Ongoing energy projects to be short of funds in 2011-12

The government could not allocate sufficient funds to some critical on-going energy sector projects including Diamer Basha Dam, Mangla Raising Project, Chashma Nuclear and National Trade Corridor projects in budget for 2011-12 due to tightened fiscal space.
Sources in the Planning Commission told Business Recorder that the government has only Rs 18 billion for Diamer Basha Dam during fiscal year 2011-12 for land acquisition but water and power ministry has estimated Rs 51 billion for this purpose.
The government also has not got sufficient funds for completing Mangla dam raising project and impound water during next rainy season. For this project, minimum Rs 13 billion is required.
According to documents available with Business Recorder, owing to limited fiscal space, foreign credit requirements for projects such as Chashma Nuclear (C3, C4), Satellite programme of Suparco can not be met fully.
The documents show that adequate rupee cover could not be provided to utilise estimated foreign assistance for fiscal year 2011-12 which include increasing volume of flood reconstruction project assistance.
The documents also show that for power sector projects, the indicated foreign aid of about Rs 40 billion, cannot be budgeted fully due to non-availability of fiscal space. Similarly, the government has provided insufficient funds for water and national trade corridor projects. Inadequate funds have been allocated for government''s initiatives, especially in the area of water and power.
Sources said that against the indicated PSDP size of Rs 280 billion during 2011-12 ministries/divisions have demanded Rs 486 billion. But the government could not allocate sufficient funds for some critical energy sector projects due to tightening fiscal space.
According to sources, this reflects that federal size of PSDP 2011-12 at Rs 280 billion by the finance division does not fully meet funding requirements of ongoing projects.
They said that to maintain the momentum of development and to accommodate present government''s development priorities and initiatives given in the nine-point economic agenda and draft new development strategy it was necessary that the PSDP be enhanced to the level which could create employment, reduce poverty and achieve Millennium Development Goals (MDGs).