Govt misses development target
The government spent Rs905 billion on development schemes in the last fiscal year, which was lower than the allocation and may now require a downward revision in the 2.7% economic growth rate that had been worked out on the basis of Rs1.1 trillion in expenses.
Of the Rs905 billion, a little over half — or Rs456 billion — was spent during the last two months (May-June), also underscoring the need to revisit the current budget strategy that artificially suppresses expenses.
According to provisional figures, the federal government spent Rs905 billion under the Public Sector Development Programme (PSDP) in the fiscal year 2024-25, which ended on Monday.
The Rs905 billion spending was less than the Rs1.4 trillion original budget approved by the National Assembly for the fiscal year 2024-25. However, the government subsequently cut the PSDP to Rs1.1 trillion, but still, the actual spending remained lower than the revised budget.
For the last fiscal year, the government had announced a 2.7% economic growth rate, which was based on the assumption that the downward-revised Rs1.1 trillion PSDP would be fully spent.
In a press briefing last month, the Chief Statistician of the Pakistan Bureau of Statistics (PBS), Dr Naeemuz Zafar, confirmed that the GDP figure assumed that the Rs1.1 trillion would be spent.
An official of the PBS said on Wednesday that after the actual Rs905 billion spending, there will be some impact on economic growth calculations. He said the exact impact could not be immediately determined.
Speaking to The Express Tribune, Federal Minister for Planning and Development, Ahsan Iqbal said, "We had almost touched the Rs1 trillion spending mark, but due to slow approvals by the Accountant General Pakistan Revenues (AGPR), the spending remained at Rs905 billion."
Sources said the Ministry of Finance had instructed the department of the AGPR to slow down releases during the last days of June to meet International Monetary Fund (IMF)-related budget targets.
According to the current budget release strategy, about 40% of the total budget was sanctioned in the last quarter, which often results in subpar expenses and may also cause leakages.
A member of the Senate, who is also in the construction business, told The Express Tribune on the condition of anonymity that the AGPR did not clear contractors' cheques due to budget-related constraints.
During the July-April period of the last fiscal year, the government had spent Rs449 billion. But in the past two months, another Rs456 billion was booked under development spending. In June alone, Rs308 billion in development spending was shown.
However, the planning minister said that development work did not stop in the third quarter of the last fiscal year and that it was only the money that was released and booked during May-June.
For the sake of the IMF programme, the finance ministry squeezed the PSDP to achieve quarterly and annual primary surplus targets.
A recently released planning ministry report stated that lower-than-planned spending had impacted projects across various sectors. Despite thin fiscal space, the government was still adding either new projects or upwardly revising the cost of already approved schemes.
Major spending heads
According to the provisional figures, the government spent Rs60.5 billion on parliamentarians' schemes in the last fiscal year. The spending was more than the downward-revised budget.
But Iqbal said that after initially deciding to revise the budget downward, the government decided to retain the original allocation for the Sustainable Development Goals (SDGs) programme.
The parliamentarians' schemes are branded as SDG initiatives.
Another Rs69.5 billion was spent on provincial projects, which are funded by the federal government. Financing provincial schemes is against the commitments given to the IMF and the National Fiscal Pact.
About Rs64 billion was spent on schemes being executed in the erstwhile Federally Administered Tribal Areas, now merged with Khyber-Pakhtunkhwa.
Against a downward allocation of Rs61 billion, spending on higher education remained at Rs58.8 billion. The Pakistan Atomic Energy Commission received its full Rs25 billion budget, but for this fiscal year, the government has drastically cut its allocation.
Development spending by the Space & Upper Atmosphere Research Commission (SUPARCO) remained at Rs30.4 billion against the allocation of Rs41 billion.
The government spent Rs154 billion on projects of the Ministry of Water Resources, which also include spending on two major dams. The allocation was Rs195 billion. For this fiscal year, the government has reduced the water sector allocation by 28%.
Spending on motorways and highways under the National Highway Authority amounted to Rs144 billion, against the Rs161 billion allocation.
Development spending on power sector projects stood at Rs88 billion, as against the Rs98 billion allocation.
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Federal govt and provinces: Senate body seeks ‘out of box' fix for NHP dispute
ISLAMABAD: The Senate Standing Committee on Power headed by Senator Mohsin Aziz is scheduled to meet on Monday (today) to find out an 'out of box' solution on the dispute on Net Hydel Profit (NHP) between Federal Government and provinces, particularly Khyber Pakhtunkhwa. The Water and Power Development Authority (WAPDA) has reportedly distanced itself from the proposal of out of box solution of current controversy on NHP. Minister for Planning, Development and Special Initiative, Ahsan Iqbal is also heading a committee on this issue. Ministry of Energy (Power Division) is represented by the CEO of CPPA-G and the MD of PPMC The Committee has convened five meetings attended by the representatives of all four Provinces, the Ministry of Energy (Power Division), the Finance Division. Further update on the finalisation may be shared by the Ministry of IPC. 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The MoU was also approved by CCI on February 29, 2016 and later the settlement of Govt of Punjab's claims of Rs.82.71 billion and payment of regular NHP at uncapped rate was also agreed and approved by CCI on December 16, 2016. Despite paying NHP at the uncapped rate that was further enhanced by NEPRA from Rs.1.10/kWh to Rs.1.155/kWh in FY 2017-18 and CCI's overriding of its earlier decision of Jan 1991 regarding KCM through approving the said MoU, the GoKP again raised the issue in CCI and asked for payment of NHP as per KCM. WAPDA argues that considering Deputy Chairman, Planning Commission's report (suggesting WAPDA's replacement with CPPA-G for NHP obligations), ECC's decision of January 24, 2019 (Power Division to lead efforts to secure financing for NHP payments to provinces) and Finance Minister's remarks during 49th CCI meeting (Finance Division is working on clearing NHP outstanding dues of KPK and Punjab, and in future CPPA-G will directly pay NHP to provinces), the Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment . WAPDA doesn't profit from selling power at hydel stations, as NHP is a pass through item and makes the NHP payment to provinces as per government guidelines and regulations. WAPDA's outstanding recovery from CPPA-G against power sales invoices has sharply increased due to delayed payments, hindering WAPDA's ability to make timely NHP payments to provinces, despite regular billing at NEPRA-determined rates. Currently, WAPDA has to pay NHP of Rs.49.565 billion to GoKP and Rs. 114.584 billion (including Rs. 13.617 billion as NHP arrears) to GoPb. WAPDA maintains that Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment. Power Division (Power Planning & Monitoring Company): PPMC has offered the following comments: (i) Article 161(2) of Pakistan's 1973 Constitution requires that net profits from hydroelectric power generation be paid to the province where the power station is located, calculated by deducting operating expenses from bus bar revenue, and explicitly excludes Net Hydel Profit (NHP) as a pass-through cost to electricity consumers ;(ii) KCM calculates NHP by aggregating power generation income, but this approach, formulated in 1985-86 was based on a unified and unbundled WAPDA being the sole power producer and distributor. Now, Pakistan's energy landscape has changed significantly including WAPDA's unbundling, emergence of IPPS, and shifts in the power mix wherein hydro power contributes 27% (approx.) ;(iii) NHP payments should be made through the federal budget or covered by WAPDA's profits from hydropower sales, rather than consumers; (iv) commenting on GoKP's proposal, PPMC is of the view that the transfer of hydropower plants to provinces is governed by the Power Generation policies of 1995 and 2015 that is applicable to BOOT-based IPP projects developed within a province by private sponsors. The WAPDA Act lacks provisions for transferring hydropower plants constructed under its mandate to the provinces, and its projects are primarily financed through PSDP, donor loans, and internal funds, after accounting for NHP; (v) NHP payment through ESCROW account, does not align with the legal and regulatory framework and the constitutional scheme. Regarding wheeling of power from PEDO and wheeling charges determination, B2B electricity supply through wheeling arrangements will be integrated into IGCEP and TSEP under the CTBCM Directive No. 7. NEPRA's periodical regime, determined water usage charges should be reviewed based on the mechanism applied in various countries. Government of Sindh: The Provincial Government submitted proposal regarding transferring Hydro Electric Stations to the respective provinces in lieu of NHP requires clarification as presently no hydro power station is managed in IPPs mode. It further stated that the hydro-electric power generation is a bi-product of 'Water Reservoir Projects (Dams)'. While framing any such proposal, the basic purpose of construction of these reservoirs be considered and IRSA be included in the committee. Govt of Sindh further contended that transfer of Hydro Electric Stations to provinces requires careful consideration of the primary purpose of water reservoir projects. To ensure a comprehensive approach, it is suggested to include representatives from IRSA, Finance Division, and Economic Affairs Division in the committee to provide technical, financial, and economic expertise. Govt of Sindh has reiterated its earlier stance on NHP, reflected in the minutes of 49th CCI meeting which is as follows; 'Chief Minister, Punjab endorsed views of DCPC and asked for early payment of Rs. 58 billion dues of NHP owned to Punjab. The Chief Minister, Sindh, endorsed the NHP claim of Chief Ministers of Khyber Pakhtunkhwa and Punjab being constitutional. He, however, did not support increase in tariff and its passing on to consumers. He said that since profit was utilized by WAPDA it should now be accounted for'. Copyright Business Recorder, 2025
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Federal government and provinces: Senate body seeks ‘out of box' fix for NHP dispute
ISLAMABAD: The Senate Standing Committee on Power headed by Senator Mohsin Aziz which is scheduled to meet on Monday (today) to find out an 'out of box' solution on the dispute on Net Hydel Profit (NHP) between Federal Government and provinces, particularly Khyber Pakhtunkhwa. The Water and Power Development Authority (WAPDA) has reportedly distanced itself from the proposal of out of box solution of current controversy on NHP. Minister for Planning, Development and Special Initiative, Ahsan Iqbal is also heading a committee on this issue. Ministry of Energy (Power Division) is represented by the CEO of CPPA-G and the MD of PPMC The Committee has convened five meetings attended by the representatives of all four Provinces, the Ministry of Energy (Power Division), the Finance Division. Further update on the finalisation may be shared by the Ministry of IPC. KP formulates strategy aimed at recovering NHP dues According to WAPDA, the Council of Common Interests (CCI) based on Article 161(2) of the Constitution determines the sale rate at Bus Bar of hydel power stations. However, calculating NHP has been tricky due to conflicting claims and interpretations of the Kazi Committee Methodology. Various attempts have been made to resolve this, including ad-hoc payments and arbitration, but a long-term solution remains unresolved. After power sector restructuring and becoming NEPRA licencee, WAPDA paid Rs. 6 billion annually to the Govt, of KP as NHP until FY 2014-15, which was later uncapped at Rs 1.10 per kWh by NEPRA in FY 2015-16, following GoKP's request for settlement of all previous NHP arrears by making payments of Rs.70 billion in four installment and notification of uncapped NHP rate of Rs 1.10/kWh-an MoU was signed between Govt of Pakistan and Govt. of KP on February 25, 2016. The MoU was also approved by CCI on February 29, 2016 and later the settlement of Govt of Punjab's claims of Rs.82.71 billion and payment of regular NHP at uncapped rate was also agreed and approved by CCI on December 16, 2016. Despite paying NHP at the uncapped rate that was further enhanced by NEPRA from Rs.1.10/kWh to Rs.1.155/kWh in FY 2017-18 and CCI's overriding of its earlier decision of Jan 1991 regarding KCM through approving the said MoU, the GoKP again raised the issue in CCI and asked for payment of NHP as per KCM. WAPDA argues that considering Deputy Chairman, Planning Commission's report (suggesting WAPDA's replacement with CPPA-G for NHP obligations), ECC's decision of January 24, 2019 (Power Division to lead efforts to secure financing for NHP payments to provinces) and Finance Minister's remarks during 49th CCI meeting (Finance Division is working on clearing NHP outstanding dues of KPK and Punjab, and in future CPPA-G will directly pay NHP to provinces), the Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment . WAPDA doesn't profit from selling power at hydel stations, as NHP is a pass through item and makes the NHP payment to provinces as per government guidelines and regulations. WAPDA's outstanding recovery from CPPA-G against power sales invoices has sharply increased due to delayed payments, hindering WAPDA's ability to make timely NHP payments to provinces, despite regular billing at NEPRA-determined rates. Currently, WAPDA has to pay NHP of Rs.49.565 billion to GoKP and Rs. 114.584 billion (including Rs. 13.617 billion as NHP arrears) to GoPb. WAPDA maintains that Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment. Power Division (Power Planning & Monitoring Company): PPMC has offered the following comments: (i) Article 161(2) of Pakistan's 1973 Constitution requires that net profits from hydroelectric power generation be paid to the province where the power station is located, calculated by deducting operating expenses from bus bar revenue, and explicitly excludes Net Hydel Profit (NHP) as a pass-through cost to electricity consumers ;(ii) KCM calculates NHP by aggregating power generation income, but this approach, formulated in 1985-86 was based on a unified and unbundled WAPDA being the sole power producer and distributor. Now, Pakistan's energy landscape has changed significantly including WAPDA's unbundling, emergence of IPPS, and shifts in the power mix wherein hydro power contributes 27% (approx.) ;(iii) NHP payments should be made through the federal budget or covered by WAPDA's profits from hydropower sales, rather than consumers; (iv) commenting on GoKP's proposal, PPMC is of the view that the transfer of hydropower plants to provinces is governed by the Power Generation policies of 1995 and 2015 that is applicable to BOOT-based IPP projects developed within a province by private sponsors. The WAPDA Act lacks provisions for transferring hydropower plants constructed under its mandate to the provinces, and its projects are primarily financed through PSDP, donor loans, and internal funds, after accounting for NHP; (v) NHP payment through ESCROW account, does not align with the legal and regulatory framework and the constitutional scheme. Regarding wheeling of power from PEDO and wheeling charges determination, B2B electricity supply through wheeling arrangements will be integrated into IGCEP and TSEP under the CTBCM Directive No. 7. NEPRA's periodical regime, determined water usage charges should be reviewed based on the mechanism applied in various countries. Government of Sindh: The Provincial Government submitted proposal regarding transferring Hydro Electric Stations to the respective provinces in lieu of NHP requires clarification as presently no hydro power station is managed in IPPs mode. It further stated that the hydro-electric power generation is a bi-product of 'Water Reservoir Projects (Dams)'. While framing any such proposal, the basic purpose of construction of these reservoirs be considered and IRSA be included in the committee. Govt of Sindh further contended that transfer of Hydro Electric Stations to provinces requires careful consideration of the primary purpose of water reservoir projects. To ensure a comprehensive approach, it is suggested to include representatives from IRSA, Finance Division, and Economic Affairs Division in the committee to provide technical, financial, and economic expertise. Govt of Sindh has reiterated its earlier stance on NHP, reflected in the minutes of 49th CCI meeting which is as follows; 'Chief Minister, Punjab endorsed views of DCPC and asked for early payment of Rs. 58 billion dues of NHP owned to Punjab. The Chief Minister, Sindh, endorsed the NHP claim of Chief Ministers of Khyber Pakhtunkhwa and Punjab being constitutional. He, however, did not support increase in tariff and its passing on to consumers. He said that since profit was utilized by WAPDA it should now be accounted for'. Copyright Business Recorder, 2025
