PESHAWAR, Jan 1: The NWFP government has decided to recover the unutilized part of the loan it has extended to some of the autonomous and semi-autonomous bodies to support their development projects.
Official sources said that the provincial governments in the past had given loans to several autonomous and semi-autonomous bodies to help them execute their development projects in different parts of the province.
However, in some of the instances the organizations could not ensure 100 per cent utilization of the loans. In some cases they could not even execute the projects despite obtaining loans, whereas, in few cases they recorded savings by completing projects in less than the estimated cost.
As the organizations, said a senior government functionary, were not using the loan money due to various reasons, the government had decided to make them return the amount so that the province could repay its expensive loans payable to the Centre.
"The provincial government, in one such instance, recovered around Rs2 billion from the Sarhad Hydel Development Organization (Shydo) and utilized it by repaying an equal amount against the cash development loan (CDL) it is required to repay to the Centre," said an official.
Similarly, recoveries have also been made from some other autonomous and semi-autonomous bodies in an attempt to lay off part of the expensive CDL payable to the federal government.
Official sources said that the provincial government would benefit from the move as it had retired part of the CDL on which it was being charged 15 per cent to 18 per cent interest.
"The province would record saving, though its capital receipts are likely to record shortfall," said the officer. He said that the amount the provincial government was getting as interest against the loans extended to autonomous and semi- autonomous bodies of the province was less than the interest rate it was being charged under some of the CDL agreements.
Though the capital receipts would experience a dip, in the long-term the province would benefit, said the officer, as it had got rid of some of the expensive CDL which were eating up considerably a large amount every year on account of interest payments.
Between 1971-72 and 1997-98 financial years the province obtained a total CDL of Rs43 billion from Islamabad. Of which it repaid over Rs14 billion principle and Rs71 billion as interest charges. Despite paying Rs85 billion, the province is still required to pay a total of Rs68 billion - including Rs28 billion principle and Rs39 billion interest amount - to clear the CDL portfolio by the end of 2025 if it repays the same in normal monthly instalments.