Senate body told: Finance Division deducting interest on NHA CDLs

Finance Division has been deducting interest on $10 billion cash development loans (CDLs) of National Highway Authority (NHA) from allocations made through the Public Sector Development Program (PSDP) and consequently it causes delays and escalates projects cost.

This was revealed by chairman NHA and endorsed by senior official of Ministry of Planning Development and Reforms while briefing the Senate Standing Committee on Communications, which met with Senator Hidayat Ullah in the chair here on Monday.

The NHA can no longer operate with the current structure, said senior official of Ministry of Planning Development and Reforms and added there is need for its restructuring. The government extends financing to autonomous bodies in shape of loans i.e. CDLs which they need to pay back. The CDLs against NHA stands at $10 billion.

The committee was informed that deputy chairman planning through a letter has taken the matter of CDLs with Finance Division and proposed that it should not be deducted from PSDP releases.

The committee was briefed on further progress on China-Pakistan Economic Corridor (CPEC) eastern and western routes, delayed metro bus project from New Islamabad International Airport to Peshawar Mor Islamabad, as well as payment to the land owners whose land was acquired for the construction of the road from Kaghan to Babu Sartop.

While presenting a detailed report on CPEC eastern and western routes, the committee was told that the government allocated Rs 11.5 billion against the NHA' demand of Rs 40 to 45 billion to complete the western route.

Planning Ministry official said that as per Prime Minister's vision, Finance Division has shortened budget release process for PSDP to speed up process of development projects and schemes. The step is aimed at easing fund flow and removing bottlenecks to boost economic development.

The new measures include; half of the budgetary allocations for approved PSDP projects have been made instantly available to Ministry of Planning & Development by revision in Finance Division's release strategy. Now 50 percent funds are available for the first two quarters without any complication. The quarter-wise releases will be 20 percent in the first quarter, 30 percent in the second quarter, 30 percent in the third quarter and 20 percent in the fourth quarter.

There shall be incentive of advance release to the executing agencies which will utilize funds appropriately within required time period. There shall be incentive of advance release to the executing agencies which will utilize funds appropriately within the required time period.

There shall be no ways and means for clearance of Finance Division for an approved PSDP project for the first three quarters of the financial year. The practice of endorsement by officers of Finance Division on the PSDP funds releases sanctioned by the PAOs is also being withdrawn forthwith. The whole process of authorization, releases and sanctioning of PSDP allocated funds shall be dealt with between Ministry of Planning Development & Reforms and ministries/ divisions and PAOs concerned.

An updated revised release strategy for approved PSDP projects to formalize the above steps has been issued by Finance Division. The Ministry of Planning Development and Reforms and other line ministries/ divisions have been amply enabled to speed up utilization of PSDP funds in accordance with the revised release strategy and Public Finance Management Act 2019. These steps will ensure adequate money supply, less tier control and ease of operation in the development program, he added. Senator Ahmad Khan said that due to short releases to contractors, projects are being delayed. The committee directed the Finance Division not to cut CDLs as well as ensure early releases to avoid project delays. Khan was of the view that a delay in fund disbursement leads to deferred work that gives rise to the cost escalation factor.

Taking notice of the non-payment of land acquired for the construction of the Babu Sartop Road from Kaghan, the chairman committee expressed concern that two months had passed despite the instructions given by the committee but these were not implemented, and condemned the 'non-serious' attitude of the Authority in resolving the matter.

Senator Salahuddin Tirmizi regretted that despite the passage of over 17 years, land payments to three thousand victims have not been made. He said he would take the matter to the Supreme Court so that justice could be provided to the landowners.

The chairman NHA assured the committee to resolve the issue soon. According to the Rules, the NHA and the Ministry of Communications are bound to make payments to the affectees after the Senate standing committee's instructions and the House report, and are directed to make payments as soon as possible.

While giving a detailed briefing on the Islamabad International Airport Metro Bus project, the committee was told that the length of the project is 25.6 km and the design and construction work of the project was handed over to NESPAK, according to which the project was divided into 4 packages. About 96% of the work has been completed on Peshawar Morr to NUST, which is 8.0 km in length and 88% work has been completed on NUST to GT Road which is 3.8 km. From GT Road Interchange to Motorway Interchange and from Motorway Interchange to New Islamabad Airport 100 percent work has been completed. The project will be completed by 2020. However the committee was informed that project was delayed due to short releases as for the current fiscal year the government allocated Rs 1.25 billion against the demand of Rs 3 billion.

While briefing on the construction of M-8 section on Gwadar-Rotodero Road in Khuzdar Shadkot, the committee was informed that due to lack of funds the project has not been completed yet. No funds have been allocated to this project in the PSDP in the year 2019-20. A detailed briefing was also given on the current situation of the project, the cost of the project, the details of the funds, the reasons for the delay and the steps taken to deal with the delay.