The long pending dispute between the North-West Frontier Province (NWFP) and the Water and Power Development Authority (Wapda) over net hydel profit issue has resurfaced, hitting the newspapers' headlines once again.
The NWFP has linked its signing of the next National Finance Commission (NFC) award to its stand over the net hydel profit. It wants the federal government to accept its position over the issue. The provincial government has toughened its stand as the provincial government's working relationship with Wapda and the federal government is getting more soured.
The Centre is trying to develop consensus among the federating units for the new NFC award by March 31 - the deadline set by the Federal Finance Minister, Shaukat Aziz.
On March 15, the NWFP government had announced that it would not sign the NFC award's documents if its grievances against Wapda were not looked into positively.
Couple of months back Shaukat Aziz and the provincial Chief Minister Akram Khan Durrani had reached understanding to opt for arbitration between the NWFP and Wapda to resolve their dispute over the net profits issue. However, the move received a setback after the federal government's move to appoint three representatives to represent the Centre in arbitration between the province and Wapda.
The provincial government sees it as an attempt by the federal government to favour Wapda by outnumbering the three-member arbitration team of the province. But the province has not decided to withdraw from the arbitration process. The dispute between the NWFP and Wapda over net hydel profit has a long history.
It came to the fore in 1991 when the then Nawaz Sharif government facilitated the provincial government, headed by its party leaders in the Frontier province, in getting a favourable decision from the Council of Common Interest (CCI) - a statutory body.
Since then the successive provincial governments and Wapda bosses have been at the loggerhead differing on interpretation of the CCI decision dated January 12, 1991.
The NWFP wants that it should be paid net hydel profit by applying the A.G.N. Kazi committee's formula "in working out 'revenue' the average selling rate including the normal rate and the FAC be taken into account, as this is what the consumer is actually paying".
The successive provincial governments were of the unanimous stand that apart from the normal rates, whatever is being paid by the consumer forms the part of the electricity tariff including the FAC, surcharge and the additional surcharge - an explanation not acceptable to Wapda.
In support of their contention, both elected and the military-led provincial governments have justified their stand on the basis of the judgment of the Supreme Court of Pakistan given in a case titled Gadoon Textiles Vs Wapda, S.C.M.R. 1997.
Deciding the nature of surcharge and additional surcharge, the Court declared in its judgment that: "By majority view all appeals and petitions for leave against the impugned judgment of the Peshawar High Court and the Lahore High Court are dismissed with no order as to costs, with the observation that the consumers in the Gadoon Amazai Industrial Estate (GAIE), who are still enjoying 50 per cent concession in the electricity tariff, shall also be entitled to the same on surcharge and additional surcharge as they are part of the tariff".
On the other hand, Wapda has been paying a fixed amount of Rs6 billion - capped share amount of net hydel profit - to the NWFP in fulfilment of the CCI's decision, though the original share of the province was much less than the payments already made to it from 1990-91 financial year to date.
The Authority has a claim of excess payment of more than Rs5 billion against the province - a claim rejected by the provincial governments. The issue has been left to linger on by putting it on the back-burner. The outcome is disharmony among the federating units.
Shortly before leaving the office prior to the October 2002 elections i.e., in August the then provincial government lodged a formal claim of Rs298 billion arrears against Wapda on account of net hydel profit for the period from 1973-74 to 2001-02 financial years.
The claim lodged with the then federal government contained that "the terms" the net profits earned by the federal government or any undertaking established by the federal government, in article-161(2) of the constitution, indicate that Wapda has the primary obligation to pay net hydel profits to the NWFP since it has earned profits as an undertaking established by the federal government".
The province also made basis the President Order No. 3 of 1991 entitled: "Distribution of Electricity Profits from the Hydro Electric Stations to Provinces, Order 1991" which, according to the NWFP's claim, provides that Wapda will pay the net profits to the provinces whereas, the federal government shall guarantee the payment of net profits to provinces on a regular basis.
Referring to the Supreme Court's decision in the Gadoon Amazai industrialists' case, the provincial government's claim contained: "the decision of the Supreme Court lays all doubts at rest on the nature of surcharge and additional surcharge and decides in favour of the NWFP's interpretation of the Kazi Committee formula to determine the revenue.
The surcharges and additional surcharges, periodically applied by Wapda to the electricity tariff are part of the tariff and have to be included under the heading SOP (sale of power) in the Kazi Committee formula".
It maintained that "in this regard, the government of the NWFP would like to emphasise that the decision of the Supreme Court is binding on Wapda which was a party to the case in Gadoon textiles-vs-Wapda".
Reminding the then Wapda bosses of the Authority's stand adopted before the Supreme Court in the said case, the provincial government's claim contained that it is also noteworthy that Wapda's position before the Supreme Court was as follows: 'The surcharge and additional surcharge though shown as separate items in electricity bills issued to consumers but in substance they are part of electricity tariff and hence are intra-vires'".
The new provincial government constituted a special committee, notified as "jirga", which comprises one leader each of all those political parties, including the opposition bloc, who have representation in the national and provincial assemblies from the NWFP.
It met on March 15 at Islamabad. After the meeting, the provincial chief minister and finance minister announced that that they would not sign the NFC award unless their demands were looked into.
The provincial government's decision paid dividends after the federal government, in a recent decision, agreed to a new mode of arbitration. The federal and provincial governments have agreed to the appointment of six members of arbitration panel which would take up the difficult job of resolving the dispute, and its decision would be binding on both the sides.