ISLAMABAD, Nov 6: The federal government has received names of five retired judges of the superior judiciary, one of whom will be appointed as chairman of the arbitration committee to settle the dispute between NWFP and Wapda over the net hydel profit issue.
Finance Ministry sources told Dawn on Saturday that the ministry had sent a summary to Prime Minister Shaukat Aziz suggesting five high-profile judges to head the commission before Eid to remove a major irritant to the new National Finance Commission award.
The NWFP has claims of Rs350 billion against Wapda on account of accumulated net hydel profit and says it should get at least Rs12 billion profit annually under the A.G.N. Kazi formula of the 1991 water accord. The Wapda, on the other hand, says it is paying Rs6 billion to the province, much higher than what is envisaged under the Kazi formula.
Sources said the federal government had earlier, on its own, floated the name of a former Supreme Court judge but the two sides had not agreed to the proposal. Later, Wapda and the NWFP were asked to submit their separate panels from which one name would be selected through consultations.
The Wapda has proposed two former judges of the Supreme Court - Justice (retd) Munir A. Sheikh and Justice (retd) Zia Mehmood Mirza - as chief arbitrator.
Similarly, the NWFP has proposed the names of Justice Sajjad Ali Shah (former chief justice of Pakistan), Justice Mamoon Qazi and Justice K.M. Samdani.
The two sides have already nominated two members each to the arbitration commission and the federal government had agreed to all the four. The NWFP members are Senator Prof Khurshid Ahmad and Mr Abdullah.
The Punjab government had earlier nominated a former chairman Wapda and Nepra, Javed Akhtar, and adviser to the Prime Minister on Finance Dr Salman Shah as its members. Now, former member finance of Wapda, Manzur A. Sheikh, has replaced Dr Salman Shah on his elevation to the federal government.
During the course of negotiations on the National Finance Commission in May 2004, the NWFP had threatened not to sign the award unless its Rs350 billion claim against Wapda on account of net hydel profit was settled.
The federal government had agreed to appoint a five-member arbitration commission to give an award on the subject and increase the NWFP's annual share of net hydel profit to Rs8 billion as an interim arrangement, adjustable according to the final award.
The federal government later refused to increase the provincial share saying it was a package deal to finalize the NFC award that did not materialize.
Accordingly, the federal government asked the Wapda to continue paying annual Rs6 billion net hydel profit to the NWFP indefinitely and directed the National Electric Power Regulatory Authority to treat the payment "as an add-on to the cost of electricity generation".
Under Article 161(2) of the 1973 Constitution and the president's order No3 of 1991, it has been the responsibility of Wapda, on behalf of the federal government, to distribute net hydel profits to the provinces.
This used to be charged from the consumers through a surcharge in monthly bills at a fixed rate of 10.4 per cent. Now, this is being treated as expenditure of the Wapda Hydro and made part of the consumer tariff.
A senior official of the ministry of water and power said the government has not done any evaluated the impact of existing or new mechanism of net hydel profit collection from consumers but confirmed the introduction of the new mechanism.
Sources said due to the disagreement between the NWFP-government and Wapda on the calculation of net hydel profit, an interim arrangement would be implemented according to which Wapda would continue to pay Rs6 billion per annum to the NWFP until the arbitration award was announced or the Council of Common Interest decided upon an alternate arrangement.