ISLAMABAD: The centre on Monday asked the provinces to jointly allocate Rs110 billion in their respective budgets next year to finance special development of the tribal regions and health sector upgradation in line with the National Finance Commission (NFC) shares.

Speaking at a news conference, Minister for Planning, Development & Special Initiatives Asad Umar said that China has agreed to take up matters relating to Independent Power Producers (IPPS) under the bilateral mechanism. He further added that the so-called debt rescheduling to Pakistan by G-20 countries did not provide any financial benefit to the country.

He explained that G-20 rescheduling would not provide any financial benefit to Pakistan because it would be net present value (NPV) neutral and the loan repayments would be delayed for 18 months. After that, the interest for these 18 months would also accrue on total outstanding and become payable. He said the loan deferral would, however, be beneficial to the extent that cash flows would be delayed.

Covid-19 scheme

The minister said the federal government had allocated in the next year budget Rs70bn multi-purpose scheme for Covid-19 responsive projects and wanted to spend Rs50bn out of this for special health sector projects across the country on matching basis. He said the provinces had been asked to provide a matching amount of Rs50bn for this initiative to upgrade all District Headquarter Hospitals (DHQs).

Centre to provide matching grant for initiatives

With this Rs100bn amount, this would be the country’s largest-ever health sector initiative to upgrade district hospitals to a level that patients do not need to rush to big cities for lack of health facilities and overburden big hospitals as was seen recently in the case of Covid-19 patients. He said the matter had been discussed with the provinces.

The minister said the entire national leadership of the country had promised about two years ago to jointly spend Rs100bn every year for next 10 years on development of tribal districts now merged with Khyber Pakhtunkhwa in addition to their usual annual development allocations. He said the initiative took off with a lapse of about a year and current year about Rs24-25bn could be spent under this head and had to be increased to Rs60bn next year.

He said he had taken up the issue at the NFC level last year that all the stakeholders should provide funds according to their respective share. He said the centre had now provided 40 per cent federal share and expected the provinces to contribute their share to address over 30-35 years of destruction and deprivation.

He said a lot of funds had been spent and dollars received in the name of the tribal region but no result could be seen on ground while enemy forces were very active in the region for destabilisation whose cost would have to be borne by all the provinces.

Responding to a question if the launch of investigation report on independent power producers (IPPs) been withheld on the demand of Chinese government after the federal cabinet had approved it publication, the minister said the sensitivity of the Chinese relationship was one aspect of the decision.

He explained that there was a bilateral mechanism between the two countries on which such questions could be raised. He said the government had already taken up the matter under the bilateral mechanism and Chinese government was ready for it.

The minister said about Rs77bn had been allocated for different projects under the China-Pakistan Economic Corridor (CPEC) portfolio, excluding power projects which were being developed in the private sector. He said more energy sector projects were coming up under the CPEC including transmission projects because the next challenge was the rising energy demand in the South including Karachi and power generation projects were mostly located in the North.

He said the Lahore-Matiari transmission line was progressing well while a new mega project of railway line form Karachi to Peshawar had been included in next year’s Public Sector Development Programme (PSDP). He said the two sides would now have to achieve financial close for over $7bn project. He said China had offered about 85pc financing for the project while we wanted its share increased to 90pc.

Mr Umar said the government had allocated in the PSDP for the ML-1 project and hoped to achieve financial close with 90pc Chinese funding very soon and begin formal construction of the project by February-April next year and complete it in nine years.

He said two major power projects with total capacity of about 2000mw under the CPEC had been completed now. Three major road projects including Zhob to Kachlak, Yarik to Zhob and Burhan to Hakla had also been included in the next year development plan.

The minister said the government had allocated Rs701bn for PSDP this year, including Rs550bn worth of projects under Planning Commission and about Rs151bn implemented through the Ministry of Finance. Of the Rs550bn, the Planning Commission had spent about Rs442bn despite the Covid-19 pandemic that virtually stopped all development activities. Still the Planning Commission was able to achieve 80pc funding utilisation even though maximum spending normally take place in the last quarter.

He said the government would be able to achieve the utilisation of Rs530bn in all against an allocation of Rs701bn by end of current fiscal year on June 30.

Published in Dawn, June 16th, 2020