ISLAMABAD, March 20: An informal meeting of the National Finance Commission (NFC) decided here on Saturday to constitute a four-member arbitration commission acceptable to both Wapda and the NWFP to give an award on the latter's claim of outstanding share (Rs345 billion) from hydel profit against the former which, the NWFP has calculated on the basis of the AGN Kazi formula and article 161 of the Constitution.

Talking to Dawn after the informal meeting of the National Finance Commission (NFC) here on Saturday, a member said that under the new formulation, the federal government would have no representation in the Arbitration commission because NWFP was strongly opposing it.

At the same informal meeting the federation and the provinces seemed 'technically' heading to an agreeable ratio of 52:48 to share the net proceeds of the divisible pool although 'politically' they still remained stuck to their stated positions with provinces demanding 50 per cent share and the centre refusing to publicly say exactly what did it mean by "45-plus" share for the federating units, Dawn has learnt through authoritative sources.

The meeting also decided to hold the next NFC meeting in Quetta on March 30-31 to crystalize things so that a consensus could be reached at a subsequent meeting in Islamabad.

Both Wapda and NWFP would recommend panels of three nominations each and four of them would be appointed as commission members by the federal government. Of these four, both Wapda and NWFP would again suggest two names each. One of these four members would be appointed as chairman (arbitrator) by the federal government.

The two parties (Wapda and NWFP) also agreed to ensure that arbitrator or chairman of the commission is non-political, professional and a man of high integrity who could do justice to both the parties. The federal government would stand guarantor to the arbitration award for its implementation.

As an interim arrangement, the NWFP proposed to 'substantially increase' the hydel profit that would be adjustable at the time of final decision as per arbitrator's award.

Since both the utility and the province are also in a dispute over the question whether the arbitration should de-cap the Rs6 billion hydel share to NWFP under the AGN Kazi formula or open this formula for re-discussion, both sides would jointly draft terms of the reference of the commission in consultation with the federal government so as to keep it within the purview of the article 161 of the constitution.

Moreover, if the two sides agree in writing, the arbitration award would have the force of the high court and would be mandatory on the both sides otherwise it would be of recommendatory nature.

The source said that federal government and Sindh were still polls apart on the question of including in the divisible pool the 2.5 per cent GST, currently going to provinces in lieu of now abolished Zila tax. Sindh, being major benefactor of 2.5 per cent GST, wanted that it should continue to be given to the provinces over and above the divisible pool.

The centre is, however, of the view that if the provincial share of the divisible pool is to be increased, the rule of thumb would be of no grants, no subventions and nothing over and above the pool share and as such 2.5 per cent GST would also stand merged in the divisible pool.

Another source said that although the provinces have been demanding publicly the inclusion of Rs50 billion petroleum development levy in the divisible pool, no such demand was raised by any province at Thursday's meeting in view of a categorical refusal by the federal government at a previous NFC meeting.