Plan to make provinces accountable for use of NFC funds

Published December 16, 2020
Information Minister Shibli Faraz addresses a presser in Islamabad on Tuesday. — PID
Information Minister Shibli Faraz addresses a presser in Islamabad on Tuesday. — PID

• Cabinet forms body to fix responsibility in oil scam
• Appointment of Lt Gen Akhtar Nawaz as NDMA chief okayed
• Opposition’s resignations not to affect Senate polls, says minister

ISLAMABAD: The federal cabinet on Tuesday decided to devise a mechanism under which provinces would be held accountable for how they spent funds given under the National Finance Commission (NFC) Award and formed a special committee to fix responsibility on those involved in the June petroleum crisis.

The meeting, which was presided over by Prime Minister Imran Khan, also allowed National Electric Power Regulatory Authority (Nepra) to adjust tariff. It is claimed that no additional burden will be passed on to the consumers during the third quarter of the current fiscal year.

The cabinet decided to improve data of Ehsaas social welfare programme, formally known as Benazir Income Support Programme (BISP), which will be used for taking decisions on public welfare.

In another important decision, the meeting approved the appointment of Lt Gen Akhtar Nawaz as the new National Disaster Management Authority (NDMA) chairman.

In a post-cabinet meeting press conference, Information Minister Shibli Faraz denied reports that former chairman of the authority, Lt Gen Mohammad Afzal, had been sacked for corruption and was under custody.

Oil scam

Shibli Faraz told media that the much-awaited report on the recent oil scam was placed before the cabinet and the prime minister vowed to take stern action against those involved in the scandal.

PM Khan formed a special committee and tasked it with presenting a report in a week to fix responsibility against those responsible for the crisis that led to petrol shortage in the country in June this year.

The committee comprises four federal ministers and is headed by Asad Umar. The other members are Shafqat Mehmood, Shireen Mazari and Azam Swati.

“The committee will present its report even before its given time; most probably by coming Friday,” Mr Faraz said.

“The investigation report ordered by Prime Minister Imran Khan into the petroleum products shortage this year was presented before the cabinet after which the premier formed a committee which will give recommendations next week about fixing responsibility for the crisis in light of the report,” he added.

In the report, the 15-member Inquiry Commission has recommended departmental proceedings against the top hierarchy of the Petroleum Division, dissolution of Oil and Gas Regulatory Authority (Ogra) and a halt to the operations of refinery and oil marketing company named Byco.

The commission’s 163-page report also estimated over Rs250 billion worth of oil smuggling from Iran and noted that a wide range of operations in the sector were against rules, operating in vacuum and without any check and balance.

It said having seen the affairs of Ogra, the commission was also ‘compelled to recommend’ performance audit of all the regulatory bodies like National Electric Power Regulatory Authority, Pakistan Electronic Media Regulatory Authority, Competition Commission of Pakistan and Drug Regulatory Authority of Pakistan.

Provinces accountable for funds

In a significant move, the federal government decided to form a mechanism to check how the provinces utilised funds given to them by the Centre under the NFC Award and to improve revenue generation by the provincial governments.

“The cabinet discussed the merits and demerits of the current NFC Award mechanism under which funds were provided to the provinces according to their population size. It emerged during the discussion, and following a presentation given by the finance ministry, that there is a fundamental gap between the money that the Centre gives to the provinces and the revenue generated by them due to which the provincial governments do not have any incentive to increase their revenue,” Shibli Faraz said.

He said the provincial governments did not have any motivation to work to raise their revenue locally because they knew that they would receive a certain amount from the federal government.

Analyse: NFC: Restoring the fiscal balance

The minister also gave a comparison of funds being given by the Centre and those generated by the provinces.

“Punjab gets Rs1.448 trillion from the Centre and generates Rs306 billion, Sindh receives Rs764bn from the federal government but generates only Rs314bn, Khyber Pakhtunkhwa gets Rs602bn and earns only Rs50bn while Balochistan generates Rs51bn against Rs282bn share in the NFC,” he elaborated.

The minister said there was no mechanism to decide how the NFC funds were spent and the money was seen to have been previously used to pay provincial salaries and for personal use such as purchasing cars.

He said some issues had emerged following the 18th Constitutional Amendment that were important to be resolved and that provinces needed to be held accountable for their spending of the NFC funds.

In an apparent reference to Sindh, he said it was not visible where the billions of rupees given to a certain province were utilised.

The minister said besides the NFC Award, the federal government also had to spend its funds in the wake of natural disasters, during periods like the Covid-19 pandemic and on development packages.

“As a result the Centre isn’t left with a lot and is forced to take loans for its expenses,” he added.

“Therefore we will have to improve this mechanism if we want money to be spent in the right places and on the right people,” he said.

The minister rejected an impression that the government sought the repeal of the 18th Amendment, saying instead, there was a need to improve the areas that needed correction a decade after the amendment.

Senate elections

Shibli Faraz said the upcoming Senate elections would not be affected even if the opposition parliamentarians tendered their resignations.

The polls for the Upper House are usually held in March but this time the government is considering holding them in February.

“Maryam Nawaz and Maulana Fazlur Rehman are not part of the parliament; then under what capacity are they demanding resignations from elected representatives,” the minister asked.

He said even if resignations came from Pakistan Peoples Party-dominated Sindh Assembly, Pakistan Tehreek-i-Insaf and its allied parties had enough seats in the parliament to make legislation.

Responding to a query about the fate of the Senate polls if resignations came from the Sindh Assembly, he said: “Although constitutional experts have different opinions on the issue, we believe that even then the electoral college of the Senate election will not be affected.”

About the Pakistan Democratic Movement public rally in Lahore, Mr Faraz said the gathering on Sunday was a flop which had been rejected by people.

Published in Dawn, December 16th, 2020

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