ECC approves Rs24 billion grants
The government on Tuesday approved several supplementary grants totalling Rs24 billion, including the additional money for armed forces and Rs10 billion for building Customs posts along the Indus River.
The Economic Coordination Committee (ECC) of the cabinet, which took those decisions, also constituted a committee to negotiate a settlement with Asia Petroleum, which is a joint venture between Pakistan's government and foreign firms.
A finance ministry statement said that the meeting considered several proposals and summaries submitted by ministries and divisions, including requests for technical supplementary grants, along with other important policy and administrative matters.
The ECC approved roughly Rs24 billion in supplementary grants, a growing number that shows poor budgeting and has also often been criticised by the International Monetary Fund.
The ECC approved a supplementary grant of Rs7.1 billion for the Ministry of Defence, including Rs2 billion for discretionary-nature projects in Punjab. "On two separate summaries submitted by the Defence Division, the ECC approved a technical supplementary grant of Rs2 billion for the Sustainable Development Goals Achievement Programme (SAP) in Punjab during the current financial year," said the Ministry of Finance.
The committee also approved a supplementary grant of Rs5.1 billion for defence services, covering capacity enhancement, infrastructure development, community engagement and cybersecurity.
The ECC decided that the Rs5.1 billion grant would be released in a phased manner and due to its recurring nature, the related expenditure would be incorporated into the regular defence budget from the next financial year.
The National Assembly has this year approved Rs2.55 trillion for the defence budget but the armed forces also get money in addition to the regular budget for special purposes.
The ECC took up a proposal regarding the establishment of Digital Enforcement Stations by the Federal Board of Revenue (FBR) along the Indus, Hub and Balochistan rivers, in line with a decision of the prime minister dated September 19, 2024.
Against the proposed technical supplementary grant of Rs10 billion, the committee approved an allocation of Rs3 billion for the third quarter, with the remaining amount to be allocated in the fourth quarter, said the finance ministry. The ministry had certain observations against the FBR's summary, but it subsequently agreed to release the funds.
Despite injecting billions of rupees to improve FBR's infrastructure and human resources, the tax authority remains unable to achieve its targets.
The ECC approved a technical supplementary grant of Rs323 million for the provision of 15 coasters to the Directorate General of Special Education to facilitate the transport of special children enrolled at the Autism Centre of Excellence being set up in Islamabad. The centre is intended to cater to at least 300 children suffering from autism spectrum disorder by providing them with a safe and enabling learning environment.
The ECC green-lighted a supplementary grant of Rs3.7 billion for Public Sector Development Programme (PSDP) projects aimed at strengthening digital connectivity, enhancing IT infrastructure, promoting e-governance and supporting the development of ICT ecosystem, with a direction that the funds be appropriately deployed to the designated projects.
The committee considered a request from the Ministry of Information for a supplementary grant of Rs1 billion for its Film and Drama Finance initiative. It aims to strengthen Pakistan's film and drama industry and support the country's strategic narrative at national and international forums through responsible, high-quality screen content.
The ECC approved an allocation of Rs700 million, with the directive that the ministry submit a six-monthly report on the utilisation of funds against clearly defined key performance indicators, ensuring competitive, transparent spending through the involvement of top-quality professional content producers.
A summary submitted by the Petroleum Division on the future of Asia Petroleum Limited's (APL) pipeline was also considered. The ECC constituted a committee comprising representatives of the Petroleum Division, Finance Division, Law and Justice Division, Special Investment Facilitation Council (SIFC) and Pakistan State Oil (PSO) under the ambit of the National Task Force-Implementation of Reforms (Power Division) to formulate a way forward by January 31.
The committee will negotiate the terms of an implementation agreement, including the guarantee agreement and the Letter of Agreement with APL, and will also decide on the ownership of fuel and the alternative use of the pipeline.
The Petroleum Division had submitted three proposals to the ECC. It suggested the continuation of the APL agreement till March 2027, which would have required $41.8 million for the settlement of dues.
The second option was to immediately terminate the contract by paying $32 million but it would have created legal risks under the sovereign guarantee and bilateral investment treaties. The third option was to constitute a negotiating committee to settle payment obligations with mutual consent.
APL was set up with World Bank's assistance in 1994 as a public limited company, which owns and operates an 82km-long pipeline system with throughput capacity of 3.2 million metric tons per annum.
The pipeline was commissioned to supply furnace oil to Hubco's power plant. APL is a joint venture among PSO (49% shares), Infraavest Limited, Hong Kong (26% shares), Independent Petroleum Group, Kuwait (12.5% shares) and Veco International, USA (12.5% shares). The implementation agreement expressly prohibits unilateral termination without adherence to the stipulated procedures.