KARACHI, July 23: On expiry of the five-year term of the sixth National Finance Commission, President Pervez Musharraf has constituted the seventh NFC with effect from July 21, 2005, headed by Prime Minister Shaukat Aziz, who also holds the charge of finance, and included a non-elected Adviser on Finance, Dr Salman Shah.

The inclusion of Dr Salman Shah as a federal government nominee in the NFC, who had been a consultant of the Punjab government for the sixth NFC, is bound to generate a lot of heat, and political leaders from NWFP, Balochistan and Sindh will raise questions.

The federal finance secretary is associated as an expert in the NFC. The NFC has now ten members that include two representatives from the federal government -— the finance minister and the adviser on finance — and finance ministers of the four provinces. Four private non-statutory members on the NFC will be nominated in consultation with the governors of the provinces.

All the previous six NFCs included nine members. Headed by the federal finance minister, the NFC included finance ministers of the four provinces and one private non-statutory member each from the four members.

The terms of reference of the seventh NFC are much more expanded and broader than the previous NFCs. The seventh NFC has been asked to review the rationalization of payment of royalties on crude oil and surcharge on natural gas. Hitherto, this issue was outside the NFC.

The seventh NFC is being asked to review the rationalization of gas development surcharge in context of the controversy generated recently by Dr Shah and others between Sindh and Balochistan.

Dr Gulfaraz, a retired brigadier and a former federal secretary in the oil and gas ministry, was nominated as Balochistan’s representative in the sixth NFC. Dr Gulfaraz does not live and had never lived in any part of Balochistan and his nomination was accepted with grudge by former Prime Minister Mir Zafarullah Khan Jamali. The pricing and distribution of oil and gas has always been framed by the federal government.

In short, the composition and terms of reference of the NFC are bound to create more disharmonies.