ISLAMABAD, Sept 10: An inter-provincial committee agreed on Monday to overcome the government’s financial crunch by utilising provinces’ surplus funds as provincial investments in major hydropower projects.

The committee also decided to divert 300 megawatt of electricity from Karachi to the national grid for equitable distribution of power.

The federal government formally put a proposal on the table for transfer of management along with all the associated financial and administrative affairs of power distribution system to the provinces as demanded by Punjab with the condition that they would have to take responsibility for reduction in line losses, recovery of electricity bills and political fall out without looking backwards to the centre, an insider told Dawn.

The percentage share from provincial governments as investments for hydropower project development and mechanism for transfer of distribution network of all distribution companies to provincial governments would be presented to the council of common interest (CCI) for formal approval and implementation, sources said.

The meeting presided by Water and Power Minister Ch Ahmad Mukhtar and attended by all the provinces chief secretaries, Azad Kashmir, Gilgit-Baltistan and additional secretary federally administered tribal areas (FATA) amongst others.

“There was a consensus in the meeting between the federal government and the provinces that the energy crises was a national crisis and could be resolved only with the joint efforts of the Federal and Provincial governments”, said an official statement adding “the provinces in principle agreed to a proposal to invest in the mega hydropower generation projects”.

The meeting discussed the enormous financial challenges faced by the federal government and it was not possible for them to handle development large hydropower projects on their own.

Therefore, one way to overcome this challenge was to pool federal and provincial resources so that half of the investment could be made by the federal and half by the provincial governments.

In addition, the provincial governments would focus on development of smaller hydropower projects on their own because of the 7th National Finance Commission (NFC) award which resulted in increased provincial transfers.

The provinces also agreed in principle to allocate a certain percentage of their development budgets for hydropower, alternate energy and coal power projects. The meeting decided that the provincial governments would come up with their commitments for a certain percentage of investment in mega hydropower projects before the next CCI meeting for approval to trigger immediate implementation process.

Informed sources said while chief secretaries of the three smaller provinces promised to look into the proposal, chief secretary Punjab asked the federal government to present a detailed model and working plan to suggest what responsibilities it desired for the provinces and what would be the role of the federal government in the new schemes of things in order for them to formally respond.

The meeting was informed that KESC had been told about diversion of at least 300mw electricity to the national grid out of 650mw being supplied by the National Transmission and Dispatch Company.

The meeting was informed that KESC has been asked to ensure generation from all of its plants by utilizing its idle capacity and by purchasing electricity from IPPs near Karachi.