ISLAMABAD: Three provinces have protested over “unauthorised and unconstitutional” transfer of their funds to the federal consolidated fund and approached the Council of Common Interests (CCI) to get the diversion reversed.

On the complaint of Punjab, Sindh and Balochistan, the CCI will deliberate the issue on Monday (Dec 23) when it is also expected to allow financing of about Rs150 billion loans of Wapda through electricity tariff to pay off net hydel profits to the provinces.

With a total of 16 items on the agenda, the CCI is also expected to seek transfer of responsibility to the provinces to finance devolved vertical programmes of health and population welfare and approve notification of National Census 2017 results.

The CCI under former prime minister Shahid Khaqan Abbasi had taken up final results of the census on May 28, 2018 but had deferred approval for notification since two provincial assemblies had stood dissolved by then.

Meeting of Council of Common Interests to be held on Monday

The CCI comprised the prime minister, four chief ministers and federal ministers for finance, industries & production, inter-provincial coordination and economic affairs.

Federal ministers for law, energy, federal education & professional training, planning and development, privatisation, science & technology, water resources, National Health Services, the attorney general of Pakistan, deputy chairman of Planning Commission, chairmen of Federal Board of Revenue (FBR) and Higher Education Commission, four provincial chief secretaries and at least a dozen federal secretaries would attend the meeting.

Because of the severity of the complaints, the Ministry of Inter-Provincial Coordination has made three separate agenda items of the CCI on the request of three provinces. On the complaint of Sindh, the CCI will debate “unconstitutional and unauthorised deduction by FBR from the Provincial Consolidated Fund (PCF)”. These funds are maintained by State Bank of Pakistan.

On the request of Balochistan, the CCI will discuss “unauthorised deductions by federal government on FBR’s claim on account of alleged outstanding withholding tax on vehicles and 5pc service charges deducted on account of collection of WHT” by Balochistan.

Likewise, on the complaint of Punjab, the CCI has also put on the agenda the “unauthorised transfer of public money from provincial consolidated fund (PCF) to federal consolidated fund (FCF) by the State Bank of Pakistan on the directions of FBR”.

The provinces have been protesting over these deductions and diversions for many years. Last year, the CCI had directed the Ministry of Finance to resolve provincial complaints against the FBR over at source deduction of funds from Provincial Consolidated Fund (PCF) but without any outcome.

Sindh and Punjab have also previous claims of about Rs15bn towards the FBR and have been seeking refunds. The provinces term such diversions from PCF to FCF arbitrary and unlawful practice and the violation of the constitution.

Utter violation

Sindh complained in its summary that the provincial government had been facing frequent arbitrary and unauthorised deductions for past years by FBR in terms of withholding tax and sales tax on goods from the PCF in utter violation of the constitutional provisions. It argues that under Article 119 of the constitution, custody of the PCF and the authority to withdraw money from it belonged to the provincial government and any arbitrary withdrawal of money from the PCF by FBR was a violation of the constitution.

It said Article 121(d) of the constitution also required that expenditure can only be made from PCF for any sum required to satisfy any judgement, decree or award against the province by any court or tribunal. This was not the case when the FBR made deductions from PCF that were made upon executive orders of the FBR functionaries, which could not be treated as authorised under the constitution and this was also upheld by the SBP in communications to FBR.

The meeting is also taking up a summary moved by the Sindh government against the issuance of no-objection certificate (NOC) by the Indus River System Authority (Irsa) for CJ Hydropower Project on Chashma-Jhelum Link canal with majority vote opposed by water regulator’s member Sindh.

The Ministry of Water Resources has also moved a summary for recovery through tariff of mark up on bilateral Islamic and commercial loans obtained by the Water and Power Development Authority (Wapda) for payment of NHP to the governments of Khyber Pakhtunkhwa and Punjab worth around Rs85bn per annum. Wapda had arranged about Rs150bn in loans from various bilateral and commercial lenders to settle NHP dues to provinces under different agreements between the federal and provincial governments.

Likewise, the cabinet division is seeking amendments to Oil & Gas Regulatory Authority (Ogra) Ordinance, 2002, to meet a conditionality by Dec 31 of the IMF programme. Under Structural Benchmark and Performance Criteria for the 2019-22 Extended Fund Facility of the IMF, the government has committed “ensuring regular and timely notifications for end-consumer tariffs in the gas sector” besides “submission of changes to the OGRA Act for CCI approval by end-December 2019 to eliminate the gap between regular semi-annual tariff determination and notification. After CCI approval, a bill will be introduced in parliament for adoption”.

Two summaries of the Petroleum Division are also coming up before the CCI meeting, including implementation of Article 158 and 172(3) of the constitution and royalty on liquefied natural gas by the exploration and production companies at the market value of LPG.

The CCI will also deliberate on the future role and functioning of National Commission for Human Development (NCHD) and Basic Education Community Schools to promote literacy in the country. The meeting will also consider the report of a committee constituted by the CCI on devolution of the Employees’ Old-Age Benefits Institution (EOBI) and Workers Welfare Fund (WWF) to the provinces.

The meeting will also take up Alternative and Renewable Policy, 2019, moved by the Power Division despite complaints by Sindh Chief Minister Murad Ali Shah that it was being pushed through the approval process in “haste” without necessary consultations as required under the constitution on the matter.

Published in Dawn, December 20th, 2019