ISLAMABAD:

The government on Thursday approved a multimillion-dollar compensation package for the Chinese nationals killed in a terrorist attack and diverted Rs70.5 billion worth of discretionary budget of Prime Minister Shehbaz Sharif and parliamentarians towards hydroelectric power schemes.

The Economic Coordination Committee (ECC) of the cabinet, which took those decisions, approved an additional supplementary budget of Rs89 billion. A major chunk – Rs70.5 billion – was given for the construction of three hydroelectric power projects by diverting funds from the discretionary budget.

The ECC gave indemnity from the breach of investment policy for the overseas Pakistanis, which appeared to be a strange decision that provided waiver on policy violation.

The ECC approved $2.6 million, or Rs717 million, in a compensation package for the five deceased Chinese nationals who were working on the Dasu hydropower project and were killed in a terrorist attack two months ago. The project has been struck twice by the terrorists.

So far, Pakistan has given $14.2 million in compensation to the Chinese nationals working on the World Bank-funded Dasu project. The latest compensation is higher than the one paid three years ago. The family of the each deceased would get $516,000, or Rs143.4 million.

However, the government approved only Rs2.5 million, or $8,929, in compensation for the family of a Pakistani man also killed in the attack.

The ECC approved a supplementary grant of Rs70.5 billion for the completion of work on hydropower projects. The financing would go to the Mohmand Dam, Dasu Hydropower Project and Tarbela 5th Extension Project.

The Water and Power Development Authority (Wapda) had demanded an additional Rs110 billion but the ECC approved only Rs70.5 billion. The money was diverted from the allocations made for parliamentarians’ schemes and the special initiatives of PM Shehbaz.

The Cabinet Division surrendered Rs28.8 billion of parliamentarians’ schemes in favour of the hydropower projects. The food ministry gave up Rs35 billion, including Rs30 billion of the PM’s agricultural tube wells’ solarisation package.

Another Rs4.8 billion of the PM’s Initiative for Green Revolution was diverted towards the hydropower projects.

Read IMF grills Pakistan on power rates

Some Rs2 billion of the PM’s Sports Initiative was also diverted towards the power projects. A sum of Rs4.8 billion of the PM’s Initiative for Women Empowerment was given to Wapda for those schemes.

The ECC approved the diversion of $8 million worth of pension fund of Roosevelt Hotel employees for meeting operational needs of the New York hotel. The money was given in spite of opposition from the privatisation ministry.

Four years ago, the federal government had allowed PIA to take a $142 million loan for meeting the financing needs of Roosevelt Hotel. It included $18 million to cover pension-related liabilities of the hotel’s employees.

The management of PIA Investment Limited had requested the diversion of $8 million of pension liabilities to meet the operational expenses.

The privatisation ministry objected to the diversion on the ground that the liabilities had already grown to $24.5 million and PIA did not have money to clear them.

The Privatisation Commission has objected to holding a meeting of Roosevelt Hotel’s board in Paris, particularly at a time when the company was under stress and found it difficult to pay salaries. It has also opposed the hiring of retired PIA employees in the hotel.

Foreign investment

The finance ministry, in a statement, said that the ECC also considered a summary of the Finance Division to make amendments in the policy for equity investment abroad to facilitate information technology exports.

The committee approved the amendments and gave indemnity from violation of the policy in the past.
The finance ministry had sought waivers and exemptions from the provisions of the equity investment policy abroad and the regularisation of investment already made under the proposed categories, irrespective of the amount involved.

According to the revised policy, the export-oriented companies operating in the IT sector have been permitted to undertake equity investment abroad from their Exporters Special Foreign Currency Accounts (ESFCAs) as well as Special Foreign Currency Accounts (SFCAs).

Those IT companies which have not yet entered the export business or do not have sufficient balances in their ESFCAs or SFCAs have been allowed to remit funds up to 100% of the average net profit of the last three financial years or $100,000, whichever is higher, from the inter-bank market for investment abroad.

The restriction on establishing and acquiring one entity per jurisdiction for export-oriented companies in the IT sector has also been relaxed. However, for acquiring multiple companies in a single jurisdiction, the applicant will have to provide justification.

The ECC approved the diversion of Rs1.1 billion of the development budget of the planning ministry to clear liabilities of the defunct Earthquake Reconstruction and Rehabilitation Authority (ERRA). In the past one month, the ECC has given Rs6.9 billion to clear ERRA liabilities.

The ECC approved Rs2.2 billion for gas supply to the closed Pakistan Steel Mills. The mill has been shut since 2015 but it is still provided 2 million cubic feet of gas per day to keep the oven burning.
The committee also agreed on giving Rs12.1 billion in supplementary grant for the children vaccination programme.

Published in The Express Tribune, May 24th, 2024.

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