PESHAWAR, Aug 16: Arbitration between the NWFP government and Water and Power Development Authority (Wapda) over the net hydel profit issue is not likely to commence in the near future because of differences between the two sides, according to official sources.

"The two sides have not yet agreed to the contents of the draft agreement," a senior official of the provincial government told Dawn. Before formally entering into the arbitration process, the two sides would have to sign an agreement which, according to the sources, they are finding difficult to formulate.

This has slowed the process towards resolution of the decades-old dispute. The NWFP has a claim of over Rs440 billion arrears on account of net hydel profit (NHP) against Wapda. Wapda does not acknowledge the stand.

The province's standpoint is that Wapda owes it this money in line with its constitutional right that guarantees payment of profit against the sale proceeds of hydro-power produced by power generation units set up in any of the provinces.

The dispute also affected the recently held inconclusive process of formulating the next National Finance Commission award. Though the issue of NHP does not relate to NFC, the provincial government took up the matter before it and adopted the stand that it would not sign the award if its stand over the NHP issue was not looked into.

Its demand for arbitration was accepted by the federal government. However, the process has not yet commenced even after several months have passed since it was assured of arbitration.

Official sources said that as the process of formulating NFC award died down following the announcement of the federal budget for the current financial year, so did the process of arbitration between the NWFP and Wapda.

"There is hardly any progress on the issue," admitted a finance manager of the province. This is also evident from a recent statement of Chief Minister Akram Khan Durrani who linked the commencement of the arbitration process with the induction of new prime minister.

However, official sources cited differences over the draft agreement as hurdles in the way of launching the process for which both the parties had nominated two representatives each several months back.

Dr Salman, adviser to the government of Punjab and Mr Javed Akhtar, a former member (power), Wapda, would represent the Authority in the arbitration process. The provincial government has nominated Jamaat-i-Islami's senator Prof Khurshid Ahmed and former chief secretary of the province, Abdullah, also a JI affiliate, to defend NWFP's stand.

An agreement on the issue of appointing a chairman for arbitration was among a host of issues needed to be settled first. Negotiations between the two sides to decide modalities for the appointment of chairman have been under progress for quite some time without much success.

"Apart from the selection of chairman, most of the remaining issues are of technical nature," said the officer, adding that "the province is ready to compromise its stand on certain technical matters but only if the other side also showed some flexibility".

"The contents of the draft agreement could not be agreed to even though the draft was modified several times," said the officer. Once the agreement is signed, arbitration would be carried out on the basis of rules laid down by the Permanent Court of Arbitration - to which government of Pakistan is also a signatory. In the absence of the country's own arbitration rules, said the sources, principles laid down by the permanent court of arbitration would be pursued.