ISLAMABAD, Sept 14: The federal government has started fresh negotiations with provinces to reach consensus on sharing of net proceeds of the federal divisible pool under the newly constituted National Finance Commission (NFC). Informed sources told Dawn that the first such meeting would take place here at the PM secretariat to start discussing issues from where they had been left off before the announcement of 2005-06 federal budget.

The government has notified Senator Saeed Hashmi as the only new private member on the NFC to represent Balochistan to replace Dr Gulfraz Ahmad. All the other private members representing Sindh, the NWFP and Punjab would remain unchanged.

Prime Minister Shaukat Aziz told Dawn recently that the centre had decided to give another opportunity to the provinces to reach consensus on the NFC award before President Musharraf presented his solution to the issue.

“We will meet once again so that provinces resolve their differences on horizontal distribution of resources among themselves,” Mr Aziz said.

He added that sharing of resources among the provinces was the real problem. “Naturally, we (the centre) are a party to it and we want it to be resolved,” said the prime minister, adding that sharing of resources between the centre and provinces was not a big problem.

“So we will make one more attempt. Otherwise we will give them a solution because finally every province and every member of the NFC has to agree under the constitution...I can’t amend the constitution,” he said.

He said the federal government wanted to take the provinces along and all the stakeholders were very close to an agreement.

Just before the announcement of the federal budget, the provinces had authorized the president to present a solution on the NFC award as they had failed to reach a consensus themselves.

The provinces had been divided over the change in population-based formula to a multi-factor formula involving population, poverty, revenue collection and inverse population density as parameters to share the resources.

Also, the provinces have been demanding that the federal government increase provincial share of the divisible pool to 50 per cent from the existing provincial share of 37.5 per cent plus special grants and subvention pool.

The prime minister said the provinces had asked the president that they could not reach the conclusion themselves and hence he should give a solution which was acceptable to all the stakeholders.

President General Pervez Musharraf had reconstituted the National Finance Commission (NFC) on July 22, 2005 under article 160(1) of the constitution as the tenure of the existing NFC had expired on July 21.

The new 10-member NFC, headed by Prime Minister Aziz who is also the Finance Minister, comprised four provincial finance ministers and adviser to the prime minister on finance Dr Salman Shah.