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CCI to take up centre-province dispute over energy initiatives

Updated August 25, 2017
An aerial view of the three canals — Dadu, Rice and Kirthar — emanating from the Indus River is seen in this file photo. The CCI will take up a complaint from Balochistan against Sindh for short supplies of its water share from Pat Feeder and Kirthar canal. Balochistan is demanding that Sindh should ensure its water share and make fiscal compensation for the short supplies.
An aerial view of the three canals — Dadu, Rice and Kirthar — emanating from the Indus River is seen in this file photo. The CCI will take up a complaint from Balochistan against Sindh for short supplies of its water share from Pat Feeder and Kirthar canal. Balochistan is demanding that Sindh should ensure its water share and make fiscal compensation for the short supplies.

ISLAMABAD: The first meeting of the Punjab-dominated Council of Common Interests (CCI) will meet on Friday amid Khyber Pakhtunkhwa’s fresh demand for Rs55 billion additional annual funds, Sindh’s protests over national energy initiatives and the centre’s quest for approval of census results and provincial contributions to limit fiscal deficit.

To be presided over by Prime Minister Shahid Khaqan Abbasi, the CCI will take up a total of 15 items and likely to also have discussions on the re-composition of CCI which has reduced representation of Balochistan and KP and increased that of Punjab.

Informed sources said the KP government has put up two cases before the CCI that cumulatively seek additional financial flows of around Rs55bn from the federal government. This includes increasing the amount of Net Hydel Profit (NHP) proceeds from current Rs18bn per annum to about Rs67bn and an end to centre’s at source deduction of KP’s on account of gas, electricity and other bills.

The reconstituted council in its maiden meeting today will also discuss KP’s demand for increase in hydro profit and more water for Karachi

The sources said the KP government claimed current NHP receipts of Rs18bn under a memorandum of understanding with the Ministry of Water and Power as an interim arrangement and has called upon the federal government to calculate its share purely on the basis of AGN Kazi Committee formula without any give and take. The centre considers the Rs18bn annual payments as full and final arrangement.

The KP government has moved another summary in which it has protested over at source deduction of electricity and gas bills. The province claims the billing of gas and electricity by the federal government’s companies was exaggerated and should not be deducted at source.

On the other hand, the finance ministry wants the provinces to be part of the fiscal coordination committee that should agree on provincial contribution to contain fiscal deficit and set borrowing principles for the provincial governments.

The meeting will also take up the National Water Policy, implementation of Article 154 of the Constitution to set rules and procedures for the CCI decision-making and secretariat and provision of the 1,200 cusecs of water to Karachi.

The Indus River System Authority (Irsa) had reported at a recent meeting that Sindh was already getting 500 cusecs of extra water share for Karachi and was now seeking additional resource for K-IV project. Irsa had told the water and power ministry that it would have no objection if provinces agree to the additional chunk at the level of CCI. The meeting will also take up a complaint from Balochistan against Sindh for short supplies of its water share from Pat Feeder and Kirthar canals. Balochistan had earlier lodged complaints with Irsa in this regard, but the matter could not be resolved. Balochistan is demanding that Sindh should be made ensure its water and share and make fiscal compensation for the short supplies.

The implementation of Article 154 is also on the agenda of the CCI as Sindh, KP and Balochistan governments have expressed their reservations over its implementation.

After the 18th Amendment, Article 154 (1) clearly states the functions and rules of procedure of the CCI. The provinces believe the council should formulate and regulate the policies relating to the matters in Part II of the Federal Legislative List. It should exercise the supervision and control over the related institutions, oil and gas and electricity.

Sindh and KP blame the federal government for making important decisions regarding the oil and gas sector through the Economic Coordination Committee (ECC) of the cabinet and the Cabinet Committee on Energy (CCE). After the 18th amendment, Article 154 reads “The Council shall formulate and regulate policies in relation to matters in Part II of the Federal Legislative List and shall exercise supervision and control over related institutions.”

The two provinces want to undo the federal government’s decisions on oil and gas that have allegedly encroached upon provincial powers and rights, in violation of the Constitution.

The two provinces are particularly agitated by decisions of the CCE and the ECC regarding the allocation of new oil and gas finds, pricing of natural gas and matters relating to liquefied natural gas (LNG).

Both provinces have argued that only the CCI had the power to formulate and regulate policies on matters pertaining to Part II of the Federal Legislative List and that they should supervise and control related institutions.

Sindh had moved a case under Article 154 of the Constitution and demanded that all decisions taken by the CCE or ECC regarding electricity, gas and LNG after the 18th Amendment should be “declared null and void” because the province had not supported or had not been consulted at the constitutional forum.

However, the law ministry had stated in its legal opinion that LNG was not produced in any province or territorial waters adjacent thereto as required under Article 172 (3) or in the Fourth Schedule of the Constitution. Being an imported product, its allocation or any other matter had nothing to do with any province, but agreed that matters relating to natural gas should go to the CCI.

The two provinces have also raised objections over policy guidelines issued by the ECC to two regulators – Oil and Gas Regulatory Authority (Ogra) and National Electric Power Regulatory Authority (Nepra) – regarding gas and electricity tariffs, saying that the two regulatory bodies fell in the provincial domain through the CCI. Article 154 also requires that CCI decisions must be taken with an expressed majority and a dissatisfied party could refer the matter to a joint sitting of parliament for correction.

Sindh has contested gas pricing of Sui gas companies under the centre’s policy advice and was also protesting over the dismantling of Mari gas’s pricing formula.

Published in Dawn, August 25th, 2017