Umar explains hike in development budget for FY22

ISLAMABAD: Federal Minister for Planning and Development Asad Umar on Tuesday said that the National Economic Council (NEC) has approved allocation of Rs2,102 billion for the country’s development programme, including Rs87 billion for the China Pakistan Economic Corridor (CPEC), for 2021-22 against Rs1,527 billion for 2020-21 showing an increase of 36.4 percent.

Flanked by Chairman CPEC Authority Lt-Gen Asim Saleem Bajwa (retd), while briefing regarding the allocations for the Public Sector Development Programme (PSDP), Umar said the allocation for federal development budget is Rs900 billion for 2021-22 against Rs650 billion for 2020-21, while the provincial development budget is of Rs1,202 billion for 2021-22 against Rs867 billion for 2020-21.

The development budget of Punjab is Rs500 billion for 2021-22 against Rs310 billion for 2020-21, Sindh’s Rs321 billion against Rs194 billion, Balochistan’s Rs133 billion against Rs89 billion and Khyber Pakhtunkhwa’s Rs248 billion against Rs274 billion.

He said one of the reasons behind the projected 4.8 percent growth, which could be more than five percent, is a highly significant increase in the development budget for the next fiscal year. He said that there was a huge difference in allocation and actual expenditure during 2017-18, therefore, he preferred five-year-old data - 2016-17.

At that time, total allocation was of Rs800 billion and now it is of Rs900 billion.

He said that 56 percent funds of the total estimates were allocated for the energy and transport projects in 2016-17, which have been reduced to 40 percent in 2021-22.

He said that a reduction in the PSDP does not mean that development work in road transport and communication sector is being reduced, adding that, in fact, more roads would be constructed by using alternative sources of funding such as public-private partnership.

He said an allocation of Rs244 billion is made for motorways, highways, interprovincial/districts roads, airport, Railway projects, adding that 3,261km length of new roads will be added to the network.

Major projects include Khyber Pass Economic Corridor Project (Rs8.5 billion), Sukkur–Hyderabad Motorway land (Rs4.6 billion), Eastbay Expressway Gwadar (Rs2.1 billion), dualization and improvement of existing N-50 - Yarik-Sagu-Zhob - 210km (Rs1.6 billion), construction of M–8 Hoshab–Awaran–Khuzdar (section-2) 168km (Rs1.5 billion), improvement and widening of Chitral-Booni-Mastuj-Shandur Road (Rs2 billion), roads linking motorways in Punjab, Main Line I (ML-I) (Rs6.2 billion), and Gwadar Airport (Rs1.1 billion).

He said that major focus is on PPP (Public Private Partnership) projects including approval of a 14 high-impact PPP transactions of over Rs978 billion expected in April to October 2021, major projects include Sialkot-Kharian Motorway, Sukkur-Hyderabad, Motorway, Karachi-Quetta-Chaman Road, Karachi Circular Railway, Karachi-Pipri Freight Corridor, Railway Hospitals.

He said the PSDP requirements are not commensurate with the resources available for infrastructure development.

Therefore, in collaboration with private sector through the Public Private Partnership mega projects would be carried out and for this purpose ‘Viability Gap Fund (VGF)’ has been created.

No amount was allocated for it in 2016-17 but now seven percent of PSDP budget has been allocated to it for 2021-22.

According to him, for the first time, the VGF has an allocation of Rs61 billion in the PSDP.

Further, four percent was allocated to the water sector in 2016-17, which has been increased to 10 percent in 2021-22.

Umar was of the view people cannot be united through tanks and guns, adding that uniform or equitable development in all areas is needed to unite the nation.

He said that work on three dams has been started.

Investment on building large dams and water conservation system as per commitment under National Water Policy, new cultivable command area of 100,000 acres developed during 2020-21 and further 200,000 acres to be added during the next two years, Diamer–Bhasha, Mohmand and Dasu (Rs84.5 billion), K-IV, Nai Gaj Dam, Rainee Canal and Small Storage Dams in Sindh (Rs25 billion), Kachhi Canal Balochistan, Awaran, Winder and Panjgur Dams (Rs8.2 billion) and small/medium dams in Balochistan and Ghabbir Dam and Papin Dam in Punjab (Rs3.65 billion).

He further said that for the energy sector investment include de-bottlenecking and upgradation of transmission system (Rs100 billion).

He said that earlier it was decided to shut down low efficiency plants and only high efficiency line to remain operational but for that it is important to upgrade transmission system. Only then will the government be able to shut low efficiency plants, he added.

Further investment is being carried in loss reduction and rehabilitation projects in high loss DISCOs, focus on provision of electricity and gas to the CPEC SEZs, K2 and K3 coastal power projects Karachi (Rs16.5 billion), Tarbela 5th extension HPP (Rs4.6 billion) and Evacuation of Power from Suki Kanari (Rs5.5 billion) and interconnection of isolated Makran network at Basima (Rs5 billion).

He said social sector, regional equalization was allocated 23 percent in 2016-17 which has been increased to 31 percent in 2021-22.

He said the Higher Education Commission (HEC) was allocated 2.7 percent of the budget in 2016-17, which has been increased to 4.9 percent.

He said the HEC allocation increased to Rs44 billion, adding that 105 universities would benefit from 120 projects while scholarship schemes of around Rs five billion would benefit more than 6,000 scholars/faculty.

He said that flagship “Ten Billion Tree Tsunami Project” would continue with an allocation of Rs14 billion.

He said that Rs51 billion was spent on the health sector in the outgoing fiscal year.

He said that for reducing regional disparities special packages have been added to the PSDP, including accelerated development plan for Southern Balochistan, Karachi Transformation Plan, Socio-Economic Development of Gilgit-Baltistan, Sindh Development Plan for 14+ Priority Districts, and allocation for Newly-Merged Districts of Khyber-Pakhtunkhwa enhanced.

He said that production sector like industries and agriculture need to be focused for growth.

He said two percent was allocated for production/science and technology/IT sector in 2016-17, which has been increased to five percent in 2021-22.

He said the PSDP allocation for China-Pakistan Economic Corridor (CPEC) projects is Rs87 billion.

These include CPEC transport and communication projects (Rs78 billion), projects of Western Alignment (Rs42 billion) and CPEC SEZs, i.e., Dhabeji, Rashakai, Faisalabad, Bostan (Rs7 billion).

The federal minister said that five percent budgetary allocation will be spent on science and technology and information technology (IT).

Responding to a question, he said that projects are being prioritized and all projects could not go at a time.

He said that China is very much interested in the CPEC projects.

He said that different nature of projects have been initiated under the CPEC during the ongoing PTI government’s tenure.

“The first phase was of construction, while the second is of agriculture and industries,” he said. He said in Rashakai industrial zone where foreign investment has already reached through a Chinese company while more companies are coming there.

“You will see a declining trend in the Chinese financing ahead due to a different nature of phase,” he said.

Other Chinese companies are working on the agriculture sector in Pakistan and for the last two years, work on cotton is being carried out and their seed will be available in Pakistan in the next one to two years.

The NEC has decided that after 31 March, no project can be accepted in the PSDP.

He said that financing in Chinese projects mainly came to IPPs, adding that this financing increased the overall size of circular debt.

He said that during the last year of the PML-N government, circular debt was increased by Rs450 billion, adding that the increase would be decreased by Rs100-150 billion in the current fiscal year. Due to delay in payment circular debt piled up, he said and added that now those Chinese banks that had given loans are facing issues in payments.

“Now big decisions have been taken and payments have been started,” he said.

He said the throw-forward of projects is of around Rs5.5 trillion. Bajwa said that negotiations are being held on Industrial Cooperation Framework with China through Board of Investment and its Chinese counterpart.

“It is a deliverable of the JCC [Joint Cooperation Committee (JCC) of CPEC]. Nothing has been halted due to it,” he said.

He further said a Joint Working Group has already been created on agriculture sector, adding that a value chain processing is being discussed with China as well.

“You will see Chinese private sector’s participation in the agriculture sector as well,” he said.

There is a commitment from the Chinese side to come and participate in the agriculture transformation, he added.

He said the Pakistan People’s Party-led Sindh government has not constructed even a single inch of motorway in the province, however, the federal government is spending Rs200 billion on the Sukkur-Hyderabad Motorway project. Besides this, development work worth Rs90 billion is under way on different projects in Sindh.

Umar said the federal government is also making efforts to eliminate encroachments and cleaning of nullahs in Sindh.

He said that Rs25 billion of funds are being spent on water projects in Sindh.

“Centre works for the welfare of Sindh’s people and not for its government,” he said.

Responding to Sindh CM Murad’s objections, Umar said no province can dictate the Centre about the federal development’s budget.

“It’s the prerogative of the federal government to spend money on projects of its own choice. However, we do take provinces’ input. But they cannot dictate the federal government,” he said.

Umar said that 90 percent utilisation of the PSDP is expected compared to 66 percent during the outgoing fiscal year.

Last year, low utilisation of PSDP was due to the Covid-19 outbreak, he added.

He further said that 320 projects have been targeted to be completed this year.

He said the GDP size was Rs34 trillion in 2017-18, Rs47.7 trillion in the current fiscal and it will be Rs53.9 trillion in the next fiscal year.

He further said the Economic Coordination Committee’s (ECC’s) approval would be sought on Wednesday to procure Covid vaccine worth $1 billion.

APP adds: Asim Bajwa on the occasion said the only portion left on the Eastern Alignment, was Sukkur-Hyderabad motorway and work on it would commence soon.

On the Western alignment, he said the Hakla-D.I.Khan motorway would become operational in October this year which would reduce the travel time by 50 percent.

He said the D.I. Khan-Zhob section has been included in the upcoming CPEC Joint Coordination Committee while work on Zhob-Quetta had already started. Similarly, he said the road network from Quetta to Gwadar is almost complete.

To a question, Asad Umar said Sindh province was getting lion share of Rs 90 billion in the federal PSDP for its various development projects. While Punjab would get Rs 93 billion so despite a big difference of population, allocation for both provinces was almost same, he added.

Copyright Business Recorder, 2021