Pakistan to face huge penalty for not executing donor-funded projects

ISLAMABAD: The federal and provincial governments have identified major hurdles such as lack of permanent appointments of Project Directors (PDs), opening up of bank accounts, acquisition of land and inability to establish proper coordination among different agencies for execution of multi-billion funded projects financed by multilateral donors.

The lack of proper planning and execution of donor funded projects has been resulting into multi-million dollar penalty on account of commitment charges on per annum basis because of slow moving projects despite approval and signing of projects. The commitment charges turns into multi-million dollars in case of Asian Development Bank (ADB) but now renewed efforts are underway to minimise amount of such commitment charges.

Now the Economic Affairs Division (EAD) highlighted all these issues in consultation with the concerned federal and provincial authorities and Prime Minister Imran Khan will be given briefing to resolve all lingering issues in order to avoid hundreds of thousands of dollar penalty in case of making no progress after signing of projects.

However, the donors’ official argued that the recipient countries were responsible for paying these penalty amounts because the multilateral donor agencies parked the amount after granting approval from its board and signing of loan agreement. If this money remained un-utilised then the recipient country should be held responsible and then penalised through payment of commitment charges, said one donor representative based in Islamabad.

The official sources said that they conducted detailed portfolio review in last three days and highlighted all major issues. Now a detailed report will be submitted to PM for placing proper planning and coordination at federal and provincial levels as it will help avoiding commitment charges and payment of hefty penalty/fine amounts.

According to official announcement made by EAD on Thursday, Federal Minister for Economic Affairs Makhdoom Khusro Bakhtiar chaired the tripartite wrap-up meeting on Portfolio Review of ADB-Funded Projects at Ministry of Economic Affairs.

The meeting was attended by Country Director Ms. Xiaohong Yang, Deputy Chairman Planning Commission and senior officers of the provincial governments. The two-day portfolio review session is being organised by Economic Affairs Division.

The volume of ADB-Funded projects is $6.6 billion, whereas volume of active portfolios in the Khyber Pakhtunkhwa is of worth $919 million, Sindh $656, Punjab $968 million, Balochistan $105 million. At second day of review session, the projects related to social, education, infrastructure development, public-private projects, irrigation & agriculture, transportation and energy sector in the provinces were reviewed.