ISLAMABAD: A renewed debate has emerged between the federation and the provinces over the longstanding issue of Net Hydel Profit (NHP), with the Khyber Pakhtunkhwa (KP) government demanding an increase of Re. 1 per unit to ensure payment of its dues are met.
However, WAPDA, Punjab and Sindh have opposed the proposal, sources within the Planning Commission told Business Recorder.
This discussion took place during an inter-provincial meeting chaired by Secretary of Planning, Development, and Special Initiatives, Awais Manzur Sumra.
‘Rs38.925bn outstanding on account of KP govt’s NHP share’
The Technical Advisor to KP Government, Himayatullah Khan, noted that the Council of Common Interests (CCI), in its decision of December 23, 2019 constituted a committee under the chairmanship of the then Deputy Chairman, Planning Commission with the mandate to propose an out of the box solution for payment of net hydel profit to the entitled provinces.
He stated that Article 161 (2) of the Constitution mandates that the Federal Government pay the net hydel profits from bulk power generation at a hydro-electric station to the province where the station is located. As per explanation provided with the Article, the rate is to be determined by the CCI.
However, in case of grievances, the matter shall be referred to a Joint Sitting of the Parliament under Article 154(7) of the Constitution by the aggrieved party.
He further noted that a Committee was constituted on November 24, 1986, to address the non-implementation of Article 161 (2), under the then Deputy Chairman, Planning Commission AGN Kazi. The committee’s proposed methodology (KCM) was subsequently approved by the National Finance Commission (NFC) in 1988 and the Federal Cabinet in 1990.
The KCM was approved by CCI in 1991 and re-endorsed in meetings from 1993 to 2022. The Supreme Court also validated CCI’s methodology in its 1997 judgment in the Gadoon Textile Case stating that CCI has discharged its constitutional obligation as to computation of net profits.
Regarding KCM based payment of NHP, he said that the payment started in 1992; likewise, second arrangement was also done in 2016. Subsequently a Committee was set up under the chairmanship of the then DCPC Jehanzeb Khan on April 24, 2018 for determination of rates/net profits, which submitted its report to the CCI on December 23, 2019.
While referring to the decision of 37thCCI meeting, it was highlighted that “practicality of the implementation of KCM cannot override the constitutional dictates, and CCI had repeatedly assured the provinces that unbundling of WAPDA would not affect their constitutional rights.”
Discussing the findings of the committee under the former DCPC Dr. Jehanzeb Khan, he apprised that the NHP of Rs.128 billion for GoKP and Rs. 52 billion for GoPb was calculated by the Technical Sub-Committee and main Committee for the year 2016-17 as per KCM formula of FY 1985-86. Presently WAPDA is no longer revenue collecting agency for the power sector, as CPPA -G is acting as collecting agency of the Federal Government.
The technical member, Himayatullah Khan presented three proposals on behalf of GoKP to the forum, as follows:
Proposal-1: Federal Government is currently financing dam component of hydro power projects through PSDP and the power component is being financed by WAPDA through tariff. Govt. of KP feels that WAPDA may also finance the power component through PSDP and revenues generated by WAPDA may be made available for NHP payments to the entitled provinces.
Proposal -II: Transfer the existing hydro power plants, currently owned by WAPDA to the respective provinces, as was previously proposed by Government of Punjab. The power generation policies of 1995 and 2015 otherwise allow transfer of power stations to the provinces.
Copyright Business Recorder, 2025