PESHAWAR, Feb 2: The NWFP government is mulling replacement of the Provincial Finance Commission (PFC), a body which distributes resources between the province and districts, with a 10-member local councils grants committee (LCGC).

The move, an official told Dawn here on Monday, was part of a proposed Local Government Act, 2008, which would be reviewed in the provincial cabinet meeting on Tuesday.

The PFC was an integral instrument envisaged under the Local Government Ordinance, 2001. The body was responsible for making recommendations to the governor for a formula for distribution of resources between the province and districts out of the proceeds of the province’s resource pool.

The PFC, as per the 2001 LGO, had 10 members, including provincial finance minister, chairman; secretaries of local government, finance, planning and development; three professional members from the private sector; and one each district, tehsil and union nazims. The LCGC, as per the proposed law, will comprise provincial finance minister, chairman; minister for local government; two members of the NWFP Assembly, one each from the treasury and opposition benches nominated by the chief minister; and secretaries of finance, local government, and planning and development.

Similarly, one district nazim elected by all district nazims, one nazim of municipal committee elected by all municipal nazims and one union nazim, to be nominated by the provincial government, would be its members, the official said.The finance department would provide secretariat support to the LCGC, which would act as a recommending body to the provincial cabinet instead of the governor, the official maintained.

The LCGC will recommend distribution of resources between the province and district councils from the provincial resource pool, also known as Provincial Consolidated Fund, in addition to the grant in lieu of Octroi and Zilla Tax.

It will also devise a formula for distribution of resources among local councils of the province, which will include district, municipal committee and union councils. Moreover, it will devise formulas for distribution of special grants among local councils.

The proposed law binds the LCGC to take into account the principles of need, capacity, effort and performance of local councils while making recommendations. Similarly, it will take all decisions by a majority of members present and voting.

Also, the LCGC would present to the provincial government an annual report on the analysis of fiscal transfers, the situation of own-source revenue in local councils and the reach and quality of their services, the official said.