NHP issue: Gandapur seeks PM's backing for ‘innovative' solution
In a letter to Prime Minister Shehbaz Sharif, he sought his attention to Article 161(2) of the Constitution, which mandates that the net profits earned from a hydroelectric station shall be paid to the entitled province at a rate determined by the Council of Common Interests (CCI).
The Kazi Committee Methodology (KCM) was approved by the CCI in January 1991 and to that effect the first payment of Rs. 6 billion was made to the then North-West Frontier Province (NWFP) in 1992. The KCM was also endorsed by the National Finance Commission (NFC), upheld by the Supreme Court of Pakistan in 1997, and repeatedly reaffirmed in CCI meetings held in 1991, 1993, 1997, 1998, 2016, 2018, 2019 and 2022.
NHP methodology, power projects' transfer: Wapda, provinces continue to have serious differences
Recognizing the financial challenges faced by the GoKP, the Federal Government introduced an 'interim arrangement,' which was duly endorsed by the CCI in 2016. This arrangement provided for NHP payments at a rate of Rs. 1.10/kWh with a 5% annual indexation, incorporated into Wapda's generation tariff, impacting the consumer tariff by approximately 18 paisa per unit.
Accordingly, Wapda began making payments to Punjab and Khyber Pakhtunkhwa; however, these payments have not been made consistently as per the agreed arrangement. This has resulted in an outstanding shortfall of Rs. 75 billion for Khyber Pakhtunkhwa.
Subsequently, in response to a summary moved by the Provincial Government for the full implementation of KCM, the CCI, in its 37th meeting held on April 24, 2018, constituted a committee under the Deputy Chairman of the Planning Commission (DCPC) to deliberate on the determination of net profit rates in light of CCI decisions.
This committee presented its report in December 2019, which was endorsed by the CCI. The report confirmed Rs. 128 billion as Khyber Pakhtunkhwa's rightful share and Rs. 52 billion for Punjab for FY 2016-17, based on KCM. Subsequently, another committee was constituted to propose an 'Out-of-the-Box' solution for the payment of Net Hydel Profit to the entitled provinces.
According to the Chief Minister, the 'Out-of-the-box' committee has held five meetings, wherein it was decided that all stakeholders would submit their proposals. The Government of Khyber Pakhtunkhwa has already shared its proposal with the Planning Commission.
The Chief Minister further stated that given the severe financial constraints facing the province, it is imperative to expedite the resolution of this matter.
He urged the Prime Minister Office to direct the Deputy Chairman of the Planning Commission to convene a meeting of the 'Out-of- the-Box' Committee at the earliest to ensure a just and equitable resolution, hoping that PM's leadership would facilitate this process and be instrumental in securing the rightful share of resources for the people of Khyber Pakhtunkhwa, in line with constitutional provisions and prior CCI decisions.
'I remain confident that, under your (PM Shehbaz Sharif) leadership, we can navigate these challenges and ensure a fair and transparent resolution that upholds the principles of justice and equity for all stakeholders, 'Gandapur added.
The KPK government has proposed a second interim arrangement to settle the outstanding dues by increasing the electricity tariff by Rs.1/kWh. Additionally, the province reiterated its earlier stance of transferring the hydro power stations to the respective provinces.
Regarding delay in NHP payments, the GoKP argued that Wapda is no longer revenue collecting agency for the power sector, as CPPA-G is acting as a collecting agency of the Federal Government, therefore, the payment should be made by CPPA-G, under Power Division.
The government of KP presented following three proposals:
Proposal i: payment of NHP by Federal Govt. as guaranteed under Article 161 (2) of the Constitution, Presidential Order No 3, decisions of CCI from 1993 to 2022 and subsequent calculations made by Jehanzeb Committee in the report approved by CCI December 23, 2019. Federal government may consider financing of power component of a hydro power station from PSDP on the analogy of Dam component. So that the revenues generated may be made available for NHP payments to the entitled provinces:
Proposal ii: transfer the existing Hydro Power stations, currently owned by Wapda, to the respective provinces, as was previously proposed by GoPb. The Power Generation Policies of 1995 and 2015 otherwise allow transfer of power stations to the provinces.
Federal government may pay the outstanding NHP payments as per KCM to the provinces till the transfer of hydro power stations to the provinces. O&M can be retained by Wapda.
Proposal III: Till the finalization options, the Federal Government may announce a 2nd interim arrangement of NHP payment by increasing consumer end tariff by Re1/KWh to generate the requisite funds.
Provincial government suggests that Instead of Wapda, CPPA-G may directly pay NHP to the entitled provinces through ESCROW account.
Copyright Business Recorder, 2025
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