AS preparations are afoot for talks on new National Finance Comm-ission Award, some inter-provincial and centre-provincial issues outside the NFC ambit have started to crop up.

These issues, though not part of the discussions on distribution of net proceeds of the federal divisible pool, will have a direct bearing on the NFC negotiations.

To start with, NWFP feels aggrieved over non-implementation of the award of the neutral arbitration commission that has deprived the province of over Rs110 billion in arrears and an increase in its annual share of net hydro-electricity profit from current Rs6 billion to Rs28 billion. For a province that claims to have the highest rate of poverty, availability of such a substantial amount can really make a big difference.

The settlement assumes greater significance in a province that is so closely attached with tribal region battling the Al-Qaeda militants. Years of neglect and poverty is seen by many as the root cause of support the militants are able to garner not only in the tribal region but also the adjoining areas of NWFP including Swat and Bannu where normal business and commercial activities have almost come to a standstill.

The province has secured a stay order from Islamabad High Court against recent tariff increase approved by the federal government on the grounds that unless it is paid net hydro-electricity profit adjudicated by the federal government’s appointed neutral arbitration commission, the Peshawar Electric Supply Company should not increase electricity tariff that would add to poverty rate in the province.

Then the Punjab government has been raising the issue of net profit on hydro-electricity resources. Punjab wants the centre to fulfill its constitutional obligations by paying net hydro profits it earned through the Ghazi Barotha hydro-electricity project and Chashma and some other upcoming projects. The province argues that it was obligatory under the 1973 Constitution that it should be paid the royalty and net profit on hydro-electricity resources.

Article 161(2) of the Constitution states: “The net profits earned by the federal government, or any (other) undertaking established or administered by the federal government from the bulk generation of power at a hydro-electric station shall be paid to the province in which the hydro-electric station is situated.” The Punjab believes that the federal government was violating the constitutional provision by denying its share in profits from hydro-power projects.

A case moved by the previous provincial government on the subject has been lying with the ministry of water and power for many years. Given the fact that Punjab is the only province where PPP does not have government of its own, the PML(N) would find it convenient to raise the issue, not only to secure its constitutional rights, but also to muster more political support in the province.

Punjab has been saying that if the NWFP can be given net hydro-electric profits from Tarbela, there was no justification in not allowing the same facility to the Punjab on 1,450-mw Ghazi Barotha power project. In 1996, the former Chief Minister Arif Nakai had stated that Punjab was willing to forego its share in net hydro-electricity profits from Ghazi Barotha. The Punjab government, however, claims that the statement was conditional to a similar commitment by other provinces, and a statement by a chief minister could not amend the federal Constitution. It estimates over Rs2 billion as net profits from Ghazi-Barotha.

Meanwhile, the National Electric Power Regulatory Authority (Nepra) has also sought policy guidelines from the federal government over net hydro-electric profit to Punjab, Azad Kashmir and the NWFP on electricity generated in their respective areas. “Unless we have a clear picture of whether or not Punjab and the AJK would be given hydro-electricity profit and its size, Nepra cannot take a final decision about the tariff of hydro power stations of Wapda. Currently, the issue is managed through an interim arrangement”, a Nepra official said.

Also, Punjab is arguing that since Wapda has been divided into regional distribution companies, there was no justification for a uniform electricity rate for the entire country. If at all, the centre wants a uniform power tariff, the difference should be borne directly by the federal government. It argues that all the distribution companies falling in the boundaries of Punjab, namely Lahore, Gujranwala, Faisalabad, Multan and Islamabad, were either making profits or were on the break-even but were forced to subsidise highly loss making firms in Balochistan, Sindh and the NWFP. Therefore, the consumers of all the distribution firms should pay for the actual cost of electricity so that companies in Punjab could make investments for expansion, system improvement and reduction in production costs, instead of bearing the burden of electricity losses in three other provinces.

Balochistan, too, has been complaining of years of neglect despite being home to vast natural resources. Disputes exist over lack of employment opportunities and business activities for locals particularly in the Gwadar Port development. Most of the people in the province have been sceptical of the centre’s handling of the provincial issues and some of them have been up in arms against the federal authorities because of sense of deprivation, non-fulfillment of job-quotas and ‘unfair’ share in oil and gas resources. Unless, these issues are addressed, the Baloch cannot be expected to be a part of the national mainstream.

In recent months, new issues have emerged between the centre and Punjab. The launching of income support programme by Shabaz Sharif for the poor ahead of the federal government’s Benazir Income Support Programme has not been welcomed by many in the federal capital. It is described as duplication of work under which many people may be getting multiple supports in Punjab. The provincial government, however, argues that it has every right to launch initiatives to the benefit of its people.

Differences between the federal government and Punjab on the issue of wheat support price for the next crop are widening. Also, the province’s decision to provide wheat flour at a controlled rate of Rs300 per 20 kg bag is seen as an attempt by the centre to discredit other provincial governments and the federal government, given the fact that wheat flour is available at about double the price in Karachi and Peshawar. Punjab contends that it was responsible for the welfare of its own people and other provincial governments should look after their people through their own means or with the help of the federation.

Being the biggest wheat-producer, the Punjab government is seeking at least 60 per cent increase in support price and its announcement upfront ahead of sowing to encourage farmers to bring more areas under cultivation and to have higher wheat production in view of food shortages.

The sooner these issues are resolved the easier it will be to focus on more crucial crisis the country is faced. It would also help in maintaining harmonious relationship between the federal government and provinces and among the federating units.