PESHAWAR: Speakers at a seminar on Net Hydel Profit (NHP) underscored the constitutional obligations surrounding NHP and the pressing need for equitable resource distribution among provinces, particularly Khyber Pakhtunkhwa (KP).
The speakers addressing at the seminar on titled Net Hydel Profit organised by National Think Tank, Good Governance Forum, in collaboration with the Institute of Management Sciences, Peshawar also highlighted key constitutional articles relevant to NHP; i.e., Article 157 allows the federal government to construct hydroelectric power installations with prior consultation from provincial governments. Article 161(2) mandates that net profits from hydroelectric power generation be paid to the province where the station is located.
The seminar commenced with a welcome note from Dr Syed Akhtar Ali Shah, Chairman of the think tank and former Home Secretary & Inspector General of Police. He provided insights into the legal aspects of Net Hydel Profit, emphasising its significance for the region’s economic landscape.
Keynote speaker Fuad Ishaq, President of the Chamber of Commerce and Industries, Khyber Pakhtunkhwa, presented an industry perspective on hydel prospects, highlighting the potential benefits for local businesses and the economy.
Himayatullah Khan, a Technical Expert on Net Hydel Profit and former Adviser on Energy and Power, delivered a comprehensive presentation that included an analysis of the AGN Kazi formula, the impact of hydel power generation on the country, and the advantages of wheeling. His insights underscored the importance of optimizing hydel resources for sustainable energy production.
Engr Iqbal Zafar Jhagra, former Governor of Khyber Pakhtunkhwa, addressed the audience on the importance of Net Hydel Profit and its implications for the province’s development. His remarks highlighted the need for strategic planning in harnessing hydel resources effectively.
Dr Usman Ghani, Director of the Institute of Management Sciences, concluded the seminar by reaffirming the institute’s commitment to promoting discussions on relevant topics that contribute to societal progress. He noted that IMSciences stands apart from universities in Khyber Pakhtunkhwa by fostering an environment conducive to such critical dialogues.
It was further reiterated that the Council of Common Interests (CCI) endorsed the Kazi Committee Methodology (KCM) for calculating NHP in 1991. An arbitration tribunal was constituted in 2005, which announced its award on October 9, 2006, granting KP an amount of Rs. 110 billion.
However, WAPDA filed a petition in civil court against the tribunal’s decision in the same year. The amount was finally received in 2009 after negotiations involving the Chief Minister of KP and the Prime Minister.
Despite these provisions, the implementation of NHP has faced significant bottlenecks, leading to a sense of deprivation among provinces. Payment of Rs. 6 billion was made in 1992, coinciding with KP’s budget of Rs. 14 billion, where KP’s Annual Development Program was of Rs. 4.8 billion for that year.
KP has not received any NHP payments for the last five months, despite estimating a need of Rs 31.5 billion for the fiscal year 2022-23.
In 2016, a Memorandum of Understanding (MOU) was signed to increase NHP from Rs 6 billion to Rs 18 billion annually, yet recent payments have been erratic, severely impacting KP’s financial health and development efforts. In 2016, an interim arrangement was established at Rs. 1.10 per unit with a 5% indexation, increasing the annual NHP to Rs. 18.7 billion.
The provincial government of KP maintains that the transfer of NHP is a constitutional obligation of the federal government and WAPDA. Erratic payments have hindered KP’s ability to meet its budgetary needs, prompting the provincial government to engage with the Prime Minister to resolve these issues. In 2021, CCI constituted a committee of technical and financial experts to propose an out-of-the-box solution for the payment of Net Hydel Profit to entitled provinces.
Speakers also mentioned that the Peshawar Electric Power Company (PEDO) initiated the wheeling process for cheap electricity to the industrial sector. Stay order by Discos from Islamabad High Court in 2021, which was vacated and sent back to NEPRA to resolve the matter within ten weeks. NEPRA conducted a public hearing on November 28, 2023 and the decision is still pending.
They emphasised to find an amicable balance to promote wheeling of electricity in the KP province to encourage industrialization and promote sustainable economic development in Khyber Pakhtunkhwa.
The seminar concluded with a strong call for the federal government to fulfil its constitutional responsibilities and ensure that KP receives its rightful share of hydel profits. The adherence to constitutional obligations is essential not only for the province’s economic stability but also for fostering a spirit of cooperation and fairness among the federating units of Pakistan.
Copyright Business Recorder, 2024
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