Panel formed by CCI suggests hydel profit payments under Kazi formula

Updated 10 Jan 2020

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A committee tasked by the Council of Common Interest (CCI) with determining the rate of net hydel profit has recommended that the federal government make payments to the provinces in line with the AGN Kazi formula to meet its constitutional obligations. — AFP/File
A committee tasked by the Council of Common Interest (CCI) with determining the rate of net hydel profit has recommended that the federal government make payments to the provinces in line with the AGN Kazi formula to meet its constitutional obligations. — AFP/File

PESHAWAR: A committee tasked by the Council of Common Interest (CCI) with determining the rate of net hydel profit has recommended that the federal government make payments to the provinces in line with the AGN Kazi formula to meet its constitutional obligations.

The committee headed by deputy chairman of the Planning Commission Dr Mohammad Jahanzeb Khan was formed by the CCI in April 2018 to examine the implementation of the NHP rates and file recommendations.

The recommendations filed by the committee in one and a half years endorse the KP government’s claim of Rs 128.6 billion annual payments in lieu of NHP.

In its last meeting held last month, the CCI had formed another committee to deliberate the issue.

The committee’s report available with Dawn notes that the issue of practicality of the Kazi Committee Methodology (KCM) implementation though raised by some committee members couldn’t override the constitutional provisions.

KP’s Rs128.6bn annual payment claim endorsed by committee

It said the KCM implementation impact on the prices of electricity, also a concern by some members of the committee, was an issue of public policy and couldn’t be assigned preference the constitution.

In the report, the committee chairman noted that Article 161(2) of the Constitution, which provided for payment of net profit to the provinces where the hydro-electric station was located, was unambiguous.

“The profits of such a project, as determined by CCI, should be ringed fenced and not be lumped with the profit or loss that may accrue in power sector. The issue of skewed energy mix, tilted towards thermal power generation, therefore, cannot be the basis of denial of the constitutional right of the province, in which the hydro-electric station is located,” he said.

The committee chairman noted that the Constitution laid down a specific course of action in case the federal or federal government is dissatisfied with the decision of the CCI.

“Such an entity may refer the matter to parliament in a joint session whose decision in this matter shall be final under article 154(7) of the Constitution,” he said, adding that there was nothing on record to indicate that federal or a provincial government has referred dissatisfaction with KCM to parliament.

He said that CCI has repeatedly reiterated its decision regarding KCM and none of these decisions have been referred to parliament by the federal or a provincial government.

“These decisions of CCI have attained finality,” he said.

The chairman noted that several decisions, spanning over almost several decades by constitutional forums such as National Finance Commission, federal cabinet, CCI and Supreme Court of Pakistan are settled and cannot be reopened.

He said that the ministry of power resources has presented Wapda inability to pay NHP since its balance sheet exhibits that worth of its total assets exceeds its liabilities.

“It is obvious that Wapda balance sheet suffers due to inefficient and high cost thermal power plants or the system inefficiencies of power cannot be the ground for not fulfilling a constitutional obligation.

The chairman noted that the CCI had discharged its responsibility by adopting the KCM and repeatedly reaffirming it.

“The KCM was formulated on the instruction of the CCI, which duly approved it [and] CCI alone, based on KCM can determine the rates of the NHP,” he said.

The chairman said if someone was dissatisfied with the forum’s decision, then they should approach a joint session of the parliament for redressal and since the constitutional option hadn’t been explored by any dissatisfied party, it was up to the federal government to fulfil its constitutional obligation towards the payment of NHP to the entitled province.

He added that the calculations by KP and Punjab amounting to Rs128.6 billion and Rs52.6 billion respectively for 2016-17 had been confirmed to be based on the original KCM of 1985-86 and the federal government should based on those calculations ensure the payment of NHP to those provinces.

Published in Dawn, January 10th, 2020