| October 25, 2020

Ministries bypassing NPC in project selection process

KATHMANDU, June 6: Ministry of Finance (MoF) last year began using software to compile projects, activities and their estimated costs in project selection and budget planning process. Now the same software has been made a tool to select development projects without rationale, according to officials.

Officials of concerned ministries insert projects and its details on Line Ministry Budget Information System (LMBIS) software. The project details are directly forwarded to the Ministry of Finance. National Planning Commission (NPC) - the apex policy making body of government - has no access to the software and no say on project selection, the officials added.
This has only helped ministers, political leaders and high-level bureaucrats to bypass NPC and pick their own projects, leaving out strategic projects with economic and social values, two government sources privy to the issue told Republica.

They claimed that NPC has little idea about projects that are inserted in the budget of the coming fiscal year.

Commenting on project selection, NPC Spokesperson Tulsi Prasad Gautam told Republica that NPC has taken a new approach of non-interference in project selection. "We only prioritize areas as per the policies and plan documents," added Gautam. "Line ministries insert projects after discussing with us. But we don't have any say until line ministries bring the projects for approval in a prescribed format after budget is approved."

Such project approval is done only after selected projects and the budget as a whole is approved and endorsed by the parliament, sources say.

A government source said Ministry of Finance was selecting projects and allocating budget on its own. Rule of thumb in development practice says authority of project selection and budget allocation should be separate.

"What matters most is political influence, not the rationale of the project particularly in road sector. Many such projects have been inserted in the budget without the knowledge of NPC," the source added.

Worse is, the finance ministry is not opposing such undue pressure and accepting it as it is.

Spokesperson of Ministry of Finance Mukund Paudel said that the line ministries fill the project information in disaggregated form on the software as per budget ceiling provided by NPC. However, he denied that NPC was being bypassed in the project selection process.

However, NPC has not considered the periodic plans and policies while upgrading regional and urban roads into strategic roads and converting the same into multi-year contract as proposed by the ministries, adding burden on state coffer, the source added.

The government had commissioned a study last year to make NPC a powerful agency focused on planned development, relieving it of its role in selecting petty projects. But no visible change has been so far.