PESHAWAR, June 5: In the next financial year, district governments in the NWFP will not be bound to set aside 40 per cent of their development funds for mega-projects, as the Provincial Finance Commission (PFC) has abolished its earlier stipulation to this effect.

The decision, which was twice deferred by the PFC, has been taken to improve the overall utilisation of funds allocated to district governments under the PFC award, following directives by Chief Minister Akram Khan Durrani, officials told Dawn.

They said that during the third quarterly review of the current Annual Development Programme (ADP), the district governments termed the condition a hurdle in the efficient utilisation of their development allocations.

The district governments were of the view that the volumes of their development allocations were not large enough for them to allow sizeable investment in mega-projects.

The provincial government in line with the PFC award had allocated Rs963 million for the district governments’ development programmes. However, by the end of the third quarter of the fiscal year they had collectively utilised hardly 15 per cent of the allocated amounts.

The PFC, while announcing the award for three years, had asked the district governments to earmark 40 per cent of their development funds for big projects in the roads and water supply sectors (those having at least an estimated cost of Rs0.5 million).

The official said the main concept behind such a conditionality was that the district governments and the tehsil and municipal administrations were mainly focusing on small schemes, like pavement of streets and drains, and ignoring work in the road and water supply sectors.

The PFC in its second meeting held on April 21 had decided to continue with the conditionality. However, the condition has now been abolished, following the chief minister’s directives, the official said.

District governments said that following the abolishment of the stipulation, funds utilisation at the local level would improve. However, officials involved in the planning work believed that this would not make a big difference in terms of performance.

They believed that low utilisation of funds by district governments was not just due to the conditionalities from the PFC. The real problem, they said, was the lack of capacity and existing practices of the district governments, which need to be improved.