PESHAWAR, Nov 10: The Rs1bn released to the NWFP recently on account of its annual share under the net hydel profit brought the much-needed relief to the cash-strapped provincial government, according to official sources.

The Water and Power Development Authority (Wapda) released Rs1bn to the NWFP in the first week of the current month after the provincial government, in a recent dispatch, complained that non-provision of net hydel profit share constrained it to take overdraft from the State Bank to meet its most essential expenditure requirements.

The provincial government’s account went into the negative at the end of the first quarter of the current financial year after the actual revenue proceeds for the period fell short of the anticipated receipts.

The situation left the provincial government with no other option but to opt for the SBP credit line.

In a letter to Wapda sent early this month — the copies of which were also dispatched to the finance division and the federal ministry for water and power — the provincial government requested for the release of its funds.

The latest disbursement brought the total amount of net hydel profit released to the province during the current financial year to Rs2bn.

The last time the province received funds from Wapda was in early September, 2003.

In this way, the disbursement has been made after a gap of about two months during which period the provincial government’s resource position went from bad to worse, added an official.

The province is supposed to get Rs6bn on account of net hydel profit from Wapda — the amount the province has been receiving for the last ten years.

The amount likely to be released to the province is Rs11.653bn less than the amount the provincial government has projected as its likely receipt under this head during the current financial year.

The provincial government has projected the net hydel profit receipts at Rs17.653bn for the 2003-04 financial year laying its claim to the amount arrived at under the recommendations of the AGN Kazi committee which had asked for increasing the NWFP’s net hydel profit share by 11 per cent every year.

Official sources said the Rs1bn released to the province helped the provincial government temporarily overcome the paucity of funds.

The provincial government’s recurring expenditure has witnessed a slight increase during the current financial year due to a 15-per cent pay increase effected in line with the federal government’s decision.

The NWFP has a total of around 272,000 employees and annual salary bill of the province and fringe benefits available to the provincial government’s employees come to around Rs17bn — about 50 per cent of the total anticipated annual revenue receipts of the province for the 2003-04 financial year.

“It is really becoming difficult for the provincial government to easily manage its finances because of increase in the recurring expenditure as a result of raise in employees’ salary and substantial shortfall recorded under the revenue receipts during the first three months of the current financial year,” said an official.

The financial crisis faced by the provincial government was likely to become more severe if Wapda, apprehended a source, did not ensure release of net hydel profit share to the NWFP on a regular basis.

“If releases from Wapda remain erratic then there is every possibility that the situation would further deteriorate in the months ahead,” said the official.

In view of scarce resources, the provincial government, said the sources, had intensified its efforts to persuade the World Bank for release of the second tranche of $90m under the structural adjustment credit programme.

The province, according to the sources, is likely to get the second tranche somewhere in the third quarter of the current financial year.