PESHAWAR, Sept 19: The federal government has intimated to the provincial government about its readiness to increase NWFP’s capped share amount of net hydel profit from the existing level of Rs6 billion per annum, according to sources.

“The sides are presently engaged in negotiating the figure of the enhanced capped share amount which the province would be getting instead of Rs6 billion annually,” a federal government official told Dawn when contacted on Thursday.

During the proceedings of the last two meetings of the National Finance Commission (NFC) - held at Karachi and Peshawar - federal and NWFP governments had developed an understanding to address the later’s reservations and stand over the issue before announcing the 6th NFC award.

Sources said Auditor-General Younus Khan, who recently served as finance secretary, visited Peshawar a couple of days back and  met Governor Iftikhar Hussain Shah, tabling some proposals before the provincial government regarding the net hydel profit issue.

Younus Khan put forth the government’s proposals, specifically regarding increasing the annual hydel profit share of the province, according to sources.

“There are increasing possibilities that NWFP’s share would be raised either to Rs7 billion or Rs8 billion per annum from the existing level,” said the sources in Islamabad.

The government has given a nod to increase the capped share amount after the provincial government adopted a strict stand over the issue at the NFC’s platform, asking for increase in the capped share amount to help the province overcome its persistent financial crisis.

In this respect, the province has also recently made a claim of Rs298 billion against Water and Power Development Authority inclusive of arrears on account of net hydel profit and interest on the dues since the 1973-74 financial year. The stand was rejected by Wapda through a press statement.

During the meeting between the governor and federal government’s representative, the province has been offered that the capped share amount would be raised from Rs6 billion to Rs7 billion per annum.

The Rs7 billion capped share amount would be subject to 10 per cent increase every year, according to sources.

“Against the Rs7 billion offer made by the Centre, the provincial government,” said the sources “has asked for Rs8 billion net profit as its capped share every year.”

By demanding Rs8 billion per annum, the provincial government has shown some flexibility on its earlier stand as in a recently sent letter to Finance Minister Shaukat Aziz, the NWFP had demanded enhancement of the capped share amount  to Rs10 billion per annum.

There are strong indications from the federal government that in case the share amount is refixed at Rs8 billion, it would be subject to eight per cent increase every year - instead of 10 per cent increase offered in the case of fixing the annual net profit share to Rs7 billion.

“The ball is now in the federal government’s court as the provincial government has expressed the resolve that it would not accept anything less than Rs8 billion per annum,” said the sources.

Sources said that apart from increasing the capped share amount, the option of arbitration between NWFP and  Wapda to resolve the issue would be pursued in line with an understanding reached at the meeting at Karachi.

They said the issue would be discussed at the NFC’s meeting scheduled at Islamabad on Sunday and a decision was on the cards in accordance with the deliberations between the governor and the federal government’s representative.