government has proposed Rs5.7 billion against the remaining requirements of Rs22 billion.

For Gwadar International Airport, Rs4 billion have been proposed against the remaining requirements of Rs20 billion.

The government has proposed Rs4.7 billion for construction of Eastbay Expressway project of Gwadar against the remaining requirements of Rs14 billion. For other port related projects of Gwadar the proposed allocation is only Rs1.6 billion against the requirement of Rs17.6 billion.

For conducting feasibility studies to link China and Pakistan through rail network, the government has proposed Rs1.9 billion allocation.

Published in The Express Tribune, May 27^th, 2016.

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