Pakistan funded development projects in Afghanistan virtually abandoned


Lahore: Pakistan’s pledge to take part in Afghanistan’s reconstruction, was indeed a sensible plan, but it hit a serious snag as the funding for the development projects nearing completion has been stopped due to mistrust, irregularities and unavailability of proper banking system.

Analysts had predicted that Pakistan’s strategy to provide Afghanistan with goods and services for development would help gain toehold in Afghanistan, while countering the Indian agenda of holding hegemony in the region.

According to credible reports from Finance Ministry, projects worth billions of dollars had been initiated in Afghanistan as a gesture of goodwill. They are now earning a bad name, as the government has virtually halted any further release of money, abruptly. A number of further impediments added to an already tangled up situation.

The sources privy to the situation told News Lens Pakistan on condition of anonymity that the accountant general had put the release of the money on hold after the Auditor General of Pakistan (AGP) made some audit paras. Consequently, the Finance Ministry has also neglected its responsibility, which is to ensure the release of funds to the contractors in Afghanistan.

The development projects most affected by the government’s apathy are; Rehman Baba High School Kabul which was 97% completed in 2013 but not operational as yet; Nishtar Kidney Center in Jalalabad, completed in 2010 but was not handed over to Afghan government due to lack of medical equipment; Jinnah Hospital in Kabul 85% completed in 2013; Naib Ameen-Ullah Logri Hospital in Lugar 70% completed in 2013, and Torkham -Jalalabad road.

Former accountant general of Pakistan, Tahir Mehmood dared to speak regarding the matter, when other ministries concerned with it refused to comment.

He told News Lens Pakistan that the audit of huge amounts of public money fell under the jurisdiction of Auditor General of Pakistan (AGP), and the departments concerned were bound to follow its guidelines in strict accordance with the contracts.

“The release of money was halted after the AGP came across many irregularities and violations of the Pakistan Public Regulatory Authority (PPRA) rules,” he confided.

“Who is to blame for the funding cuts?” he asked. Mehmood answered that the AGP office was not to be blamed for the situation. “Our job is to ensure that the rules and regulations are being obeyed and to see whether the contract is being executed according to the existing applicable laws or not,” he observed.

“We fulfilled our constitutional obligations and if the Finance Ministry and the Planning Division have objections, they should alter the rules.”

Mehmood further bogged down into other details and said that the Planning Division had given the contract to Frontier Works Organization (FWO). Under the contract, subcontractors were to be involved in more than 30% execution of the projects.

“In violation of the PPRA rules, the Planning Division gave 100% execution of projects to subcontractors amidst the deteriorating situation in Afghanistan and the FWO was asked to put the development projects on hold,” he noted.

“The government should have employed international contractors and bidders to complete these development projects, which have consumed billions of rupees up till now, if it really is serious in countering Indian hegemony.”

Another obstruction preventing the release of money to contractors in Afghanistan is the dearth of a secure banking system for transactions, as the money was transferred to Afghanistan through hundi.

It is dispiriting that although it has been 13 years, no successive government has ever decided upon the execution of the transaction system or how the contractors and subcontractors would be paid.

Several sub-contractors have been arrested at the airport, carrying dollars to pay for the labour cost in Afghanistan.

Imran Shaukat, a sub-contractor, revealed to News Lens Pakistan that the money was transferred through hundi with the consent of the government.  “I was once arrested at the airport and was released after the intervention of the Finance Ministry,” he said.

Senior analyst Amir Mateen called it a state within a state. “On one hand, the government is taking measures to curb this menace and on the other hand, it’s promoting hundi in such sensitive matters,” he lamented.

It has also been revealed that there were no allocations regarding foreign exchange in the budget for these projects. Contractors were paid in Pakistani rupee until 2007, as the dollar was stable but once PPP established their government and came into power, the value of the dollar increased.

The former accountant general said that it had already been decided in the contracts that the contractors would be paid according to the value of the dollars. “But the SOPs of the payment in dollars were not decided. Hence, when NLC and FWO asked the Finance Ministry to pay in dollars the ministry backed out,” he added.

Reportedly, Foreign Affairs Adviser to the Prime Minister, Sartaj Aziz, wrote a letter six months ago to the Minister of Planning and Development, Ahsan Iqbal to resume the transfer of funds for the completion of the development projects, but his request is yet to be entertained.

When News Lens Pakistan contacted Sartaj Aziz, he said that some amendments had been made to PPRA rules in order to restore the release of funds for the projects. “The amendments approved in PPRA rules will allow awarding of the full contracts to subcontractors in Afghanistan,” he detailed.

However, he noted that the meeting called to review the projects in the first week of November, had been deferred for an indefinite period.

Regarding the illegal means being used for the transfer of money, the advisor said that there were no proper banking channels available in Afghanistan. “Therefore, hundi and remittance are the only means that can be used to provide money to contractors in Afghanistan,” he said, adding that contract have been given to the NLC once again, to ensure its completion.

The development projects were initiated in 2002 under Musharraf’s regime, when Shaukat Aziz was the Finance minister and Pakistan donated $100 million dollars for the purpose of development in Afghanistan. FWO and NLC were contracted to build roads, infrastructure, schools and hospitals.

During his visit to Afghanistan in 2005, Shaukat Aziz announced the allotment of another $100 million for the development projects. Pakistan government added $50 million at the London conference for Afghanistan and later announced another $50 million, making the total investment worth $300 million dollars.

When PML-N came into power, Nawaz Sharif added a further $200 million, raising the invested amount to $500 million dollars.


  1. Sartsj aziz must joking when he says there is no proper banking system in Afghanistan. If there is
    no proper system, then how other countries operate.


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