Funds insufficient to complete some critical schemes of Gwadar and Karachi
ISLAMABAD: The Ministry of Finance has sought Rs112 billion for spending on federally-funded provincial projects and meeting reconstruction needs in war-torn areas for next fiscal year but the amount is insufficient to complete some critical schemes of Gwadar and Karachi.
The finance ministry, this week, shared the project-wise details with the National Assembly Standing Committee on Finance for its endorsement. These schemes are directly and indirectly executed by the federal government, including some China-Pakistan Economic Corridor (CPEC) projects.
According to the Ministry of Finance’s working, the water treatment projects for Gwadar under CPEC and Karachi Water Supply scheme K-IV will not be completed in the next financial year 2020-21 as well.
The federal government has not sought sufficient funds in the next budget for these projects, as proposed allocations are far less than the outstanding requirements, according to the details.
Out of Rs112 billion, the proposed allocations of the Federal Board of Revenue (FBR) stand at Rs8.8 billion. The finance ministry has sought Rs34.5 billion for federally funded provincial projects, Rs48 billion for erstwhile Federally Administered Tribal Areas (Fata) and Rs17 billion for temporarily displaced persons, affected by military operations against the militants few years ago.
The proposed allocation for fiscal year 2020-21, starting from July, is subject to endorsement by the Priorities Committee and the Annual Plan Coordination Committee, which are expected to meet two months later.
In its first review report, the International Monetary Fund (IMF) projected fiscal year 2020-21’s Public Sector Development Programme (PSDP) at Rs796 billion – higher by Rs95 billion or 13.6% over the original budget of this fiscal year.
The Pakistan Tehreek-e-Insaf (PTI) government has so far spent Rs188 billion or 27% of the annual budget and hopes that the remaining funds will be fully utilised before the close of the fiscal year.
A look at the proposed allocations for fiscal year 2020-21 reveals that majority of the projects the ministry is funding in Balochistan and Sindh would not get the full financing. At least three projects are expected to be completed out of total 38 ongoing federally-funded provincial projects.
The government faces serious budgetary constraints, as about three-fourth of the total budget is spent predominantly on debt servicing and then on defence of the country.
Against the expected minimum remaining requirement of Rs2.6 billion, the five-million-gallon-per-day desalination plant at Gwadar, being set up under CPEC, is likely to receive only Rs500 million in the next fiscal year. The project is under implementation since May 2018 and so far only 2% financial progress has been achieved. The scheme is very critical for development and industrial activities in the seaport city.
Similarly, the Gwadar Smart Environmental and Sanitation System and Landfill project of CPEC will receive only Rs100 million against the total requirement of Rs2.2 billion. Another Gwadar project for necessary facilities of fresh water treatment and water supply has been proposed to get Rs1 billion against expected minimum remaining requirement of Rs5.8 billion.
The expected remaining financing requirements are worked out by the Ministry of Finance on the basis of actual spending by December last year and projected allocation for the second half of this fiscal year.
Despite scarcity of resources, the Ministry of Planning is frequently convening the meetings of the Central Development Working Party (CDWP) to approve new projects.
The project for construction of Dirgi-Shaboai road, under implementation for the last seven years, will receive just Rs500 million against the total remaining requirement of Rs1.9 billion. As of December, the physical progress on the scheme was only 42%, according to the finance ministry.
The Gwadar Development Authority project, first approved 16 years ago, would remain incomplete in the next fiscal year too. Against the minimum remaining requirements of Rs12.5 billion, the Ministry of Finance has proposed only Rs1 billion allocations. The physical progress on the project in 16 years was only 48%, showing apathy towards a project that is critical for country’s strategic and development needs.
The Gwadar Safe City project is expected to be completed in the next fiscal year and the government has proposed Rs688 million for meeting rest of the financial needs.
The Greater Karachi Water Supply Scheme (K-IV) has also been proposed to receive Rs800 million against the centre’s remaining share of Rs2.4 billion. This means the project will linger for yet another year despite MQM’s strong reservations against delay in completion of the scheme. The finance ministry’s brief showed 42% physical progress on the project while financial progress was equal to 75%.
The Lyari Expressway Resettlement project, started in 2002, is projected to receive Rs50 million against the remaining requirement of Rs4.7 billion. The establishment of a combined effluent treatment plant for the industrial area of Karachi will get only Rs500 million against the need for Rs2.9 billion.
The project for establishment of an institute of petroleum technology at Karak will receive Rs150 million against the need for Rs1.9 billion.
The finance ministry has projected Rs24 billion for Annual Development Plan of merged districts of Khyber-Pakhtunkhwa for next fiscal year. The allocations for this fiscal year was also Rs24 billion but six-month spending remained at only Rs4 billion.
Likewise, the finance ministry proposed Rs48 billion for merged areas of erstwhile Fata. In this fiscal year the allocation was also Rs48 billion but in six months the spending remained at Rs8 billion.
For relief and rehabilitation of internally displaced persons Rs17 billion have been proposed – at the current year’s level. The spending under this year from July through December has remained at Rs5 billion.
Published in The Express Tribune, February 9th, 2020.