ISLAMABAD (June 30 2009): The Economic Co-ordination Committee (ECC) of the Cabinet, which is scheduled to meet here on Tuesday, is expected to resolve a controversy between the federal and provincial governments over provision of funds for development projects, sources in Finance Ministry told Business Recorder. In March, 2009, at a meeting convened by the Inter-Provincial Coordination Committee (IPCC), it had been agreed among the stakeholders that all projects launched by the President and Prime Minister in provinces would be fully funded by the federal government, and deduction of provincial funds at source by the federal government would not be made. It had also been decided that vertical projects, launched by the federal government in provinces, would continue to be fully funded by the federal government. They should, however, be owned by the provincial governments and the provinces should be on board when such projects are conceptualised, executed and maintained. However, one of the most important proposals had not been agreed to by the provinces. The proposal said: federal projects launched by the federal government in the provinces would have 75 percent funding by the federal government and 25 percent by the provinces. Sources said that Inter-Provincial Coordination Secretary Sarod Lashari had submitted a summary to Prime Minister Yousaf Raza Gilani, in May, for approval of policy guidelines for funding. The Prime Minister did not approve the proposal, and directed the concerned Division to place it before the Economic Co-ordination Committee (ECC). Sources said that when this issue came under discussion in IPC, the Advisor to PM on Finance stated that the federal government is funding all such projects which are of national significance on the direction of President/Prime Minister. These projects, however, benefit the people of the area where such schemes are initiated. Hence, it is necessary that the provincial governments should also contribute in such federal projects executed at provincial level. The Advisor was of the view that such projects should be funded by those in whose jurisdiction the projects fall. Federal Minister for Planning said that the sponsoring agency should be responsible for funding, which is an age-old formula, because it generates sense of ownership by the provincial government in whose jurisdiction the project is located. He stressed that all stakeholders should be taken on board at the stage of conceptualisation, execution implementation, and maintenance of the schemes when these are initiated by the federal government. The Minister for IPC Balochistan stated that the federal projects launched in Balochistan are not sustainable because they lack ownership by the province. She stressed that provinces should be associated/consulted at the time of conceptualisation of the project so that provinces can participate in the deliberation process and later on execute the projects and take them over for maintenance. Balochistan Chief Secretary highlighted the matter by stating that there are four aspects of the case: i) Projects which have already been approved and funded by the federal government should be executed as such. The issue of cost sharing by the Balochistan government should not be raised at this stage. ii) ADP is prepared after a lot of deliberations and such schemes are included in the ADP, which are high on priority list of the province. Balochistan has only an ADP of Rs 8 billion, which is not sufficient to meet its own needs. Therefore, where schemes are announced on the directive of the President/Prime Minister, there is no fiscal space to accommodate such schemes. Therefore, such schemes should be fully funded by the federal government. iii) Sometimes new schemes are proposed by the provincial government but it has no funds to execute such projects. Therefore, the competent forum should decide the funding issue in view of financial constraints of the Balochistan government. iv) Overlapping of development program by federal and provincial governments may be avoided as it leads to wastage of time and money. Sindh Minister for IPC also agreed with the views expressed by the Balochistan Minister for IPC. He reiterated that President/Prime Minister\'s directive/schemes should be fully funded by the federal government. NWFP Minister for IPC opined that provinces should be taken into confidence before launching federally sponsored development projects so that the element of ownership emanates in the provinces. Moreover, federal projects should be fully funded by the federal government. Sometimes, federal government deducts funds of provincial government at source for schemes initiated at the instance of the federal government. This should be done away with. Punjab Chairman of Planning and Development was of the view that projects under President/Prime Minister\'s directive should be fully funded by the federal government. He said that in 2004, a summary was submitted to the President containing the proposal that the projects announced by the President/Prime Minister should be sent to provinces for prioritisation and funding on 50:50 basis. Prior to 2004, such schemes were fully funded by federal government. Now as there are fiscal constraints within the province, the practice of 50:50 sharing should be done away with as this distorts provincial priorities. Another situation since 2004 is that additional cost on account of escalation in rates and cost of land is being borne by the provincial governments, which is not appropriate. Federal government should also share the increase in the escalation of rates and price of land. Federal Minister for Planning and Development clarified that the decision in 2004 was taken after interaction with all the provinces. Therefore, it was wrong to say that provincial governments were not taken on board. Hence, 50:50 criterion should continue as it generates ownership of projects launched in the provinces. National Highway Authority Chairman said that the project of \'Widening and Improvement of National Highway (N-5)\' from Bahawalpur Chowk (929 km) to Chowk Kumharan (937 km)\' has been initiated by the NHA. Therefore, it does not require funds from the province. However, in case of cost escalation, additional funds should be made available by the sponsoring agency. Further, the provinces which have already made commitment to contribute in projects which are already in hand, should honour their commitments. NWFP Planning and Development Secretary said that it had Rs 27 billion ADP. Due to financial constraints/resources scarcity it is very difficult to spare funds for schemes under President/Prime Minister\'s directives. Therefore, the federal government should fully fund such schemes. He stressed that at source deduction of provincial funds by the federal government should not be made. Balochistan Chief Secretary endorsed the views expressed by NWFP Planning and Development Secretary. He said that at source deduction of provincial funds by the federal government was unconstitutional. Federal Planning and Development Division Additional Secretary said that for timely completion of the projects it is necessary that provincial governments should bear the escalation cost, otherwise the execution and completion of projects would be delayed. Advisor to PM on Finance said that provinces should own the projects which are sponsored by the federal government, and they should be consulted at the time of conceptualisation, implementation, and maintenance of projects to generate ownership of projects among the provinces. Further, there were four (4) types of issues on which the following criterion was proposed by him: i) Projects launched on the President/Prime Minister directives should be fully funded by federal government. ii) Vertical projects of the federal government, executed in the provinces, are fully funded by the federal government and should be owned by the provincial government for their success. iii) In the case of federal government\'s desired projects, the federal government should bear 75 percent of the cost while the provincial government should bear 25 percent of the cost. iv) For projects launched by provincial governments, the cost sharing should be in the ratio of 25 percent by federal government and 75 percent by the province. He also said that maintenance of all schemes should be provided in the PC-1 for a period of 2 years, thereafter maintenance be taken over by the provincial governments. Federal Minister for Local Government and Rural Development agreed to the suggestions of the Adviser to PM on Finance. NWFP Provincial Minister said that the ratio of funding should be left on case-to-case basis. The Advisor to PM on Finance opposed this idea and said that if sharing was left open, consensus could hardly be arrived at. He said these were simply guidelines and exceptions can be made in cases where such a need is felt. NWFP Minister for IPC and Chairman Planning and Development, Punjab expressed reservation with regard to fixing of proposed contribution for projects, to be launched by the provincial/federal governments