Sep 29 - Oct 12, 2008

The Central Development Working Party (CDWP) at is first meeting, after PPP led government took over in March last, held in Islamabad on Thursday approved 42 new development projects costing over Rs.237 billion mainly relating to infrastructure. It also upwardly revised the estimates of nine ongoing schemes from Rs.14 billion to Rs.24.7 billion. Out of 42 new projects 22 which involved expenditure over Rs.506 million would be put before the Executive Committee of National Economic Council (ECNEC) for final approval. The meeting was chaired by Deputy Chairman Planning Commission Mr. Salman Farooqi.

According to the breakdown of the projects and their estimates given by the Planning Commission spokesman Asif Sheikh 46 schemes worth Rs.218.4 billion would be funded by the federal government. Out of total of 51 projects 18 projects are located in Punjab, 13 projects are under Multan Development Package for which Government of the Punjab will contribute Rs.500 million. One project located at Punjab titled "Construction of Cherah Dam Project" costing Rs.5.31 billion will be financed by Government of the Punjab. Two hydro power projects located in AJK costing Rs.6.7 billion will be financed on 30:70 cost sharing basis between government of AJK and federal government. The federal government will provide Rs.4.72 billion from PSDP. Of 51 projects, 9 projects have been revised their cost which has increased from Rs.14.0 billion to Rs.24.7 billion he said. Allocation of Rs.5.8 billion exists in the PSDP 2008-09 against the 22 projects.

Establishment of inland container terminal dry port near Sher Shah Railway Station Multan will be financed through Public Private Partnership. Ministry of Railways will give the land free of cost. One project "Deepening & Widening of Port Qasim Navigation Channel" costing Rs.8.1 billion will be financed by the PQA from its own resources. The CDWP also conceptually cleared the projects titled "Balochistan Local Service Delivery and Government Project", "Rehabilitation of the Medium Wave Radio Broadcasting Network for the enhancement of Education", "Health and Enlightenment in NWFP FATA and "Balochistan in Islamic Republic of Pakistan", "Establishment of National Road Safety Secretariat/Authority".

The CDWP also approved "Revival of Karachi Circular Railways as Modern Commuter System" costing Rs.52.3 billion. A foreign assistance of Rs.39.2 billion is expected for the project. Asif Sheikh said that federal government would not bear the operational losses after completion of the project in five years.

A total of 32 development projects were approved in the infrastructure sector costing Rs238 billion that also include exchange component (FEO of R81.26 billion). He said that "Land Acquisition and Resettlement Plan of Basha Dam" costing Rs.116.7 billion has been approved. According to him 99 percent area to be affected by the dam is in the Northern Areas (NAs). The plan, which was approved by the CDWP, was framed by NA administration. Total of five projects costing Rs.123.88 billion have been approved in the energy sub sector. In the water resources, four projects valuing Rs. 8.05 billion have been approved. The PAEC plan of establishing two power generation units (C3 and C4) were dropped from the agenda.

In social sector, 18 projects costing Rs. 24.37 billion were approved in social sector. The important schemes in the transport and communication are Rehabilitation of Larkana-Naudero-Lakhi Road costing Rs.1.92 billion and Dualization/Rehabilitation of Larkana Moenjodaro valuing Rs.1.93 billion. Of the 18 projects for Punjab, 14 projects costing Rs.4.2 billion would be launched under the Multan Package, said Asif Sheikh. He said that Punjab government will also provide Rs.500 million for the package.

As in the past, the strategy adopted by the new dispensation rightly lays optimum stress on infrastructure development, which is the need of the hour. However, going by the approval of mega allocations, it appears that the planning and implementation bureaucracy is back at its old game. For instance, February this year the ECNEC had approved 23 new development schemes worth Rs. 309 billion, including 15 in infrastructure, eight in transport and communication, one in water resources, four in energy and two in physical planning and housing sectors. The Ecnec had also revised the cost of nine on-going projects from Rs.6.2 to Rs.8.2 billion. This had brought the total number of projects approved till then to 116 at a total cost of Rs.685.9 billion, including a foreign exchange component of Rs.260.5 billion.

What is the current status of these projects or the utilization of huge financial allocations approved for them? Have the projects been fully implemented, partially implemented or abandoned? Further, has the funding approved for them lapsed, or does it survive in a carry-over shape? A news report had quoted the then Deputy Chairman of the Planning Commission as saying that the government would have to curtail development expenditure during the remaining five months of FY2007-08, because of the tightening financial crunch. Earlier, in October last year, it was disclosed that as many as 632 projects worth Rs.2.36 trillion had been approved in the last eight years, including 394 in infrastructure sector and 200 in social and other sectors. However, despite all the hype then generated, our economy remains hopelessly enmeshed in crippling infrastructure handicaps. In fact the economic slowdown the country is experiencing today is a direct result of gross neglect of project implementation by the previous government. The spiraling energy cost and the galloping steel and cement prices have become a major cause of project cost over-runs, which have become the real bane for the country's economy.

Analysts have often attributed the problem to a serious mismatch between our ambitious projects and our restricted delivery capacity, largely because of the country's infrastructure and expertise constraints. The present government should break the vicious circle.