The ECNEC approvals include a hefty amount of Rs. 21 billion for eighth ongoing projects on account of cost escalation attributed to faulty planning, designing problems and delay in implementation.

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
Sep 04 - Sep 10, 2006

The Executive Committee of National Economic Council (ECNEC), in its first meeting during the current financial year (2006-07) with Prime Minister Shaukat Aziz in the chair, accorded approval to 30 projects valuing Rs. 88.1 billion out of 35 projects worth Rs. 130 billion.

Deputy Chairman Planning Commission Dr. Akram Sheikh told this to the newsmen at a press briefing after the ECNEC meeting. He said: "The meeting actually considered 35 projects which include 27 new and eight ongoing projects with revised costs. Out of 27 new projects, five projects costing Rs. 5.3 billion were deferred due to the absence of health minister from the meeting. However, the deferred projects will be taken up in the next ECNEC meeting".

Dr. Sheikh said that the meeting approved 15 projects in infrastructure sector, 12 in social sector and 3 in other sectors. Out of 30 projects, ECNEC approved 8 projects on overall Pakistan basis, 3 of AJK, 2 of Balochistan, 4 of NWFP, 5 of Sindh and 8 projects of Punjab province.

He said that the meeting also reviewed the economic indicators according to which middle class is emerging in the country and per capita income has reached $ 847. Moreover foreign investment in the country has increased to $ 3.9 billion, which include foreign direct investment (FDI) of $ 3.9 billion and portfolio investment of $ $ 0.4 billion. He said that Standard Chartered Bank has purchased the Union Bank at $ 500 million, manifesting more trust in the business climate of the country and government's economic reforms programme.

Dr. Sheikh said that the government has chalked out a strategy to increase growth in exports, which would make the country's exports cross $ 40 billion mark in the next five years.

To achieve this whopping target the authorities are concerned and working to modernize the agro-based and existing traditional industries and large manufacturing industries. In addition, the government will explore more and more markets in the world for Pakistani products. He said that currently the number of cellular phones has increased to 38 million and there is an increase of 1.5 million connections per month, which shows that the middle class is emerging.

He said that 20.7 million people have come above the poverty line because of the improvement in economy. However, he added that 23.9 percent people are still below the poverty line, which is a matter of grave concern for the government.

He said that the ECNEC meeting was told that Wapda has given 19,000 electricity connections in 2005-06. He said that the meeting approved the most important project of Right Bank Outfall Drainage (RBOD) from Sehwan to sea at Gharo at the revised cost of Rs. 29.217 billion. Its earlier cost was estimated at Rs. 14 billion.

He said the capacity of RBOD has increased form 2,227 cusecs to 3,500 cusecs. However, the technical section of Planning Division will firm up the cost of the project.

He said that the cost has increased by 13 percent in earthwork, by 101% in structures and by 1300% in flood protection works. The increased amount of projects also includes escalation in POL products, cement and steel prices and labour charges on the already awarded works and physical contingencies were charged @ 5%.

The RBOD projects will depose the saline effluent into sea, save the Manchcher lake and the area under Kotri barrage command from contamination by the saline effluent coming from upper Balochistan province.

The ECNEC meeting also approved emergent repair works and feasibility study costing Rs. 1.647 billion under Punjab Barrages Rehabilitation and Modernization project. Under the project, emergent repair of seven barrages that include Taunsa, Khanki, Sulemanki, Pajnad, Balloki and Islam will be carried out. The said barrages are 50 to 100 years old.

The meeting approved the Tausna Barrage Emergency Rehabilitation and Modernization project at the revised cost of Rs. 11.232 billion. Taunsa barrage irrigation system is providing irrigation supplies to about 2 million acres of valuable land of DG Khan, Rajanpur and Muzaffargarh districts. Cropping intensity at present is 50% in both Kharif and Rabi and owing to continuous use over the years the mechanical components of the barrage have outlived their life.

Dr. Sheikh said that the Punjab government will arrange funding for the projects of paramount importance and World Bank will also provide finance in this regard. Most of the mechanical components and structure of Taunsa barrage have been damaged due to long wear and tear and weather action. The meeting approved the remodeling of Bawal canal at a cost of Rs. 746 million, Pehur high-level link canal project at Rs. 66 billion in NWFP, Makhi-Farash link canal project in Sindh at Rs. 1.7 billion, construction of fall structures on Naral canal in Sanghar at Rs. 11.08 billion, second flood protection sector projects at Rs. 4.6 billion and Bazai irrigation project in NWFP at a cost of Rs. 1.6 billion.

In energy sector, ECNEC approved 450-500 MW combined cycle power plant at Chichoki Malian that is estimated to cost Rs. 18.050 billion, oil-fired thermal power station at Jamshoro unit 2,3 and 4 at the cost of Rs. 8.749 billion and feasibility study at Rs. 545.5 million for detailed engineering design and preparation tender documents for Kohala hydropower project.

He said that the committee has been constituted to decide the provision gas for power plant at Chichoki Malian, when asked if the government will provide gas from gas reserved for Wapda thermal houses as it was decided in principle that gas will be allocated from inefficient thermal houses of Wapda to efficient IPPs.

In agriculture sector, the meeting approved two projects that include milk collection/processing, dairy production and development programme and livestock production and development for meat production. In commerce sector, the meeting approved construction of building for Pakistan School of Fashion Design at Lahore. In culture sector, the meeting approved national monument of Pakistan.

In education sector the meeting also approved three projects - capacity building of teachers training institutions of Ministry of Education and training of elementary school teachers in ICT, FATA, FANA and AJK, capacity building of elementary teachers training institutions in Punjab, and capacity building of elementary teachers training institutions in NWFP.

In governance sector, the meeting approved establishment of nationwide integrated trunk radio system for police. In higher education sector, the meeting approved the overseas scholarships for MSc/M Phil leading to PhD in selected fields. In mass media sector, the meeting approved Islamabad Media Tower. The ECNEC meeting approved 6 projects in physical planning and housing sector.

Addressing the meeting, Prime Minister Shaukat Aziz said Pakistan was gradually becoming a middle level income country having reached a per capital income of $ 850, which was among the highest in South Asia.

Of the 30 projects approved by ECNEC, eight are national projects. Of the rest, three will be located in Azad Kashmir, two in Balochistan, four in the NWFP, five in Sindh and eight in Punjab. How much these schemes will help in removing disparities in incomes between various provinces, and improving household incomes in less developed areas in each province, cannot yet be assessed but the government needs to review its present development policy and allocation priorities that have worsened the disparities in individual and regional incomes. The situation has led to provincial disharmony and differences. The foreign exchange component of the approved projects will be nearly one third of the total cost. How much of it will be in the form of foreign loans is not known, but foreign funded projects suffer from the hassles involved in firming up pledges into firm commitments and disbursement of funds. The problem needs to be tackled.

Apart from funding of the social sector at the required level, the timely completion of projects without cost overruns is also a critical issue. The ECNEC approvals include a hefty amount of Rs. 21 billion for eighth ongoing projects on account of cost escalation attributed to faulty planning, designing problems and delay in implementation. These include the second flood protection project, RBOD extension, Taunsa barrage emergency rehabilitation and modernization project, Punjab barrage and the water supply scheme in Khyber Agency.

At a recent meeting presided over by the Minister for Water and Power, it was also revealed that three major water sector projects had met a similar fate. Progress on the Rs. 64 billion Mangla dam raising project is much behind schedule. The cost of the Katchhi canal project has more than doubled - from Rs. 31.2 billion to over Rs. 70 billion - because of lack of proper planning and faulty procedural codes.

The security problem in Balochistan has delayed the completion of the Rs.13 billion Gomal Zam dam by more than two years. The water sector programme, so vital for boosting agricultural production, appears to be worst hit. The government needs to appoint project director with professional expertise and not the favoured ones to supervise and manage the timely implementation efficiently. All development projects need to be closely and efficiently monitored to ensure their timely completion to avoid cost escalation because of delays. Those appointed to monitor the timely implementation of the projects should be held responsible for delays and cost escalation.