The Economic Coordination Committee (ECC) of the Cabinet has constituted a sub-committee to decide the conversion of over Rs 1.8 trillion Cash Development Loan (CDL) of National Highway Authority (NHA) into government grant or to write it off, it is learnt.
The NHA has moved a summary to the ECC seeking the conversion of over Rs 1.8 trillion CDL into government grant or they may either be written off. The ECC has constituted a sub-committee led by Asad Umar, Federal Minister for Planning, Development and Special Initiatives in this regard. The committee would deliberate on the matter and finalize its recommendation with respect to piling-up CDL.
Official sources revealed to Business Recorder that the federal government provides development funds to NHA as CDL every year for execution of Public Sector Development Program (PSDP) projects approved by the Ministry of Planning, Development and Special Initiatives as per policy of the government.
The NHA has objected to the rules while saying that the government first directs the Authority for building roads and then says to pay back so many loans. Sources said that most of the road projects are unviable from business point of the view, but when the government approves them on one or the other pretext, the NHA has to implement them. Unless the mechanism around CDLs is changed, their size would keep growing beyond NHAs' financial viability and rendering it financially unviable. Hence, the practice of provision of CDLs to NHA should be stopped.
According to sources, CDL has reached over Rs 1.8 trillion and the Finance Ministry deducts interest on this amount of NHA from allocations made through the PSDP. The deduction from PSDP consequently delays and escalates projects cost, said the officials, adding that NHA has taken up the issue with the government to rectify this anomaly.
All CDLs and foreign loans, whether direct or relent, including interest accumulated thereon, received up to June 30, 2019 be converted into government grant or the GoP may either "write off" the said loan, the official added.
For future, all PSDP allocations including relent/direct loans, both rupee and foreign exchange component, to NHA may also be provided as government grants. The CDL may be advanced only for commercially feasible projects on which Finance Division and NHA mutually agree regarding the terms and conditions of the loan and its repayment, the NHA has pleaded in the summary.
The Ministry of Planning, Development and Reforms also through a letter has taken the matter of CDL with Finance Division and proposed that it should not be deducted from PSDP releases.
Sources said that a delay in fund disbursement due to CDL deduction from PSDP leads to deferred work that gives rise to the cost escalation factor.
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