Caretaker government decision on mega projects: no more financing through levy of new surcharge

The caretaker government has imposed a ban on financing of mega projects in public sector through levy of any new surcharge, well-placed official sources in the Water and Power Ministry told Business Recorder on Monday.
Referring to the 969-MW Neelum-Jhelum hydropower project, which was cleared by Prime Minister Muhammedmian Soomro after several '' ifs and buts,'' the sources said when the project came up for discussion in the Cabinet on December 12, it caused consternation among the participants. Some members were incensed at the move. They protested against the decision saying that by levying ''special surcharge'', the government was introducing an entirely new mode of financing for a mega project and that too without taking general public into confidence.
Interestingly, the architect of this mode of financing, Dr Salman Shah, Minister for Finance, was not present in the meeting. "This mode should not be seen as an example or a rule to be followed in future projects in power or any other economic sector by the government later," the sources quoted the members who were arguing strongly against the move as saying. According to the sources, initially the Prime Minister also did not approve of this mode.
The sources said the Ministry of Water and Power had submitted the summary to the Cabinet Division soon after it obtained approval in principle from the Economic Coordination Committee of the Cabinet, headed by former Prime Minister Shaukat Aziz, but the prime minister secretariat did not allow its appearance on the agenda owing to political considerations. The sources said this move by the concerned officials had irritated the caretaker prime minister in the Cabinet meeting.
"Why should the caretaker government clear a controversial mode of financing when the government of Shaukat Aziz had not done so and how would this surcharge affect people at large?" the sources quoted Soomro as saying. The Prime Minister also asked whether a 10 paisa increase would hit the consumers of Karachi Electric Supply Corporation.
"When Wapda sells up to 700 MW electricity to KESC, there is no doubt a 10 paisa raise will be passed on to the latter''s consumers but the Water and Power Ministry hid this fact from the Cabinet," the sources added.
They said the concerned officials of the Water and Power Ministry assured the Cabinet that no precedent of financing would be set in for power sector projects as after eight years, which is the deadline for completion of Neelum-Jhelum project, surcharge of 10 paisa would be withdrawn.
According to the sources, the Ministry of Water and Power was also of the view that since the caretaker government did not have political motives, it would be easy for it to approve the projects of national importance.