PROJECT APPROVAL

6.2   Where approval has been given to a project with certain conditions, it has to be ensured by the executing agency that those conditions are duly fulfilled, especially those which have to be fulfilled prior to the execution.

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6.3   The project approving bodies working at various levels are the following:

 i)     National Economic Council (NEC)

ii)     Executive Committee of National Economic Council (ECNEC)

iii)     Economic Coordination Committee of the Cabinet (ECC)

iv)     Central Development Working Party (CDWP)

v)     Departmental Development Working Party (DDWP)

vi)     Provincial Development Working Party (PDWP)

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(a)     To sanction development schemes in the public and private sectors.

(b)     To allow moderate changes in the plan and in the plan allocations.

(c)     To supervise the implementation of economic policies laid down by the NEC or the Government.

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(a) Energy Related Projects

A Cabinet Committee on Energy with the Prime Minister as its Chairman, Finance Minister as Vice Chairman, and Minister for Planning and Development, Minister for Petroleum and Natural Resources and Minister for Water and Power as its members was responsible inter- alia to approve operational plans, policies and development schemes costing more than the powers of approval enjoyed by the Ministry or the concerned agencies. Cabinet Committee on Energy was abolished vide ECC decision in Case No.ECC-55/3/96, dated 03.03.1996. All cases within the purview of the CCE was to be submitted to the ECC through the Technical Committee on Energy and the Planning Commission. However, vide ECC decision dated 28-1-1997 all projects related to Energy or to the Public Sector Corporations be reverted back to the formal fora of Planning Commission i.e. CDWP/ ECNEC (Annexure-XXAI).

(a) National Highway Council

b) National Highway Projects

A National Highway Authority has been established vide National Highway Authority Act, 1991, under which a National Highway Council has been constituted with the Prime Minister as its President, the Minister for Communications as Vice President, and the Minister for Finance and Minister for Planning & Development as its members. One member National Assembly and one member from Senate to be elected by the respective House also as member of NHC. The Chairman National Highway Authority will be its member/ Secretary. The Authority will inter alia consider and app-rove the proposals, schemes and projects costing sixty million rupees or more.

"The Adviser to the Prime Minister for Finance and Economic and Planning has been designated as Chairman of both the Committee i.e. ECNEC and CIPC. Since the basic functions of CIPC and Cabinet Committee on Energy/TCE are approval of the public sector/public sector financed projects, it is proposed that all such projects related to Energy or to the Public Sector Corporations be reverted back to the formal fora of Planning Commission i.e. CDWP/ECNEC". In view of the ECC decision cited above, all the new projects of Corporations/Autonomous Bodies including Energy Sector will now be prepared on PC-Is and submitted to Planning and Development Division for processing through CDWP/ECNEC".

Federal schemes (Non-recurring) costing between Rs 20 million and Rs 100 million (Annexure-XX), subject to the condition that Ministry of Finance does not disagree.

All schemes costing below Rs 20.00 million (Non-recurring) and or Rs 4.00 million (Recurring) subject to certain conditions.

All schemes costing below Rs 20.00 million (Non-recurring) and or Rs 4.00 million (Recurring) subject to certain conditions.

Governor NWFP is empowered to sanction FATA schemes to the extent permissible in respect of Provincial schemes i.e. all FATA schemes costing upto and including Rs 60.00 million (Non-recurring) after they have been processed by the PDWP.

6.12   The Provincial Government's projects are presently considered in the meetings of the Provincial Development Working Party (PDWP) chaired by the Additional Chief Secretary (Dev) in the provinces of Balochistan, Sindh and NWFP. The PDWP in the Punjab province is headed by the Chairman, Planning & Development Board. Corresponding to these bodies, there exists in the Federal Government, Departmental Development Working Parties (DDWP) in the Ministries/Divisions headed by their Secretaries with the Financial Advisors and others concerned as members. The schemes initiated by the Provincial/Federal Corporations are also processed through these bodies.

6.13   The projects meant for approval of CDWP/ECNEC are processed through the above bodies and passed on to the Planning and Development Division where these are examined by the various Technical Sections concerned and a Working Paper is prepared and placed before the Central Development Working Party (CDWP). The financial powers of the various bodies, viz., PDWP, DDWP and the CDWP are given at Annexure-XX. The schemes above Rs 100 million are considered by the ECNEC, which is headed by the Adviser to the Prime Minister for Finance and Economic Affairs. The ECNEC comprises the representatives of the Provincial Governments and the Federal Ministries/Divisions. The composition and charter of the ECNEC is given in Annexure-XXII. The Cabinet Division is the Secretariat of the ECNEC.

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6.15   In accordance with para 8 of the above procedure, copies of PC-I/PC-II have to be sent by the sponsoring Provincial Governments and the Federal Ministries to the Planning and Development Division and other members of the Central Development Working Party for simultaneous examination. The composition and Charter of the CDWP is given in Annexure-XXIV.

6.16   The number of copies required by the Planning and Development Division which acts as the Secretariat of the CDWP, has been specified from time to time according to the requirements of the Cabinet Division, who act as the Secretariat of the ECNEC, depending on the increase or decrease in the membership of ECNEC. The position as of January 1989 viz-a-viz the number of copies required by the Planning Commission is as follows:-

i)  Provincial & Federal Schemes requiring approval of ECNEC = 100 copies.

ii)  Federal Schemes requiring approval of CDWP only = 45 copies.

6.17   In order to doubly ensure that a copy of PC-I/PC-II has reached all the members of CDWP before it is considered in the CDWP meeting, the Planning and Development Division arranges to send an additional copy of PC-I/PC-II out of the 100, and 35 copies mentioned above to all the members of CDWP.

6.18   A copy of PC-I/PC-II of a federally sponsored scheme should be sent to their respective Financial Advisor of Finance Division for their comments before submitting the same to the members of the CDWP/DDWP (Annexure-XXV).

6.19   A scheme sponsored by the Federal Ministry/ Corporation should be supported with a statement that the scheme has been seen and approved by the Secretary of the Ministry concerned. Similarly, a scheme sent by the Provincial Government should carry a certificate that it has been seen and approved by the respective Chairman/ ACS (Dev) / Development Commissioner of the Provincial Government (Annexure-XXVI).

6.20   PC-I form of the project should invariably be signed with date by the officers as specified at the end of part "A" (Project Digest) of the proforma.

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i) Registration and circulation of schemes to all the Sections of the Planning Commission and other Members of CDWP. = 1 day

ii) Finalization of comments for consideration by CDWP. = 4-6 weeks

Note: The above period is the maximum and efforts are made to complete the above stages earlier.

6.22   The Planning and Development Division has to ensure that the PC-I has been prepared correctly and according to the prescribed procedure. In case, the PC-I is found sketchy and deficient it is returned to the sponsors with the approval of Secretary (Planning)/Deputy Chairman (Planning Commission) under intimation to all the members of the CDWP.

6.23   The Planning and Development Division should, when necessary, make a consolidated enquiry from the sponsors with respect to deficiencies in the proforma and seek clarification/ additional information.

6.24   A Chart showing flow of PC-I/PC-II within the Planning and Development Division and their processing through the CDWP/ECNEC is given in Annexure XXVII.

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6.26   According to the decision taken by the Cabinet at its meeting held on 1-11-1973 and 18-9-1994, the Central Development Working Party and ECNEC should meet regularly every month and after every six weeks, respectively. The procedure for approving schemes should be streamlined so that a project is approved within 2 months, (Case No. 273.26.73, 391/2/94 and 414/21/94 dated 18.9.1994)

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6.27   The meetings of the Central Development Working Party are normally held in every month. The Planning and Development Division provide the Secretariat for the CDWP. The ECNEC, however, generally meet once in 6 weeks.

6.28  The agencies represented on CDWP should circulate their comments to each other well before the CDWP meeting so that the discussions thereat are useful and schemes are cleared speedily.

6.29   The minutes of the CDWP meeting should be recorded by the Planning and Development Division and circulated to those represented at the meeting and other agencies concerned. The agencies represented on the CDWP should, however, be expected to take action required by them without waiting for the minutes. The minutes of CDWP should be treated as confidential. The minutes/record of discussions of ECNEC should be treated as secret. However, decisions of ECNEC in respect of public sector development projects would be unclassified unless specially classified by the Planning and Development Division. Please refer to para VII (3) and (4) of  "Procedure in regard to ECNEC" (Annexure-XXVIII).

6.30   Every effort should be made to clear a scheme at one meeting; where this is not possible, the scheme should be considered at successive meetings of the CDWP until it is disposed of. The basic requirement is that the scheme should not be lost sight of and the progress in its disposal is maintained.

6.31   With a view to avoiding lengthy discussion on detailed comments of the various agencies represented on CDWP, a Pre-CDWP meeting is to be held to resolve the outstanding issues in respect of federal schemes (Annexure-XXIX).

6.32   The meeting of National Highway Council shall be called by the Secretary of the Council, at least once a year, on such date and time as may be specified by the President of the Council.

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6.34   In accordance with para II (2) of the "Procedure in regard to ECNEC" (copy enclosed as Annexure-XXVIII), the Chairman, ECNEC, where he is satisfied, has powers to allow the execution of a scheme in anticipation of its formal approval by ECNEC.

6.35   The request for anticipatory approval has to be submitted to the Cabinet Division for on-going and new schemes in the proformae prescribed for each of them (Annexure-XXX). The request for anticipatory approval should be signed by the Secretary of the Division concerned in the case of federal schemes and the ACS (Dev) in the case of provincial schemes.

6.36   The ECNEC at its meeting held on 29-11-1978 further decided that the Chairman, ECNEC may dispose of any case/scheme in his discretion pending the formal submission of the Summary to the Committee, provided that in such cases the particular scheme would be processed through the normal channels and submitted to the Executive Committee of the National Economic Council (ECNEC) after completing all the formalities within six months with further provision that the total period of anticipatory approval should not exceed 12 months in any case. Furthermore, anticipatory approval and sanction for incurring expenditure shall in no case be allowed beyond the end of each financial year, i.e 30th June (Para-3 of Annexure-XXXI). On the expiry of the date for which anticipatory approval has been granted, the case will have to be processed afresh in the same manner as mentioned above, if further extension is required. It may be noted that the grant of anticipatory approval falls in the category of "extraordinary jurisdiction" and this power cannot be re-delegated both for reasons of uniformity of treatment and to maintain financial discipline and control. Therefore, all cases of anticipatory approval, irrespective of the cost involved, have to be submitted only to the Chairman, ECNEC for approval (Annexure-XXXII).

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6.39  Administrative approval is a sort of general sanction of the scheme in which total cost foreign exchange component and any other riders imposed by the approving body are incorporated. This sanction is distinct from the sanction for incurring expenditure on the scheme which is to be issued on yearly basis restricted to the budget provision (Annexure-XXXII).

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6.41   Copies of sanction letters issued by the Federal Ministries and the Provincial Governments should be endorsed to the Planning and Development Division (5,copies), Cabinet Division and Finance Division and Finance Department in the case of provincial projects.

6.42   While issuing administrative approval, the Federal Ministries/Provincial Departments should specifically incorporate the conditions, if any, imposed by the approving body so that the Project Director/Executing Agency should be fully aware of his responsibilities in complying with those conditions before, during and after the implementation of the project.

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6.44   Concept clearance is required for those projects only which have not been cleared by the CDWP/ECNEC. The project should, however, fit in with the priorities laid down in the Five Year/Perspective Plans and the overall economic development policies/ priorities of the Government. After Concept clearance has been accorded, the donor agency generally arranges pre appraisal/appraisal missions to discuss the project with the EAD/other agencies concerned. After appraisal of the project, sufficient data is available with the sponsoring agency to prepare the PC-I. The sponsoring agency are required to submit the PC-I to Planning & Development Division within a maximum period of one month after appraisal of the project by the donor agency for processing through the relevant approving authority. It is necessary that the decision of the CDWP is available before formal loan negotiation are held with the donor agency, so that loan negotiation conform to the decision of the CDWP. Likewise, the loan agreement, etc. should not be signed before approval of the project by the competent forum or the anticipatory approval of the Chairman, ECNEC.

6.45   Vide Planning & Development Division's circular of January 29, 1994 ^[1] (Annexure-XXXVII), the Prime Minister has decided to dispense with the requirement of obtaining prior clearance of the Prime Minister before seeking financial assistance for the development projects. It has, however, been desired by the Prime Minister that an MIS on the projects cleared by the Committee be sent for Prime Minister's information which may contain such details as the cost of project, financial plan, sources of financing, location, sector, commencement and completion dates etc. Unless objected to by the Prime Minister the list would be assumed to have been cleared for further processing. Accordingly, the Planning & Development Division submitted the list of projects cleared by the CDWP/CCC for seeking foreign assistance to the Prime Minister's Secretariat for information of the Prime Minister after every meeting of the CDWP/CCC. In case of any objection from the Prime Minister on any development project, the sponsoring agency concerned and the EAD are informed accordingly.

6.46   In September, 1994 it was decided that in future the proposals which constitute a part of the approved PC-I and for which the donors are changed should be considered conceptually cleared and should not be brought afresh for consideration.

6.47   It has been noticed that the proposals for seeking foreign assistance are sent by sponsoring agencies for approval of Concept Clearance Committee without proper examination, and sufficient details of proposals establishing their need are not available. It has accordingly been decided (Annexure-XXXVIII) in the meeting of CDWP/CCC held on 29-3-95 that in future:

(i) All concept clearance proposals costing Rs.10.00 million and above must accompany a feasibility study prepared departmentally.

(ii) No proposal for foreign assistance will be considered for the purchase of vehicles, air conditioners and other consumer durables, produced in the country.

6.48    After careful study of the whole procedure, the following guidelines are framed:

(i) It should be a normal practice to submit projects on PC-I or PC-II for the approval of CDWP. However, only those projects should be sponsored for concept clearance where strong indication is available from multilateral agencies/donors for making available necessary funding and formal request for donor financing can not wait for preparation of PC-I/PC-II.

(ii) The proposals should be accompanied by adequate information regarding basic concept of the project and cost details/breakdown with departmental feasibility if the cost of the project is Rs. 10 million and above.

(iii) Donor assistance should not be sought for the purchase of vehicles, airconditioners and other consumer durable goods produced in the country. Similarly, projects should not be sponsored for outright import of road making or earth moving machinery and drilling rigs etc. by the government departments/agencies without a project design fully justifying the additional acquisition after taking into account inventory of the existing machinery of all public sector departments/agencies. Effort should always be made for pooling available resources rather than resorting to fresh imports under new projects.

(iv) Following the concept clearance of the project, if the project design is altered by donor agencies at any subsequent stage Planning and Development Division should invariably be consulted and clearance obtained by the executing agency before proceeding ahead with negotiation.

(v) It should be ensured that the executing matching local currency funds would be available in PSDP/ADP to absorb the aid being sought.

6.49   Instances have come to the notice that executing agencies negotiate and finalize foreign aid (loans and grants) much beyond the scope and size allowed under concept clearance. It has, therefore, been decided vide Programming Section's O.M. No.7(4)PS/PC/96-FA dated the 9th September, 1996 that in case the loan and/or grants negotiated and/or finalized is over and above the size and scope of concept clearance the proposal be re-submitted for approval of the competent authority. It has further been decided that no aid agreement be finalized and signed till PC-I is approved or at least anticipatory approval of the competent authority is obtained with respect to scope and size of the PC-I and possibility of its budgetary financing is envisaged.

6.50   Vide Planning and Development Division's O.M. No. 7(20)PS/PC/95-Fa dated 4-1-1997, it has been decided that concept clearance of foreign aided projects by the Concept Clearance Committee will be considered as final as was the practice from the year 1983 to 1990 (Annexure-XXXVIII-A).

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6.53   The Government have introduced a new concept of public/private partnership in which private/public sectors will work in harmony for national development. Since public/ private partnership was a new concept, the procedure for approval of the project under this programme did not exist. The Ministry of Planning & Development approved the following procedure, proposed by the Ministry of Industries and Production to process/approve the Projects under Private/Public Partnership:

(i) The preparation of PC-I and its processing through ECNEC/CDWP may not be necessary for a project proposed to be implemented under the concept of Public-Private partnership if:

          a. The equity participation by the public sector is not more than 30% of the project cost.

          b. The management is with the private sector, and

          c. No funds are being demanded by the public sector partner out of the Federal Budget.

(ii) The project will be based on feasibility study and public sector corporations, under administrative control of Ministry of Industries and Production, will be responsible for viability of the project.

(iii) The Chairman of the above corporations may approve/sign the MOU with private partner. However, the approval of the project or Joint Venture Agreement with Private (Local/ Foreign) partner will require to be obtained from the Board of Directors of the respective Corporation.

(iv) The MOU/JVA will be in accordance with prevailing government's Industrial/Investment policy.

(v) The project will be implemented through a joint venture public limited company registered under the Companies Ordinance. All decisions with respect to the affairs of the joint venture will have to be taken by the Board of Directors constituted by the Articles/Memorandum of Association under the provisions of the Companies Ordinance.

6.54   It may be noted that for project under private/ public partnership, no funds would be provided through PSDP. Government guarantee, if essential, would be obtained from Ministry of Finance, who will exercise due diligence as guarantor.

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