An all-party conference held in Peshawar recently has urged the federal government to pay the net hydro-profit arrears owed by the Water and Power Development Authority to Khyber Pakhtunkhwa at the earliest.

Expressing concern over the capping of the profit at Rs6 billion, the conference backed the provincial government in its efforts to get the arrears.

Prime Minister Yousuf Raza Gilani had recently asked the federal finance secretary to sit with his KP counterpart to sort out the matter.

The Arbitration Tribunal (AT), headed by Justice Ajmal Mian, had decreed that the Wapda would pay Rs110 billion profit arrears in equal installments of Rs25 billion to KP in July each year. Last year, the federal government paid Rs25bn but it has released only Rs4.6bn so far this year. The delay in payment of arrears has exposed the province to financial strains.

The issue has been a major irritant since the 1973 constitution took effect. In September 2008, in a meeting with a KP jirga, Gilani had formed a committee of experts to present its report within two months on the issue of capped net hydro profit (NHP) amount. However, the committee is yet to give its decision.

While participating in the committee, KP has opposed the reopening of issues already decided/settled in the AT and NFC awards.

The minister has also opposed the adjustment of NHP against federal government loans as is being suggested by some quarters.

Senator Haji Muhammad Adeel, a former KP finance minister and NFC member, says Wapda owes us around Rs300bn now.

“Apart from Rs75bn NHP arrears, Wapda owes us over Rs55bn for 10 per cent interest on the outstanding amount and Rs203bn unpaid increased NHP amount post AT award and another Rs40 billion for this year’s NHP,” he says.

Adeel laments that Wapda has capped the annual NHP at Rs6bn, deviating from A.G.N Kazi formula, unanimously endorsed by the NFC in February 1988, approved by the Council of Common Interests in January 1991 and validated by the presidential NFC order No3 of 1991. The NFC had recommended increase of 10 per cent on Rs6 billion for future years.

“While Punjab is being paid Rs5bn for 100MW of electricity produced at the Ghazi Barotha power project, KP is given Rs6bn for 4,000MW produced by it, while power tariff has also been increased manifold since then,” he adds.

Wapda, however, proposed Rs72bn against Rs83bn already paid, thus claiming Rs10.9bn as overpayment to KP while maintaining that surcharges of Rs829bn and other revenues of Rs195bn could not be used for NHP determination. It also stubbornly rejected as unconstitutional the Kazi formula.

Realising that Wapda was too weak financially and reluctant to provide the money, KP has focused on the federal government, being guarantor of the AT award.

Based on the NFC award, the AT award was binding on all parties. But Wapda challenged it in a civil court. Feeling betrayed, KP also went to the Supreme Court against this move where the case is still pending.

Aftab Ahmad Khan Sherpao says: “Arbitration was unnecessary in the matter. The NHP was/is the constitutional right that was accepted by A.G. N. Kazi Commission established in 1987, also by the Council of Common Interest and guaranteed by the constitutional provisions; no federal government could deny net hydro profit to the province. The KP government must stick to the Kazi formula. But we would also like to know as to what has happened to the Hydro Development Fund and the money provided thus far,” he adds.