LAHORE, Oct 16: The Punjab Education Foundation has stopped issuing one third grant component of interest-free financial assistance to establish male and female educational institutions all over the province.
The decision was taken in the board of director’s meeting last month. A formal notification for the new share formula of a project cost is, however, awaited.
The decision to stop the grant component in the project was taken in the wake of a National Savings Schemes’ policy to disallow institutional investment in July, 1999. It is learnt that the foundation’s Rs220 million endowment fund invested in the National Saving Scheme is maturing next year.
As the foundation was offering grants and loans from the profit earned from the invested endowment fund which is likely to reduce after its investment in commercial banks, the foundation’s board of directors in March this year had also levied three per cent service and administrative charges on loan amount per annum.
It may be mentioned that the foundation was earlier issuing two-third loan including one-third grant while the applicant NGO was required to incur one-third of the total expenditure of the total project cost to construct a building for a school in the rural areas. However, the share ratio in the urban areas was —- grant component (20 per cent), loan component (50 per cent) and NGO’s share (30 per cent). The project cost included construction of building, provision of furniture, fixture, laboratory, equipment, library books and computer labs.
The applicant’s one-third share in the case of the rural areas and 30 per cent share in the case of the urban areas does not include the cost of the land on which the building is to be established.
However, as an incentive for the establishment of girls schools in the rural areas, the foundation accepts the applicant NGO’s land as one-third share of the project cost. The foundation, however, impose a condition that the said land should be transferred in the name of the institution.
It may be mentioned that the grant component was non-refundable while the loan was recoverable in 14 biannual instalments in seven years.
The foundation extends loan in three instalments in the case of construction of a building and in lumpsump in the case of acquiring furniture, fixture, laboratory, equipments, library books and computer labs.
It may be mentioned that the foundation used to give one-third of the total recurring expenditure as grant for a maximum period of three years on an annual basis. The recurring expenditure included utility bills, teachers’ salaries etc. The recurring grant was also stopped in September, 1998.
OBJECTIVES:The PEF was established in 1991 under The Punjab Education Foundation Act, 1991, to promote and finance development of education in the province. The foundation encourages the private sector including NGOs, trusts and social welfare organizations to run educational institutions preferably on a no-profit and no-loss basis. “If some profit is earned that should be spent on the welfare of the institution as well as assisting the deserving and needy students to get free education.”
The foundation also encourages to establish educational institutions for girls while in the rural areas institutions for both boys and girls are encouraged. The foundation also encourages co-education up to middle level.
Currently, the PEF is offering loans for the establishment of primary, middle and high schools, vocational schools and computer labs in schools up to matriculation level.
Before September, 1998, the foundation was also offering grants and loans for the establishment of higher secondary schools, inter and degree colleges and vocational and commercial institutes and colleges.
The foundation was initially given Rs200 million as seed money in 1990-91, while Rs250 million more were given in 1991-92 and Rs20 million more in 1994-95 to keep as an endowment fund. However, the government withdrew Rs250 million out of the total Rs470 million seed money in 1996.
PERFORMANCE:During 1991-2000, the PEF had released loans and grants to the tune of Rs312.3 million. The foundation had, however, sanctioned loans and grants to the tune of Rs454.718 million during 1991-2001 excluding the financial year 1999-2000 when the foundation’s board of director was not functional due to a change in the government in October, 1999.
The loans extended to the NGOs had helped to establish 339 institutions including 229 institutions in the urban areas and 110 institutions in the rural areas across the province.
The institution-wise break-up shows that 59 primary schools, 69 middle schools, 135 high schools, 17 higher secondary schools, 12 intermediate colleges, five degree colleges, 26 vocational and technical institutes and 16 special education institutions were established.
The gender-wise break-up shows the established institutions included 103 for boys, 102 for girls and 134 for co-education.
It may be mentioned that the PEF had extended Rs157.423 million as grant and Rs115.855 million as loan for the construction of buildings during the last one decade. Similarly, for the provision of furniture, fixture, laboratory, equipment, library books and computer labs, the foundation had so far extended Rs15.054 million as grant and Rs12.154 million as loan. The PEF had also extended a recurring grant to the tune of Rs11.809 million. The miscellaneous expenditure so far is calculated as Rs6,091.
PEF deputy managing director Sheikh Anwaar told Dawnthat no case was pending applied before September, 19, this year. He said an applicant NGO was required to get its case approved by the District Education Promotion Committee (DEPC) concerned previously headed by deputy commissioners.
After the approval by DEPC, Mr Anwaar said, the PEF sanctioned loans and asked the NGOs concerned to complete legal formalities including agreement, undertaking and the mortgage deed or bank guarantee. “The PEF does not release sanctioned loans until the legal formalities are completed,” he said.
Answering a question, he admitted that the applicants were facing problems as the offices of the deputy commissioners had been disbanded and the district coordination officers (DCOs) had yet not been given powers formally to help complete the legal formalities and recommend the release of loan. As a way out to the this problem, Mr Anwaar said, the PEF give an authority letter to the applicant NGO for the DCO concerned to complete legal formalities.
A formal notification to extend the powers to complete and assess the legal formalities to the DCOs is under process, it is learnt. The foundation’s board of directors has also recommended the formulation of uniform district committees.
Mr Anwaar said the PEF also offered loan for rented buildings for provision of furniture and fixture on the basis of rent deed for seven years. The PEF also offered ADB-funded loan for technical education project to launch a diploma course in associate engineer.
Answering a question, Mr Anwaar said the foundation’s recovery rate of loans was around 88 per cent.
