In a letter addressed to the prime minister, the chief minister highlighted the constitutional provisions regarding NHP, referring to Article 161(2) of the Constitution, which mandates that revenues generated from hydropower plants should be allocated to the entitled provinces.
The letter underscores that the Council of Common Interests (CCI) is responsible for determining the rate of NHP.
In 1991, the CCI approved the Qazi Committee Methodology (KCM), which led to the first payment of Rs6 billion to the then-North-West Frontier Province (now Khyber-Pakhtunkhwa) in 1992.
This methodology was subsequently endorsed by the National Finance Commission (NFC) and upheld by the Supreme Court of Pakistan in 1997. In 2016, the federal government introduced an interim arrangement, later ratified by the CCI, which set the net hydropower profit rate at Rs1.10 per kilowatt-hour, with an annual 5 per cent indexation.
Under this framework, payments were made to Punjab and K-P, but inconsistencies in these payments have resulted in accumulated dues of Rs75 billion for K-P.
The letter further states that in 2018, the provincial government pressed for full implementation of the KCM formula, prompting the formation of a committee under the Deputy Chairman of the Planning Commission.
In December 2019, the committee verified that K-P was owed Rs128 billion in net hydropower profits for the financial year 2016-17, a finding later endorsed by the CCI.
To address the broader issue of provincial hydropower payments, another committee (Out of the Box Committee) was subsequently formed, which sought input from all stakeholders. The K-P government has already submitted its recommendations to the Planning Commission in response.
Emphasizing the province’s financial challenges, the chief minister urged the prime minister to convene a meeting of the out-of-the-box committee at the earliest to ensure a fair resolution in line with constitutional provisions and CCI decisions.
He expressed confidence that the prime minister would play a leadership role in securing the constitutional and legal rights of the people of K-P.
It may be recalled that in January 2023, the K-P caretaker government decided to lobby for the payment of Rs123 billion outstanding dues that the Centre has failed to release.
The provincial government contacted the National Power Regulatory Authority (NEPRA) in this regard which failed to release a penny under net hydel power profit last year.
A document obtained by The Express Tribune shows that the federal government had to pay Rs25.92 billion under net hydel power profit but it failed to do so.
Under other heads, the federal government had to pay Rs123 billon to K-P and because of this held up sum, the province has been facing an economic crisis.
In a meeting, it was revealed that due to delay in the release of funds under various federal transfers by the federal government and nonpayment of net hydel profit, the provincial government has been facing severe financial constraints.
Currently, the federal government owes billions of rupees to the K-P province which has resulted in an adverse impact on the ongoing development and welfare activities in the province, especially the merged areas.