Reconciled arrears of previous NFC share: PM asks finance division to make payment to KP

ISLAMABAD: Prime Minister Shehbaz Sharif has directed Finance Division (FD) to take steps for payment of reconciled arrears of last FY’s National Finance Commission (NFC) share to Khyber Pakhtunkhwa, sources close to Secretary Finance told Business Recorder.

On May 25, 2023, the PM visited Peshawar and held a meeting with KP caretaker Chief Minister Muhammad Azam Khan and discussed different issues including financial issues of the provincial government. Like other provincial governments, KP government is also facing financial woes.

Under the new formula, approximately 51.74% of revenue shares were directed to Punjab, 24.55% to Sindh, 14.62% to Khyber Pakhtunkhwa and 9.09% to Balochistan. All shares were distributed based upon their performances.

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KP has presented the following issues before the Prime Minister: (i) levy Federal Excise Duty on oil @ 5 per cent of valorem in light of Article 161 (1) (a) of the Constitution of Pakistan; (ii) increase Federal Excise Duty on gas from 10 to Rs 25 per MMBTU and link the rate to Consumer Price Index (CPI); (iii) schedule an urgent meeting of CCI and decide the matter of windfall levy on oil related to Tal Block; (iv) transfer windfall levy on oil share collected from Baratai and Togh Blocks to Government of Khyber Pakhtunkhwa without further delay; (v) transfer 50 per cent of Government Holding Private Limited (GHCL) share in KP Block to KP Holding Company in the light of Article 172(3); (vi) allocate 20 per cent Liquefied Petroleum Gas (LPG) produced by KP by GHPL and Pakistan Petroleum Limited (PPL) to KP-OGDCL on G2G basis; (vii) establish Pakistan Petroleum Upstream Regulatory Authority with representation recommended by the Provincial Government; (viii) Facilitate GoKP in wheeling of electric power to industrial sector of KP on the Pehure Model; (ix) Reallocate 100-MMCFD gas from power to industrial sector. Deputy Chairman Planning Commission may be directed to place the matter of Net Hydel Profit (NHP) in the next CCI meeting; (x) release the pending payment of NHP amounting to Rs 49.5 billion; and (xi) Flood Relief Assistance.

The total funding gap for the merged tribal districts’ current and development budgets, from 2019-20 to 2022-23, is Rs. 144.4 billion against the committed allocation from the federal budget. Only Rs. 75.5 billion has been received for the Accelerated Implementation Plan of merged tribal districts in the last four years, leaving a funding gap of over Rs. 469 billion compared to the committed amount of Rs. 400 billion. The federal government also faces a shortfall of Rs. 25 billion in federal tax assignments. Moreover, it owed Rs. 49.5 billion in Net Hydel Profit and Rs. 2.5 billion in oil and gas royalty.

Since Pakistan Broadcasting Corporation (PBC) Radio Pakistan employees of Peshawar have not been paid salaries for April and May, 2023, Finance Division shall ensure disbursement of their salaries immediately through Ministry of Information and Broadcasting.

According to sources, the meeting noted that as the figures of Wapda and KP Government for payables of Net Hydel Profit to KP do not match; therefore, Ministry of Water Resources, Wapda and Government of Khyber Pakhtunkhwa (representative be nominated by the caretaker Chief Minister) shall sit together and reconcile the amount payable to KP on account of NHP. Once reconciliation is done, the matter will be placed before the Finance Minister Senator Ishaq Dar for final decision. Prime Minister has proposed the meeting during this week.

Finance Division has been directed to take steps for payment of reconciled arrears of last FY’s National Finance Commission (NFC) share to the Government of Khyber Pakhtunkhwa. Sales Tax exemption in Newly Merged Districts (NMDs) and Provincially Administered Tribal Areas (PATA) to be extended for two years, on its expiry.

Prime Minister also directed that repair/ reconstruction of burnt Radio Pakistan building Peshawar to start immediately by Ministry of Information and Broadcasting.

It was directed that swift punitive action be taken against miscreants involved in the incidents of the 9th and 10th May, 2023 under the relevant laws and umbrella of the Constitution. At the same time, it must be ensured that no innocent person comes to harm.

Prime Minister has also directed Secretary Interior, Chief Secretary KP, IGP, KP to make arrangements for disbursement of compensation to the families of Shuhada and injured persons of Peshawar incident of January 30, 2023, immediately.

Copyright Business Recorder, 2023