Row over formation of arbitration body: Payment of hydel profit to NWFP
By Khaleeq Kiani
ISLAMABAD, April 24: The federal government, the NWFP and Wapda have developed differences over the constitution and terms of reference of an arbitration commission to settle a dispute regarding payment of net hydel profit to the Frontier province.
The federal government has given one month’s deadline, ending on May 15, to the NWFP and Wapda to jointly propose a name for the chairman of the commission. Otherwise, the centre would use its discretionary powers to appoint the chairman, a senior official told Dawn.
Wapda says it has no objection if the chairman of the five-member arbitration commission is appointed by the federal government. But the NWFP is against it on the ground that Wapda is a federal entity and its financial burden is shared by the centre.
The NWFP claimed that an amount of about Rs342 billion had been outstanding against Wapda and the centre on account of royalty and net hydel profit, since the commissioning of Tarbela Dam in 1974, the official said.
Wapda says it will discuss the hydel profit issue in line with the 1991 water accord which resulted in its calculation under the A.G.N. Kazi formula. According to Wapda, issues preceding the 1991 accord should be settled by the federal and provincial governments and it has nothing to do with them.
Differences also exist over the nature of the commission’s award i.e. whether it will be binding or only recommendatory.
Wapda has proposed two former Supreme Court judges— Justice Munir A. Sheikh and Justice Zia Mehmood Mirza — for the post of chief arbitrator.
The NWFP has proposed the names of former chief justice of Pakistan Justice Sajjad Ali Shah, Justice Mamoon Qazi and Justice K.M. Samdani.
According to sources, both parties are poles apart on the issue and not willing to accept any of the names proposed by the other.
The federal government, the NWFP and Wapda had agreed in April last year to resolve the hydel profit issue through a five-member arbitration commission. The commission, however, is yet to be appointed.
Although hydel profit is outside the scope of the National Finance Commission, it has been one of the major obstacles in the new NFC award for the last two years.
The NWFP has a claim of Rs342 billion on account of accumulated net hydel profit and says it should get at least Rs12 billion annual profit under the A.G.N. Kazi formula. Wapda, on the other hand, says it is paying Rs6 billion to the province, much higher than what is envisaged in the Kazi formula.
The sources said the federal government had earlier proposed the name of a former Supreme Court judge but the two sides did not agree to it. The two sides have already nominated two members each to the arbitration commission which have been accepted by the federal government. The NWFP members are Senator Prof Khurshid Ahmad and Mr Abdullah.
The Punjab government had earlier nominated a former chairman of Wapda and Nepra, Javed Akhtar, and adviser to the Prime Minister on Finance Dr Salman Shah as its members. Now, Wapda’s former member finance Manzur A. Sheikh has replaced Dr Shah.
During negotiations on the National Finance Commission in May this year, the NWFP had threatened that it would not sign the award unless its Rs342 billion net hydel profit claim was settled.
The federal government had agreed to appoint an arbitration commission to give an award and increase the NWFP’s net hydel profit share to Rs8 billion per annum as an interim arrangement, adjustable in the final award.
The federal government later refused to increase the province’s share, saying it would come under a package deal for the NFC award that did not materialize.
Accordingly, the federal government asked Wapda to continue paying Rs6 billion net hydel profit annually to the NWFP and directed the National Electric Power Regulatory Authority (Nepra) to treat this payment “as an add-on to the cost of electricity generation”.
