Metro bus project: PM approves controversial subsidy sharing formula

New agreement means Punjab will pay less subsidy, get a larger slice of revenue

ISLAMABAD: In a controversial move, Prime Minister Nawaz Sharif has finally accorded his approval to revise the subsidy sharing formula for the metro bus project plying in the twin cities. The revision means that the federal government will be paying more while its share of revenue will fall.

The move will directly benefit the Punjab government which will now have to pay less subsidy while enjoying a greater share of revenue generate from the mass transit project.



Former Capital Development Authority (CDA) chairman Maroof Afzal, who is currently posted as the additional secretary establishment division, had sent a summary for the controversial formula to the prime minister on May 11, 2016.



According to the summary, Afzal informed Nawaz that he [the prime minister], after consultation with the ministries of finance, planning and development, as well as the Punjab government, had approved a formula to equally share the subsidy.

“[This formula was calculated] irrespective of distance, ridership and number of stations as conveyed by the Cabinet Division in May 2015,” read the letter. Afzal wrote that the Punjab government was suggesting that the subsidy should be divided on the basis of length of track and number of stations in Rawalpindi and Islamabad rather than equal sharing.

Under Punjab’s suggested formula, the federal government would have to pay around Rs1.4 billion of the total Rs2.4 billion annual subsidies calculated for the first financial year. The Punjab government, however, would have to pay less than Rs1 billion.

The formula further sets a smaller share of the revenue pie for the federal government as compared to that of the Punjab government.

Metro Bus project: The need to realise the reality

The former CDA chief had pointed out that the Punjab government’s proposal could not override previous decisions taken by the prime minister.

But in a March 31, 2016, a meeting between finance ministers of the centre and Punjab, discussed the new formula and the issue was resolved.

“Now the finance ministry has conveyed that Finance Minister Ishaq Dar has agreed to the demand of Punjab government regarding sharing of subsidy,” Afzal wrote. A copy of the agreement [under revised formula] between the federal and Punjab finance ministers was sent to the CDA chairperson’s office but he refused to sign. Instead, he sent the matter to the premier for his approval.

Punjab’s Chief Minister Shahabaz Sharif also pushed the prime minister over the issue and sought his “urgent intervention” to settle the matter. “I will earnestly request you [PM] to kindly reconsider the stance of the federal government, as the subsidy sharing formula already proposed by us [Punjab] is not only equitable but also sustainable. It will obviate the possibility of any future friction between the governments in the times to come,” Shahabaz wrote in the letter to Nawaz.



While no federal government departments including the CDA or CADD were ready to sign the agreement, the CDA has now received a letter from the secretary to the prime minister, Fawad Hassan Fawad, which carries the prime minister’s approval for the formula ending the year-long dispute.

When contacted, CDA’s incumbent chairman and mayor of Islamabad, Sheikh Ansar Aziz, told The Express Tribune that the row had been resolved as the prime minister had approved
the summary.

Published in The Express Tribune, October 3^rd, 2016.