ISLAMABAD, May 4: The federal government has told the provinces that population will continue to be the basis of resource distribution for another year as at least four issues require settlement.

Increase in royalty on Tarbela Dam for the NWFP, distribution of 2.5 per cent GST to provinces, calculation of royalty on oil and gas resources for provinces and distribution of Rs20 billion subvention pool required comprehensive discussions which could not be completed within a short period of one month before the federal budget, a finance ministry official told Dawn on Sunday.

The Sindh and Balochistan governments have not yet nominated their members, the official said, adding that even if they forwarded their nominations today it would not be possible for the new National Finance Commission to complete its deliberations before budget.

Once all the provinces convey their nominations, the finance ministry would move the file to the prime minister, which would then go to the president who would finally announce the constitution of the NFC.

Sources said the last NFC had finalized its recommendations on many issues, but the sharing of subvention pool, royalty to the NWFP on Tarbela Dam, calculation of oil and gas royalty to the respective provinces and a mechanism for transfer of 2.5 per cent GST to provinces in lieu of octroi remained unresolved.

The provinces have been demanding that resource generation and backwardness should also be given weightage along with population in the resource distribution because the lone criterion of population could create unnecessary problems for them.

Last year, the NFC was extended for a year i.e. up to June 2003, which now seems to be revised for another year given the fact that even if the new commission is constituted now, it would not be possible for it to announce a new award.

The government had decided to revise the formula of royalty on Tarbela Dam to the NWFP, but the provincial government and Wapda have so far failed to move an inch on the subject.

Similarly, no progress could be made on calculations and criteria of oil and gas royalty. Sindh and Balochistan are going to be the main beneficiaries of the improvement in natural resources’ royalty.

According to one estimate, Balochistan could get Rs7 billion royalty on gas it was feeding to the country from the existing level of around Rs600 million at present.

Similarly, Sindh, whose share in the natural resource’s income has been negligible in the past, would get sizable amounts under this head in view of a couple of major gas discoveries coming to commercial production.