Automobile sector as an attractive investment avenue?


Oct 14 - 20, 2002


The NWFP Governor, on 13th August 2002 at Peshawar, while reviewing progress of about 20 mega-projects aimed at uplifting and beautifying the city, directed the executing agencies to ensure quality of work as well as proper utilization of resources. Presiding over a meeting, the Governor was quoted to have said there should be no compromise on the removal of encroachments, but added that the process for payment of compensation should be transparent. He reportedly directed the concerned authorities to remove hurdles in the execution of these projects, find ways to complete the projects quickly and asked utilities to shift their infrastructure for early start of construction. The executing authorities are hopefully encouraged for better and timely execution of city infrastructure projects.

The Governors of other provinces, their cabinets and members of senior administration are, no doubt taking similar steps, for timely implementation of civic infrastructure projects to meet people's needs and to enhance their living standards. At the same time all the authorities are urged to remove difficulties identified by the international lenders. Reportedly about 30 % of ADB loans to the provinces are included in risk category due to implementation difficulties such as late start-up of project activities, delayed decision making, lack of inter-agency coordination, inadequate or delayed release of counterpart funds, staffing issues, an inadequate understanding of ADB guidelines and requirements, and/or a lack of accountability regarding the management of development resources.

Most of the infrastructure in cities and towns need major repairs. It may require large funds, which mostly are not there. Therefore, whatever funds from ADB, the World Bank or the federal government are available must be used diligently. Optimal use of project funds is possible if the officers are positively motivated and are extensively trained in areas such as planning, procurement, financing and execution. This paper proposes participative approach and suggests measures for better execution of projects for better delivery of services to the people.


A participatory approach is best suited for timely completion of projects within budget. Cooperation among the officers from the provinces, utilities, district governments and the elected representatives can result in early execution of projects at relatively lower cost. Improvement in various stages of project cycle is possible through careful planning, training and full regard to the prescribed procedures and practices. Financial restraints can be partly overcome through association of the private citizens and organizations in this work. These issues are discussed in some detail in the following paragraphs.

Provincial governments: The federal government some three years ago initiated reforms for improved governance, tighter fiscal controls, social service delivery, tax collection, public procurement and accountability. However, basic services are delivered at provincial / district levels. The provinces have also suffered from poor governance and lack of fiscal capacity. The World Bank's structural adjustment loan of $ 236.5 million has been approved recently for taking the federal reforms to the provincial level. The provincial structural reforms aim at improving governance, human development and social service delivery; and enhancing employment opportunities. Process has started but it will take effect in due course. Currently, the provincial governments are busy handing over powers / functions to the district governments. Progress is dismally slow as nobody likes to let go the authority. In the process it is apprehended that already weak infrastructure situation in the cities and towns is further deteriorating. This is a complex situation but it has to be amicable resolved.

District governments: The elected representatives in the district government originally had lot of enthusiasm; most of it now vanished. In most situations these representatives do not have the powers or the financial resources to implement the direly needed repairs of civic projects or the execution of such new projects. Once devolution of powers makes considerable progress, these representatives would be more effective. It will be prudent if they are extensively exposed to the tasks ahead and are provided formal training in projects' planning, procurement, financing and execution.

Private sector participation: The government alone might not be able to improve the infrastructure situation in the near future. Therefore, Pakistanis with God given financial means are urged to supplement government efforts. The provincial / district governments must encourage such people to come forward by creating conducive conditions and by prescribing clear procedures for participation in the building of city infrastructure. Rich people may start building or repairing civic infrastructure in their localities or in slums inhabited by the very poor. They might undertake activities such as repair of sewerage, repair of school buildings, furnishing of schools with furniture / teaching aids, repair and furnishing of health units and so on. These activities will provide comfort to common people in addition to employment to the jobless.

Motivation of employees: Role of every employee, at whatever level, is critical for timely realization of development projects. These employees are also urged to thank God Almighty for the opportunity to them to serve the nation by lessening difficulties of the people. They are expected not to use public office for personal gains; not that most of them were involved. Their positive frame of mind would spur economic activity for prosperity to all. The seniors can set example for the juniors. Salary package of these employees may be rationalized in line with the market conditions. Training courses may also be arranged for them to learn modern techniques for better project planning and execution. The employees are in a position to effect savings of considerable magnitude by avoiding wastage of materials, time and effort. The Government must acknowledge their good work.


Funds are never adequate for executing development projects. Ingenuity and initiative of the concerned officers matters most. They can successfully implement most projects within available funds. Getting best value for the money is the key. Improvements in the following areas are particularly suggested:

Selection: Project selection has to be proper. Participatory approach at approval stages may weed out low priority projects. Matters such as location, delineation, physical parameters, expected benefits, etc. should be discussed thoroughly before work actually starts. Through this process weak areas in the project will be identified and strengthened so that people get maximum benefits. All projects need to be implemented on least-cost basis. This will be possible if the award of contracts is transparent, is on merit and according to prescribed rules and regulations. Also, procurement is proper, financing is timely and execution is closely monitored for quality of material used. All this will involve lot of hard work, often beyond the call of duty, on part of the concerned officers. The sacrifices made by the officers should be gratefully acknowledged.

Feasibility and capital cost: Executing agencies usually build in provisions for expected cuts at PDWP / CDWP /ECC levels and capital cost shown is in the range of 150% to 200% of the realistic cost. Often projects are loaded with frills that do not add any utility and project effectiveness does not change if frills are removed. Only essential elements may be included and financed. The delayed releases of budget funds often contribute to procurement problems. Situation can be improved through down or progress payments. This will encourage the contractors to avoid padding and projects could be completed early and within budget. Reduction in capital cost enhances project feasibility.

Waste and misappropriation: The authorities should eliminate misappropriations under whatever name. In a recent audit report to the Ad hoc PAC, the office of the AGP has detected over-payments, misappropriations, negligence, violation of rules, violation of propriety and non-production of records. The amounts allegedly involved are large. These amounts, if put to proper use, could finance a number of social or physical infrastructure projects of common good. Most of the projects will now be implemented through district governments. The GOP might consider requesting the AGP for getting an instruction manual on the subject prepared and circulated to different executing agencies so that misuse of funds and wastages of materials in the implementation of the projects could be avoided.

Land acquisition: The acquisition of project land needs careful watch by the authorities. The Ghazi Bhrotha land scam is there. The matter is before the Honourable Court. Large amounts of money are alleged to be misappropriated. It may be noted that the NWFP Government has, as a precautionary measure, banned transfer (mutations) and development of land falling under water reservoir of the proposed Kkhurram-Tangi Dam. Similar precautionary steps may also help other governments and authorities in plugging the holes with potential for misappropriation. This will conserve resources meant for execution of projects.

Procurement: Through the public procurement, major share of the country's public resources is being spent and part of it presently wasted. Transparency International in its report to the GOP reportedly observed that Pakistan could benefit greatly from an almost total overhaul of the country's procurement systems, institutions and rules. Full transparency of bid evaluation process and application of strict / transparent procedures can improve the quality of procurement. It is even more critical when one has fewer funds as against overwhelming needs for city infrastructure.

Contractors' performance: Projects are usually delayed, are of poor quality and do not yield the desired benefits to the people. Possible reasons include incompetence of the contractor or possibly his collusion with those who are supposed to supervise his performance. This needs careful monitoring. Maximum number of small projects may be executed in-house. This way the officials would get experience and executing agency may save on contractor's margin. The authorities have to be careful that the officers do not use their official position for private benefit from the contractors or suppliers. The contractors and the officials may be morally encouraged to execute projects of general welfare for seeking God's blessings.

Use of consultants: The consultants are helpful most often but should be used carefully. Good and conscientious consultants can help execute the projects within cost and time budget. Such consultants may be encouraged and used more often. The 'Consultants', who during discussion throw in big names but are without long practical experience or successful projects, should not be encouraged. Such 'Consultants' will only damage the project. It is better to do without them. It is said that the Integrity Pact concept developed by the Transparency International helps in better execution of projects. We must use maximum local consultants for advice or vetting different aspects of development projects. Pakistani counter parts (junior consultants) must always be attached to the foreign consultants.

Compliance with procedures: Rules and procedures must be observed by the executing agencies. Transparency and fairness at all stages can yield much better results. Regarding the executing agencies or departments with large number of audit objections of alleged misdeeds, the government may consider keeping on hold the future financial allocations until they show satisfactory progress in resolving the issues pointed out by the auditors. This will be a step toward more discipline in project preparation and execution.

Bottlenecks and steering committees: Steering committees have pivotal role in the smooth execution of city infrastructure projects. At time the shifting of infrastructure relating to power, gas, water, telephone or sewerage may considerably delay execution of road, bridge, or similar other projects. Delays that cause time and cost over-runs must be avoided. The district and provincial governments may keep close liaison with all these utilities. It is in their mutual interest that the projects, sponsored either by the government or the utilities, are implemented properly in a coordinated manner. This will ensure implementation of projects at much reduced cost and time. The country needs both.

Liaison with international financiers: ADB, the World Bank and other bilateral donors provide development loans and expect the executing agencies to utilize the funds properly within the agreed schedule. Each provincial and district government might as well have experienced people in special units to monitor compliance with requirements prescribed by these creditors. They should be fully conversant with the guidelines and procedures and should be able to communicate with the creditors with confidence. As regards the divergent procurement procedures prescribed by the donor agencies, executing agencies can discuss the matter with the creditors and try to bring uniformity.

Lessons for future: Wise people do not make the same mistakes again. Lessons from previous project may be noted and used for improving the design, financing, procurement and execution of similar projects in future. International financing institutions have special departments that review the completed projects and find out, for future use, any changes needed in the policies, loan processing, approval, disbursement and realization of the objectives envisaged at initial stages. Special Cells in the government may be set up for such studies. Data bank can also be developed on various job rates, costs and the parties associated in the fruition of the projects.