Musharraf to offer NFC formula: Provinces repose confidence in president
By Khaleeq Kiani
ISLAMABAD, May 30: Without changing their positions, provinces on Monday authorized President Pervez Musharraf to work out a formula to end the ongoing deadlock over the sixth NFC award. “The provinces were reluctant to change their stand because of political implications, and left it to the president to take a decision. Now, it is up to the president to decide whether to give weight to revenue collection, inverse population density and poverty,” an official told Dawn.
The president did not agree to a proposal that he should persuade Sindh to give up its demand for inclusion of revenue in the multi-factor formula for distribution of resources and said the viewpoint of each stakeholder should be accommodated in the formula.
“The president underlined the importance of evolving a consensus by showing flexibility and accommodating each other’s point of view so that the benefits of economic development may be transferred to the common man at the earliest,” an official statement issued after a meeting of President Musharraf with provincial chief ministers and finance ministers said.
He said judicious distribution of resources among provinces was necessary to redress injustices of the past and for promoting an environment of harmony for accelerated development across the country. The president said all provinces stood to gain from the economic turnaround and they should avail themselves of the opportunity for an increased share as the federal government was keen to give them additional resources.
“After listening to all participants, the president asked the stakeholders to have confidence in him and he would take a decision (on NFC) in a couple of days,” Balochistan Finance Minister Syed Ahsan Shah told Dawn. He, however, said the federal and provincial budgets would be announced on the basis of the existing award. If the president’s decision helped reach a consensus, adjustments could be made later.
On gas development surcharge, Sindh and Balochistan submitted detailed papers and asked the president to take a decision which both parties would accept, said Mr Shah.
A source said the Balochistan challenged Sindh’s position on gas surcharge and said that based on the legal and factual position it had the right to seek 100 per cent of the Rs16 billion gas development surcharge.
Balochistan argued that Sindh should not get share in the gas development surcharge on the ground that one of its gas fields was providing gas to power sector at higher rates and another was supplying gas to fertilizer sector.
In that case, Balochistan would demand supply of its gas to power plants at higher rates instead of to the main system. On the basis of weighted average price and volume of gas in each province, the whole of gas development surcharge belonged to Balochistan but it was ready for a give and take.
The meeting presided over by President Musharraf was attended by the prime minister, his adviser on finance Dr Salman Shah, four chief ministers and four provincial finance ministers. Provincial finance secretaries and private NFC members were also invited but kept out of the meeting.
NWFP Finance Minister Sirajul Haq told reporters that provinces presented arguments and statistics in support of their claims, besides their difficulties and financial requirements.
He said the NWFP informed the president that poverty in the Frontier had increased to 48 per cent, the highest in the country, and demanded an increase in net hydel profit as an interim arrangement, besides fulfilment of a commitment made by former Prime Minister Zafarullah Jamali on the subject last year.
He said provinces and the federal government presented proposals on the sharing of resources among stakeholders, besides collection and distribution of General Sales Tax (GST).
He said the federation was ready to gradually increase the provinces’ share in the divisible pool to 50 per cent. The transfer of 2.5 per cent of GST in lieu of octroi/ zila tax would remain outside the divisible pool, he said.
Mr Haq said the president would present his formula to the provinces in two to three days on the basis of proposals presented by the stakeholders. He said Sindh appeared to have softened its position on inclusion of income-generation in the multi-factor formula.
He said a formula agreed upon by Balochistan, Punjab and the NWFP last week was also discussed at the meeting. He said it was a common perception that the share of all the provinces should increase, both in amount and percentage.
Mr Haq said it would be a great achievement of the federal government if the president presented a consensus formula. If a consensus was not reached, he added, smaller units would get higher grants and subventions.
When asked if President Musharraf had the constitutional authority to take a decision on the NFC, he said if the president could help achieve a consensus and the provinces accepted his formula, the constitutional requirement would be fulfilled.
He said the formula could be accepted by the provinces as an interim relief for one or two years and added that an interim relief for one or two years was better than one province being forced to accept three provinces’ will.
The NWFP minister said if a consensus was not achieved, the president could provide higher grants for backwardness and poverty from his discretionary fund. Sabihuddin Ghausi adds: Sindh Finance Minister Syed Sardar Ahmad informed Dawn that President Musharraf was expected to intervene to resolve the issue.
He was, however, not in a position to say when and how the president would intervene. “Till then we will go ahead with our budget preparation on the basis of the 1997 NFC award,” he said.
“We stick to our position on horizontal distribution of resources among the provinces on the basis of multiple criteria which should include resource collection as a key factor,” the minister emphatically said.
“We have offered no ratios for these factors,” he said. He explained that revenue collection meant that all taxes collected in a province should be given weightage when it comes to allocation of resource share.
Answering a question, he said that the 2.5 per cent GST collection could be made a part of the federal tax pool if the federal government agrees to raise the share of provinces to 47.5 per cent from the existing 32.5 per cent.
As for differences with Balochistan on gas development surcharge, he said this issue was outside the purview of the NFC. Balochistan wanted higher amount of GDS than Sindh because of its volume. It would now be taken up with the petroleum and natural resources ministry, he added.
ISLAMABAD, May 30: Without changing their positions, provinces on Monday authorized President Pervez Musharraf to work out a formula to end the ongoing deadlock over the sixth NFC award. “The provinces were reluctant to change their stand because of political implications, and left it to the president to take a decision. Now, it is up to the president to decide whether to give weight to revenue collection, inverse population density and poverty,” an official told Dawn.
