LAHORE: The University of Engineering and Technology (UET) has obtained Rs300 million loan/ financial assistance as a supplementary grant for the current financial year 2020-21 from the Punjab government to run its affairs smoothly.

The university is facing Rs1 billion debt and has to get Rs300 million loan to pay salaries and pensions to its employees. The university had given financial assistance of Rs90.87 million to academic year 2017-18 students, Rs122.7 million to 2018-19 students and Rs124.11 million to 2019-20 students, besides allocating funds for 2020-21 session students.

The Higher Education Department (HED) summary for getting the loan states, “The approval is required for one time financial assistance/loan amounting to Rs 300 million for UET, Lahore through a Supplementary Grant during the current Fiscal Year 2020-21 as per terms and conditions prescribed by Finance Department for smooth functioning of the university.”

The terms and conditions include total amount of the loan will be Rs300 million to be disbursed/released during FY 2020-21 in single or multiple tranches. Unwithdrawn amount during the financial year shall stand lapsed and will not carry forward to the next financial year. Considering the lapsed amount, if any, the total amount of loan will be reduced accordingly.

Academic says the authorities should have instead cleared varsity’s dues

Loan duration will be five years including two years as grace period during which the principal of the outstanding loan amount will not be recovered from the UET, Lahore.

Grace period shall start from the date of 1st loan disbursement to the borrower. Re-payment on account of interest as well as principal shall be made on an annual basis with re-payment date as 30th June of every year.

Interest amount will be calculated at the rate of 0.25pc per annum on the amount outstanding on the date preceding the date of re-payment. For the purpose of the interest calculation 365 days in a year shall be considered.

The summary also includes reasons for demanding loan and these include major cut in HEC annual recurring grant as there was reduction of 10.64 per cent as compared to the previous financial year, effectively 19.21pc decrease as trend indicates average annual increase of 8.57pc per annum.

Among other reasons are Covid-19 pandemic which has resulted in delay in collection of dues and affecting timely conduct of entrance test, coupled with double digit inflation, around 10pc raise in staff salaries in 2019-20, and devaluation of rupee against USD. Pension payment continues to add extra financial burden on recurring budget.

There were also pending loans from other accounts including approximately Rs1,095 million taken as refundable loan however the Finance and Planning Committee (FPC) meeting held on June 25, 2020 decided to refrain from further such arrangement as it is serious audit objection. The Syndicate endorsed the recommendation of the FPC.

The UET has extended financial and administrative support to the Punjab government in handling and maintaining operations of Rachna College of Engineering and Technology, (RCET), since December 2006 with a cumulative financial impact of over Rs900 million till now. It has also extended financial and administrative support to MNS UET amounting to Rs94.216 million.

It states the university needs additional finances for pension fund to bridge the gap of over Rs8 billion as per actuarial report of 2017.

UET Vice Chancellor Dr Mansoor Sarwar told Dawn that the government had approved the loan for the smooth running of the university.

Meanwhile, UET Teachers Staff Association (TSA) president Dr Fahim Gohar said the Punjab government would have to pay Rs1 billion which the university spent for construction of sub-campuses. He said the government did not pay UET dues but after the university went into crises, the government was giving loan of Rs300 million with an interest rate of 0.25 per cent and the terms also include that all the money would go into interest in the first two years.

He said the government was giving loan to the UET but it had not paid back Rs1 billion and was also not giving interest on it. He demanded that the government should at least pay the interest if not the principal amount.

Published in Dawn, September 26th, 2020