ISLAMABAD, March 5: Provincial governments have been directed by Prime Minister Mir Zafarullah Khan Jamali to finalize their finance commission awards latest by the first week of May.

Official sources told Dawn on Wednesday that the new provincial commission awards would be for three years. However, provinces have been told to make sure that whatever is being paid to district governments in their one-year interim awards should not be reduced in new awards.

Sources said the prime minister had agreed with National Reconstruction Bureau chairman Daniyal Aziz that district governments should be given increased funds by provincial governments.

The NRB chairman told Dawn the National Steering Committee on Allocations would shortly be contacting the provinces to discuss with them the finalization of their awards.

He hoped that provinces would come up with suitable and transparent awards aimed at providing better resources to district, tehsil and union councils.

Mr Aziz expressed concern over Wapda’s at source deduction of its arrears payable by the district governments. The devolution plan would work satisfactorily only when local governments were offered considerable funds to carry out development projects, he added.

The federal government is expected to offer an additional Rs34 billion for provincial finance commission awards. Revenue being received from the imposition of 2.5 per cent additional General Sales Tax will be offered to provinces. The Centre had earlier agreed to increase the share of provinces from the present 37.5pc to 42pc in the new NFC award.

Under the present resource distribution formula, the Centre retains 62.5pc share and 37.5pc is offered to the provinces. The government retains major share by saying that it has to look after the bigger issues like debt servicing and defence expenditure.

Sources said that new resource distribution formula, finalized by the prime minister’s adviser on finance before general election, has not been abandoned as it was prepared on the basis of revenue collection as demanded by Sindh, backwardness as sought by the NWFP and area as emphasized by Balochistan. Punjab had been insisting that the new formula should be carved out on the basis of population.

NWFP and Balochistan are already getting an additional Rs3.9 billion and Rs4.8 billion, respectively, in the shape of subventions.