ISLAMABAD, April 27: The federal government is holding a meeting of provincial finance ministers on Thursday to discuss the sixth National Finance Commission award and try to finalize it before the announcement of next year’s budget. A senior official said there had been significant progress on the issue of distribution of royalty on natural gas between Balochistan and Sindh and added that the latter had shown willingness to accept a new formula.

Adviser to Prime Minister on Finance and Revenue Dr Salman Shah would preside over the meeting, sources said on Wednesday.

The official did not rule out a meeting between the chief ministers of Balochistan and Sindh on the issue of gas royalty.

He said the federal government had already held separate discussions with all the provinces and it would be for the first time this year that all the five stakeholders would discuss their positions at a meeting. He said it would be an informal session because private provincial members of the NFC had not been invited to the meeting.

A source said that Sindh Chief Minister Arbab Ghulam Rahim, who was scheduled to leave the capital for Karachi on Wednesday, was asked by the prime minister’s secretariat to stay back for a meeting with Prime Minister Shaukat Aziz on Thursday.

He said Mr Arbab would be asked to show flexibility on Sindh’s demand for inclusion of revenue collection in the formula for horizontal distribution of resources.

The sources said that the centre would be suggesting a structured and step-by-step approach to the provinces to increase their share in the net proceeds of the federal divisible pool (FDP) to 50 per cent in a phased manner.

Under the formula half a per cent point could be increased in a way that provincial share of the FDP would go up to 50 per cent by 2009-10, the last year of the sixth NFC.

This means that the provincial share would start from 48 per cent or 48.5 per cent in the first year of the new NFC. It would then go up by 0.5 per cent every year and reach 50 per cent by 2009-10.

A provincial source, however, said that at least two provinces were opposed to this formula.