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breaking news: cuts in PSDP led to power, water crises: govt

The planning commission said that 83 projects which were supposed to complete by June 2011 have not completed.

ISLAMABAD: The government has conceded playing a key role in prolonging economic recession in the country by repeatedly cutting down the Public Sector Development Programme (PSDP), resulting in energy and water shortages and unemployment in the country.

To partially overcome some of the lasting and negative impacts of national recession, the government is now considering privatising some of the major projects through outright sale or through Public-Private-Partnership (PPP) mode on Built to Operate and Own (BOO) basis.

The $12 billion Diamer-Bhasha dam is one project being considered for implementation on BOO basis.

The unusual public admission has come from the Planning Commission in its latest report on the analysis of PSDP. “Reduction in PSDP 2010-11 has adversely impacted the overall economy by further prolonging economic recession due to delay in meeting energy and water shortages, impeding employment generation and delay in achieving MDGs (millennium development goals),” it said.

“The result has been the cost and time overruns of projects, hindering poverty reduction measures and reinforcing boom-bust cyclical behaviour in the economy.”

The planning commission said: “The size of PSDP portfolio normally keeps on increasing as new projects get approved because the level of financing required for projects approval keeps decreasing. Against the Rs208 billion size of PSDP approved by the National Economic Council, the PSDP budget had been scaled down by Rs100 billion.”

It said 83 projects which were supposed to complete by June 2-11 have not completed. Similarly, other projects, particularly related to infrastructure, faced reduction of over 50 per cent in their original allocations, delaying their completion.

“The situation further has been aggravated by allocations to provincial projects. Rs33 billion have been allocated during the current financial year. This amount could be diverted to infrastructure projects for their completion provided provincial governments take on such projects by financing them from their own resources but the provinces have shown reluctance to do so.”

Quoting some of the specific impacts on projects and programme, the planning commission said the allocations to important projects of National Highways in Khyber Pakhtunkhwa, southern Punjab and rural Sindh have been slashed from Rs27 billion to Rs11 billion – a reduction of 57 per cent.

Priority projects of water resources like small and medium dams, canals and right bank outfall drain projects have been adversely affected.

“Only Rs8 billion will be available for them against a commitment of Rs18 billion. Rs6 billion are required for Mangla Dam Raising Project”.

Moreover, no amount is now left for down payment to meet international obligations for nuclear projects – Chashma 3 & 4 – of Pakistan Atomic Energy Commission “which has jeopardised the contract between the Chinese contractor (CZEC) and Exim Bank”.

Likewise, to implement the Supreme Court’s decision, Rs9 billion is required for Lady Health Workers. Against this amount, Rs5.8 billion has been released and the balance of Rs3.2 billion is difficult to ensure, the planning commission said. An amount of Rs3.7 billion will be required to pay only salaries of the employees under Population Welfare Programme.

Similarly, the education sector will also be affected. Projects like Education for All and Teachers’ Training will be affected while foreign aid of Rs31 billion would also be affected. Only Rs9.6 billion will be disbursed against the commitment of Rs31.6 billion.

The planning commission wants an embargo on approval of new projects unless they are critical and donors’ assistance is agreed and committed. Also, projects that are already part of PSDP be reviewed for deferment until fiscal space improves.

More importantly, “potential projects may be transferred to private sector with PPP or Built to Operate and Transfer (BOT) or Built to Operate and Own (BOO), particularly Diamer-Bhasha dam”, it said.


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