Despite the lack of allocation, ECNEC okayed the grand scheme

Islamabad:

The caretaker government on Monday approved nine projects worth 372 billion rupees, including a mega-scheme that is not part of the current fiscal year’s development spending and lacks funds – in violation of the Public Finance Management Act.

Out of a total of 12 projects costing Rs 626 billion presented before the Executive Committee of the National Economic Council (ECNEC), led by caretaker finance minister Dr Shamshad Akhtar, two worth Rs 214 billion were withdrawn. The ECNEC postponed approval of a project, the Thal Grand Canal, due to a serious dispute between Sindh and Punjab.

According to a statement issued by the finance ministry, “ECNEC has approved the Thar Coal Railway Connectivity project with the existing railway network at a total rationalized cost of Rs 53.7 billion.”

However, this project is not part of the Public Sector Development Program (PSDP) of the current financial year and there is no budget for it. The Planning Commission received the project on 5 September, the Central Development Working Group approved it on 7 September. Finally, ECNEC gave its final approval on Monday in violation of the Public Finance Management Act which has set clear benchmarks for the inclusion of any project in the development portfolio.

Planning Secretary Awais Manzur Sumra did not respond to questions on whether a project can be taken to ECNEC for approval without a feasibility study and no budget allocation.

The ECNEC-approved plan shows that out of the total cost of Rs 53.7 billion, Rs 26.9 billion will be provided by the federal government over two years and the remaining amount by the Sindh government.

Of the Rs26.9 billion, the federal government is required to provide Rs15.5 billion during the current financial year. Under the current $3 billion program, Pakistan cannot provide any additional grant.

Finance ministry spokesman Qamar Abbasi did not respond to questions about whether the ministry would provide funds to the project in violation of its commitment to the IMF.

This move challenges the PMF Act and tests the status of the IMF at a time when an IMF technical mission is reviewing Pakistan’s budget process. An earlier IMF report this year revealed that Pakistan’s PSDP has become unsustainable due to staggering financing needs of over Rs 14 trillion with small annual allocations.

The Thar Coal connectivity project aims to build a new 105 km single track railway infrastructure from Thar Coal Mines to New Chhor Station and build an 18 km double track from Bin Qasim to Port Qasim. The proposed rail system has the capacity to transport 10 MTPA of coal. It will save the national exchequer from importing fuel to the tune of $1.50 billion a year.

Reading: Rush, ECNEC approves 8 projects

Section 17 of the PFM Act states that no development project shall be considered for inclusion in grant applications which has not received technical approval. No development project is considered for inclusion in grant applications unless it is provided with a budget allocation for the following year that fully reflects the proposed cost of the project for each year, in accordance with the law.

Article 16 states that all development project proposals are subject to a technical approval process. Technical approval is granted only to projects that comply with the standards and procedures set by the Planning Commission.

Apart from the controversial Thar Coal project, the ECNEC approved the Prime Minister’s laptop program at a cost of Rs 16.8 billion, the Northern Bypass project at a cost of Rs 27.1 billion, the KP Human Capital Investment project at a total cost of Rs 24.2 billion financed through a World Bank loan of $85 million and the Khyber-Pakhtunkhwa Food Security Support Project at a cost of Rs 25.2 billion supported by a loan of $83 million from the Asian Development Bank.

The ECNEC also approved the Refugee and Host Communities Program at a cost of Rs 33 billion, the Sindh School Rehabilitation Plan at Rs 86 billion with a loan of $275 million from the Asian Development Bank, the Women’s Funding Program at a cost of 31 .4 billion Rs. including a $106 million loan from ADB and the Sindh Dam Improvement Project at a total cost of Rs74.6 billion.

However, the Greater Thal Canal project was put on hold with a mandate to the Ministry of Planning and the Ministry of Water to develop a proper summary of the status of inter-provincial consultation and implementation of ECNEC’s previous decisions on the matter.

Initially, the Greater Thal Canal was given conditional approval at the ECNEC meeting on 28 February 2002. The approval was subject to the condition that, for the sake of transparency, a telemetry system providing information on water flows would be installed. A separate PC-I for this system was expected to be submitted within a month.

Sindh is of the view that, without monitoring the flow of water at all points, Punjab may receive additional water, violating the water distribution treaty. Sindh contends that without proper and reliable monitoring of inflows into the Indus basin system and without knowledge of the actual usage by Punjab province, the entire exercise of implementing a monitoring mechanism for the Chashma-Taunsa-Guddu reach would be useless and futile.

ECNEC has also granted approval for the Women Inclusive Finance Project, which costs Rs 31.4 billion, including a $106 million loan from ADB. The aim of this program is to ease the constraints for Pakistani women in accessing credit by ensuring that more funds are available for borrowing.

Published in The Express Tribune, December 12^u2023.

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