Tripartite agreements: PDDC allowed to continue functioning till June 30, 2013

The Federal Government has allowed the Pakistan Dairy Development Company (PDDC) to continue functioning till June 30, 2013, for completing the tripartite agreements made by it on behalf of the government with the livestock farmers and the banks.
After the dissolution of Ministry of Food and Agriculture under 18th Amendment, PDDC was awaiting a final decision for continuing its work or disbandment. It had sought permission from the government to allow it continue working till June 30, 2014 to meet the commitments with the borrowers and the lenders.
The Prime Minister had referred the matter to Inter-Provincial Co-ordination (IPC) Ministry, which in a letter observed that though the dairy sector stands devolved after the passage of 18th Amendment, the Federal government is contractually bound to abide by its obligations, ie tripartite agreements within the PDDC, borrowers and the lenders for providing subsidies for the promotion of dairy farming, sources told Business Recorder here on Thursday.
Hence, the IPC Ministry proposed continuation of the Company till the obligations are met. Agreeing with it, the Prime Minister Syed Yousuf Raza Gilani, recently, approved functioning of the Company till June 30, 2013, to fulfil these tripartite agreements, the sources said.
The company has been advised to submit a revised business plan for approval by the Planning and Development Division keeping in view the reduced scope of the project besides curtailing its operating expenses to the satisfaction of the Planning and Development Division.
It may be recalled that PDDC was established in 2005 as a special initiative of the prime minister and is registered under section 42 of the Company's Ordinance 1984. The company was later transferred under the Minfa when the devolution process started. The objective of the company was to introduce best dairy practices of leading dairy countries of the world with a view to bring "The White Revolution - Doodh Darya" in Pakistan.
'The White Revolution - Doodh Darya' project worth Rs 2.654 billion was approved by Ecnec in year 2007. At the moment six active Dairy Development Programmes, Model Farm Programme, Cooling Tank Programme, Community Farm Programme, Bio Gas Programme, Rural Services Provider Programme and Training & Extension Programmes are under implementation.
PDDC entered into tripartite legal agreements with the dairy farmers and the financial institutions, under which the company would bear the mark-up on the loans taken by dairy farmers from financial institutions for five years. While on successful implementation of dairy farm practices for three years these farmers will also be entitled to 50 percent grant of the total loans. During this period all these dairy interventions have to be fully supervised by the field staff of Dairy Pakistan as per agreement terms.
According to the remarks by the IPC Ministry, at the time of the decision of winding up the PDDC had liabilities of 130.481 million under the head of mark-up payable on loans already sanctioned to dairy farmers by the PDDC and another Rs 67.923 million for success-related grants. To allow the Company running till June 30, 2013 would also incur operational expenses around Rs 170.339 million while an amount of Rs 223.391 million might be spent on provision of technical services to the farmers/entrepreneurs enrolled in the programme, thus bringing the total liability to Rs 591.623 million.
It said that the only argument in favour of retention of the PDDC is that the government has entered in to tripartite agreements with the borrowers and the lenders to provide subsidies for promotion of dairy farming. These agreements being irrevocable must be honoured.
It said that the proposal by the Company should be accepted with direction to the company to submit a revised business plan for approval by the Planning and Development Division keeping the reduced scope of the project in view, curtailing operational expenses to the satisfaction of the Planning and Development Division, which could also ascertain whether the project can be closed down earlier than June 2014. IPC also proposed carrying out consultation with the P&D Division to ascertain whether continuation of technical advisory services is a contractual obligation of the government and if these too can be scaled down or discontinued altogether.
Sources said that the Prime Minister accepting the proposal has approved continuation of PDDC working till June 30, 2013. Meanwhile, when contact PDDC Chief Executive Officer Mian Mazhar Ahmad confirmed the news and said it is a welcoming move by the government. He said accomplishing the tripartite agreement would maintain the trust of the livestock farmers in the government.