In a major policy decision, the federal government has started work on devolution of gas and power companies' networks to the provinces, well- informed sources told Business Recorder. This decision was taken at a recent meeting of the Council of Common Interests (CCI) on April 24, 2018 with Prime Minister Shahid Khaqan Abbasi in the chair.
According to sources, Chief Minister of Khyber Pakhtunkhwa (KP) Pervez Khattak underlined the need to implement the previous CCI decisions in this regard. The CCI in its 34th meeting had referred the matter of IPCC for appropriate recommendations. IPCC recommended to the CCI to implement the AGN Kazi methodology for calculation of Net Hydel Profit (NHP).
Minister for Power, Awais Leghari read Article 161(2) of the Constitution which stipulates: "The net profits earned by the Federal government, or any undertaking established or administered by the federal government from the bulk generation of power at a hydro-electric station shall be paid to the province in which the hydro-electric station is situated".
He expressed his reservations that AGN Kazi Methodology could not predict the quantum of profits to be calculated at that time at the Bus-Bar as the electricity generation is a mix of thermal, coal and hydel resources etc. AGN Kazi committee was constituted on July 25, 1985 and was headed by the then Deputy Chairman, Planning Commission AGN Kazi.
According to the Minister for Power, its mandate was to devise a formula for calculation of NHP payable to the provinces. The report was finalized on July 28, 1987 and approved by CCI in its meeting of January 12, 1991. At that point in time, the WAPDA had not been unbundled which was done in 2007. Till then power generation remained the exclusive domain of WAPDA and the determination of tariff was done by Finance Division before the creation of Nepra. At present, WAPDA is recovering only the cost of generation with no profit at all while the federal government has to take care of the loans raised for the Nelum Jhelum and Dasu power projects. WAPDA is no more a profit generating entity, he added.
During the discussion, significant difference of opinions emerged between the provinces and federal government on the mechanism for determination of costs associated with generation, distribution, transmission line loses and calculation of net profits.
Prime Minister Shahid Khaqan Abbasi underlined the importance of reconciliation of figures payable to the provinces. The Government of Khyber Pakhtunkhwa, however, stressed the implementation of CCI decisions regarding the implementation of AGN Kazi Methodology. However, they agreed to the reconciliation of figures / rates of net profits.
After a detailed discussion, the CCI, in principle, reiterated its earlier decisions on implementation of AGN Kazi Methodology and constituted a committee to deliberate upon the issue of determination of rates/net profits and submit report/ recommendation in the next meeting of the CCI decision. The composition of the committee includes Deputy Chairman, Planning Commission, Secretary Water Resources Division, Secretary, IPC Division and Chief Secretaries of Khyber Pakhtunkhwa and Punjab. The committee may co-opt any member as it may deem appropriate.
The CCI also decided that the provinces will bring a proposal for devolution of gas and electrical power networks including generation, transmission and distribution etc. to the provinces in the next CCI meeting.
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