Planning Commission has decided to scrap all those development projects which were unable to receive budgetary allocations due to limited fiscal space in Public Sector Development Programme (PSDP) for the last two years, sources close to Deputy Chairman Planning Commission told Business Recorder.
For this purpose revised guidelines for the development projects are being issued with the approval of the Economic Co-ordination Committee (ECC) of the cabinet, the sources added. Giving the background, the sources said that Executive Committee of the National Economic Council (ECNEC ) in its earlier meetings framed guidelines to streamline procedure for project preparation, submission to Planning Commission and final approval by CDWP/ ECNEC depending on the volume of cost of each project. Existing procedure of CDWP/ ECNEC and improvement required is given below:-
CDWP Process PC-I/ PC-II costing above Rs.60 million for federal projects and Rs.5 billion for provincial projects (except for irrigation projects and projects containing less than 25% foreign loans) are received in Planning Commission for CDWP consideration.
Time limit for scrutiny of project in the Planning and Development Division and its submission to the CDWP is six weeks (i.e. three weeks preliminary appraisal, two weeks response to queries of Planning and Development Division by the sponsoring agency, one week for holding pre-CDWP meeting for sorting out issues/ points with sponsoring agency).
Projects up to Rs.1 billion are approved by CDWP and beyond this limit are recommended by CDWP for submission to ECNEC. Project costing more than Rs.300 million for infrastructure and production sectors must be based on proper feasibility studies.
In case foreign aid is available and PC-I/ PC-II have not been prepared/ approved, concept clearance should be obtained from CDWP by the sponsoring agency for starting negotiations with foreign donors. However, PC-I should be approved by the competent forum before signing agreement with donor agency. Provincial project to be funded from federal PSDP (in full or part) be submitted to Planning and Development Division by concerned federal ministries/divisions duly signed by Federal Secretaries/PAOs for consideration of CDWP.
ECNEC Process ECNEC meeting needs to be held every quarter and in case of delay of ECNEC meeting, anticipatory approval of Chairman ECNEC is required to incur expenditure on the project or signing loan/ grant agreement with donors.
Current practice that needs amendment
a) Time limit of six weeks fixed by ECNEC for scrutiny of projects in Planning Development Division and submission to CDWP is not being followed. Often sponsoring agencies submit PC-I, one/ two days before CDWP meeting and by showing some urgency put pressure to include it in the agenda of the CDWP meeting. For proper examination of projects, time limit fixed by ECNEC must be strictly followed.
b) For Infrastructure and Production sector projects costing above Rs 300 million, proper feasibility studies are not being conducted / submitted by sponsoring agencies in most of the projects. This should be made mandatory.
c) Sponsoring agencies take a long time to fulfil conditionalities imposed by CDWP. This delays approval/implementation of projects. Maximum time line of one month must be fixed for meeting such conditions by the sponsors. If they do not follow this limit line, project should he returned.
d) Confirmation of firm commitment of foreign aid should be provided by sponsor before submission of project to ECNEC.
e) Strict compliance of time line (two weeks) for issuance of CDWP/ ECNEC agenda and working papers/summaries.
To improve the system fresh guidelines are as follows:
a) Time limit for scrutiny of project in the Planning & Development Division and its submission to the CDWP is six weeks as follows: (i) Three weeks preliminary appraisal;( ii) two weeks response to queries of Planning & Development Division by the sponsoring agency; and (iii) one week for holding pre-CDWP meeting for sorting out issues/points with sponsoring agency
b) After recommendation of the project by the CDWP for ECNEC, the summary must be prepared by the Planning and Development Division within one month and submitted to ECNEC secretariat. However, in cases where CDWP imposes certain conditions to be met by the sponsoring agency before submission of project to ECNEC, it is necessary that sponsors should furnish the required information within 2/3 weeks of the CDWP meeting, failing which the project will be returned to the sponsors and the approval of CDWP will automatically lapse and fresh approval of CDWP will have to be obtained. Projects placed before CDWP should have conducted feasibility as per existing instructions.
c) It has been experienced in a number of cases that implementation of projects suffer due to insufficient provision of funds in PSDP. To overcome this problem it is essential that financial phasing should be linked with implementation schedule of project and the project should not be initiated/ approved unless the required funding is assured. Once the financial phasing is approved, it should be released accordingly subject to availability of resources.
d) Planning Commission should strengthen its technical appraisal machinery and only those projects should be cleared which are based on realistic cost prepared on accurate estimates of future inflation and exchange rate fluctuations. Similarly a strong check should be exercised upon over inflated projects.
e) While approving projects, the DDWP/ PDWP/CDWP/ ECNEC should also look into the implementation capacity of the organisation.
f) All the projects wherein Public Sector funding is involved should come to the forum of DDWP/PDWP/CDWP/ ECNEC as per their cost estimates. No project should be brought before ECNEC if not thoroughly scrutinised by CDWP and meeting conditions imposed by CDWP. No incomplete project should be placed before ECNEC for consideration.
g) The portfolio of approved projects should be kept within the overall PSDP size as far as possible. Proposals for approval of individual projects should clearly indicate the phasing of their financing in subsequent years reflecting impact on each year's PSDP allocations.
h) It has been experienced that projects are placed before ECNEC without confirmation that foreign funds are available. In future such projects where foreign funds has been indicated should have confirmation from ECNES.
i) Economic Affairs Division, Planning Commission should ensure that no project be placed before ECNEC without such confirmation.
j) No MoU with any bilateral/multilateral funding agency be signed without the approval of project by competent forum.
k) ECNEC summaries should be submitted to Cabinet by Planning Commission at least 10 working days in advance before scheduled date of ECNEC meeting. If this time line is not adhered to summaries would not be included in ECNEC's agenda.
l) CDWP meeting would be held on 2nd Thursday of August, November, February and May each year subject to availability of Chairman CDWP. Projects should be received in Planning Commission latest BY 1st of respective month in which CDWP is to be held.
m) ECNEC meeting would be held on 2nd Thursday of September, December, March and June subject to availability of Chairman, ECNEC.
n) In case Chairman is not available, meeting would be held within the month on the first available date.
o) Planning Commission should submit monthly projects monitoring reports to Key members of ECNEC.
The Planning Commission has requested the ECC to allow it to notify fresh guidelines for projects unable to find allocation due to limited fiscal space in PSDP during the last two years would require fresh approval from the competent forum for allocation of funds.
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