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• Province argues its share of the divisible pool was never updated after 2018 merger of tribal districts
• Petition seeks ruling on federation’s duty to update NFC formula as units change
ISLAMABAD: With a staggering Rs964bn claim on the Federal Consolidated Fund, the Khyber Pakhtunkhwa government has filed a constitutional petition in the Federal Constitutional Court (FCC), challenging the continued extension of the 7th National Finance Commission (NFC) Award more than a decade after the merger of the erstwhile Fata with KP.
This is in addition to the national commitment of Rs100bn per annum for developing and integrating the merged districts, made in 2018 but not fully implemented, KP Chief Minister’s Adviser on Finance Muzammil Aslam said at a press conference on Monday. The province’s total claims exceed Rs1.6 trillion.
In its petition, the KP government has asked the FCC to determine whether its NFC share should be increased to reflect its expanded size and responsibilities following the 25th Constitutional Amendment, which merged the tribal region into KP in 2018.
It argues that despite this major constitutional change, the NFC formula has not been updated to include the merged districts — violating the principle of “finance follows functions” and under-allocating resources to their population.
Constitutional questions
For the first time, a province has sought what it calls a “living NFC”, challenging the prolonged delay in updating the award. If accepted, the petition could address much of the criticism surrounding the 18th Amendment.
The petition goes beyond a provincial fiscal claim, asking the FCC to clarify whether, under Article 160, the federation’s claim of a constitutional deadlock is justified — or whether it has failed to discharge its constitutional responsibilities.
At stake, Mr Aslam said, is not only KP’s share but the integrity of Article 160 itself: whether the NFC remains a periodic, evidence-based mechanism, or whether resource distribution can rely indefinitely on outdated assumptions after a province’s population, territory and responsibilities have fundamentally changed.
Claim for revised share
The KP government maintains the 7th NFC Award’s formula does not need to be reopened or altered — only applied to the province as it constitutionally exists after the 25th Amendment.
While the formula is unchanged, the values inserted into it still reflect pre-merger KP, meaning the population, area and development indicators of the merged districts were never incorporated, despite becoming part of KP on May 31, 2018.
On this basis, the province wants its share in the horizontal distribution of the divisible pool revised from the date of merger, arguing this is not a discretionary grant but the automatic constitutional consequence of the 25th Amendment read with the existing formula.
It also seeks a declaration that this entitlement is payable from that date — not as retrospective application of law, but as recognition that the constitutional facts changed in 2018 and the formula already in force under the 2010 Order applied automatically to those changed circumstances.
According to KP’s calculation, the resulting shortfall — the claim now before the court — stands at Rs964bn, an amount the province says was instead distributed to other provinces because the post-merger reality was never reflected in the NFC framework.
Article 160
The petition argues that Article 160 envisages a periodic, evidence-based framework for fiscal federalism, with an NFC to be constituted at intervals of no more than five years to keep resource distribution responsive to changing realities.
“The continued reliance on arrangements rooted in the 7th NFC Award, without adequately reflecting the merger of Fata with Khyber Pakhtunkhwa, has created an unresolved constitutional and fiscal anomaly,” the petition says.
It adds that the case does not seek to undermine the federation or turn the NFC into an adversarial contest among provinces, but that fiscal federalism can only function if the agreed formula is applied to federating units as they actually exist under the Constitution.
The province has asked the court to determine whether the Constitution requires equitable distribution of resources between the federation and provinces as a fundamental feature of Pakistan’s federal framework; whether each NFC must independently review and recommend revenue distribution; and whether an award based on an earlier commission’s recommendations can continue indefinitely without fresh input from a subsequent one.
It also seeks clarity on the relationship between Articles 160(4) and 160(6) — specifically, whether the president’s power to amend an NFC Order is a power coupled with a duty when constitutional, demographic or fiscal circumstances materially change.
KP wants the court to declare whether provincial shares adjust automatically by operation of law when the basis for calculating them changes, and whether the federal government and president are constitutionally bound to give effect to such changes through an Amendment and Modification Order under Article 160(6) — noting that this provision has been used since 1973 to revise the formula in light of changing demographic realities.
The province has therefore asked the FCC to declare that the president was constitutionally bound to promulgate, and the federal government bound to advise promulgating, such an order to give effect to KP’s revised share.
Separately, KP maintains that its position on the national commitment for developing and integrating the merged districts — the Rs100bn-per-annum pledge from 2018, or an allocation equal to 3pc of the divisible pool — remains distinct.
Published in Dawn, July 21st, 2026
