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Govt preparing to close ‘sick’ projects

Govt preparing to close ‘sick’ projects
The government is working on bringing a policy to shut down the ‘sick’ projects that have not seen any meaningful physical progress for a long time. According to government sources, the federal budget for the fiscal year 2023/24 is introducing a policy to close down such projects. While billions of rupees are being spent every year to complete the projects, not much progress has been achieved which has resulted in an additional financial burden on the government. With the government currently battling with a severe resource crunch, it is not in a situation to allocate budgets for such projects. “The government has been spending huge resources in the name of sick projects. However, such projects have not been completed,” said a senior official of the National Planning Commission (NPC). “Now there is no rationale to continue such projects. We are bringing a policy to end such projects.”

Government officials said that a separate study will be initiated after the federal budget about the need for such projects. While construction of some projects will be taken forward based on priority, the majority of sick projects will be shut down. The government plans to close sick projects by shifting the human resources and machinery to other projects.

Currently, many projects in the sectors such as road, irrigation, and hydropower are in ‘sick’ condition. There are a lot of sick projects, especially in the road sector. The Ministry of Physical Infrastructure and Transport had recently identified 264 contracts as being in a bad state. While the government is yet to release the latest data on ‘sick’ projects, the number of such projects is estimated to be over 1,200. The report of the Commission for Investigation of Abuse of Authority (CIAA) three years ago, had stated that as many as 1,202 projects with a combined value of Rs 86.44bn are in a bad state. These projects—some of which were signed in 2009—are related to seven development-focused ministries. Following this discovery, the anti-graft body has repeatedly instructed the government agencies to either ensure that the works in sick projects are accelerated or terminate their contracts. One of the reasons why so many contracts have remained sick is the trend of awarding a large number of contracts to a small number of contractors. After the Covid-19 pandemic, the government extended the deadline for such projects amending the Public Procurement Regulation. Starting construction work without preparing a detailed project report (DPR), no clarity in the project implementation modality, land acquisition, and compensation disputes, and lack of inter-agency coordination in the transfer of utility services have plagued the development of the projects and billions of rupees go to waste. According to the CIAA report, the highest number of 'sick' projects are related to the Ministry of Physical Infrastructure and Transport, followed by the Ministry of Urban Development (442), and the Ministry of Energy, Water Resources and Irrigation, according to the report. The CIAA also studied the projects under the Ministry of Urban Development, the Ministry of Federal Affairs and General Administration, the Ministry of Tourism, and the Ministry of Water Supply.