Austerity axe falls on CPEC, Gwadar projects

Government cuts 455 projects from PSDP

ISLAMABAD: The government has formally axed 455 projects from the ongoing Public Sector Development Programme (PSDP), contending that they had been added to the annual development programme on political grounds.

The Ministry of Planning and Development on Tuesday presented the revised PSDP 2018-19 in a meeting of the Senate Standing Committee on Planning – a week after the mini-budget was presented in the National Assembly.

The document also reveals that a few projects of the flagship China-Pakistan Economic Corridor (CPEC) and Gwadar city have also been dropped from the PSDP.

The decision to exclude unapproved projects would reduce the overall financing needs of the PSDP by Rs2 trillion to close at Rs4 trillion.



However, the revised PSDP document also shows some contradictions. As against the finance minister’s announcement that Rs575 billion will be provided from the budget to finance the PSDP, the planning ministry has kept the allocations at Rs675 billion in the revised PSDP.

But the planning ministry has done this with the consent of the finance ministry, according to an official of the planning ministry.

The last PML-N government had announced Rs800 billion development budget, but the new political dispensation has lowered it under its economic stabilisation policy.

“The government has dropped approximately 400 projects from the PSDP on parameters of all new unapproved projects and approved schemes where spending is either nil or up to 10% of the cost,” Development Budget Adviser Asif Sheikh of the planning ministry told the Senate panel.

But he did not share the exact number of schemes that were dropped from the PSDP.

In the original PSDP document, there were 1,284 schemes, including those funded by corporations that have now been lowered to 829, showing that 455 schemes have been dropped.

The finance minister had announced on the floor of the National Assembly that CPEC projects and education schemes would not be dropped from the PSDP.

However, Sheikh admitted before the Senate panel that at least four projects of CPEC and one dozen schemes of Gwadar had been dropped from the PSDP.

The government has retained the Rs14.2 billion project of construction of the Lahore-Sialkot Motorway despite the fact that there was only 0.4% spending on the scheme. The allocation for the scheme in the new fiscal year is only Rs5 million.

The government also dropped rehabilitation of the Quetta-Dhadar section despite spending Rs700 million on it which is 10% of the total cost. It also axed another project of Kuzdar despite spending Rs500 million on it which constitutes 30% of the total cost. It also dropped the construction of Basima-Khuzdar project worth Rs19.2 billion.

The government has slashed 78 schemes of the National Highway Authority (NHA), bringing them down to only 54. The NHA’s budget allocation was cut by 12%, or Rs25 billion, to Rs185.2 billion.

However, the government added one new scheme – Projects under the Karachi Package – to the portfolio of the Ministry of Communication.

As many as 45 projects of the Higher Education Commission have been dropped from the PSDP, bringing the total number of schemes to 133.

The HEC budget was also cut by 13.5%, or Rs4.9 billion, to Rs31 billion. Finance Minister Asad Umar had assured former planning minister Ahsan Iqbal on the floor of the National Assembly that his government would not cut the HEC projects.

About 83 schemes of the interior ministry, some of them ongoing, have been cut and the government has lowered the overall number to only 29 projects.

The interior ministry’s development budget has been slashed by 48%, or Rs11.4 billion, to only Rs12.2 billion.

In violation of the criteria, the government has retained two projects of the Ministry of Law and Justice despite there was nil expenditure on them.

The construction of Supreme Court of Pakistan Branch Registry Building in Karachi has also been retained even though it has not been approved by any forum.

The government has axed 11 projects of the Pakistan Atomic Energy Commission in addition to reducing its budget by 6.7%, or Rs2 billion, to Rs26.7 billion.

About 12 projects of the planning ministry have been dropped and its allocation has been reduced by 56.6%, or Rs9.2 billion, to Rs7.1 billion. The CPEC Institute of Gwadar has also been axed.

The government has also dropped nine projects of the Power Division and cut its budget by Rs3 billion to Rs33.3 billion.

A Rs3.5 billion project for supply of electricity to Chitral has been cut from the PSDP. The government has dropped 20 projects of water resources and reduced its budgetary allocations from Rs79 billion to Rs78 billion.



Sheikh informed the standing committee that 12 schemes of Gwadar had been dropped from the PSDP, including a project for the construction of a fish harbor on water bay, expansion of the existing hospital at Gwadar, development of academic and research facilities at Gwadar and a scheme for land acquisition under the Gwadar Master Plan.

Overall, the federal ministries’ development budget has been slashed by 15.5%, or Rs68.5 billion, to Rs371.9 billion.

The corporations’ development budget has been reduced from Rs246 billion to Rs218.6 billion – a reduction of 11.2% or Rs27.6 billion.

The Capital Administration Division’s budget has been cut by Rs10 billion or 72% to Rs3.9 billion. The communication ministry’s budget has been reduced by 53%.

The federal education ministry’s budget has been cut by 27% to Rs3.2 billion, and that of the human rights ministry by 88% to only Rs35 million.