Khyber Pakhtunkhwa Chief Minister Ali Amin Gandapur has written to Prime Minister Shehbaz Sharif, urging his intervention for an expedited and equitable resolution of the long-running Net Hydel Profit (NHP) dispute between the provinces and Wapda. The letter cites constitutional provisions and Council of Common Interests (CCI) decisions, pressing the federal government to settle outstanding dues and ensure regular NHP payments to KP.
Gandapur’s letter draws attention to Article 161(2) of the Constitution, which requires that profits from hydroelectric power generation be paid to the province in which a power station is situated. He reminded the Prime Minister that the Kazi Committee Methodology (KCM), approved by the CCI in January 1991 and upheld by the Supreme Court in 1997, remains the governing formula for calculating NHP. Under this methodology, KP had received its first NHP payment of Rs6 billion in 1992. However, while the methodology was later reaffirmed in several CCI meetings, successive governments have struggled with consistent implementation.
To ease KP’s financial stress, a temporary arrangement was introduced in 2016, whereby Wapda was to pay Rs1.10 per kWh with an annual 5% indexation built into the generation tariff. This interim model was approved by the CCI and has remained in place since. However, Gandapur said the agreed payments have not been consistently made by Wapda, resulting in a shortfall of Rs75 billion in KP’s NHP dues.
The issue resurfaced in 2018 when the provincial government submitted a formal request for full implementation of the KCM. In response, the CCI constituted a committee led by the Deputy Chairman of the Planning Commission to re-evaluate NHP rates. The committee submitted its report in December 2019, which was endorsed by the CCI. The report confirmed that KP was entitled to Rs128 billion for the fiscal year 2016–17, while Punjab was due Rs52 billion. Following this, a second “out-of-the-box” committee was formed to find an alternative mechanism for regularising NHP payments. According to Gandapur, five meetings of this committee have been held, and KP has already submitted its proposal. The Chief Minister is now urging the Prime Minister to instruct the Planning Commission to convene another meeting of the committee to move the process forward.
In his letter, Gandapur presented three proposals. The first calls for the federal government to directly pay the outstanding NHP amounts based on the constitutional guarantees under Article 161(2), CCI decisions from 1993 to 2022, and the 2019 Jehanzeb Committee report. He suggested that the power generation component of hydel projects be financed through the federal PSDP, similar to the approach used for dam construction, ensuring that project revenues can be redirected toward NHP payments.
The second proposal recommends transferring ownership of hydro power stations from Wapda to the respective provinces, as permitted under Pakistan’s Power Generation Policies of 1995 and 2015. Until such transfers are complete, the federal government should continue to make NHP payments as per the KCM, while Wapda may retain operations and maintenance responsibilities.
The third proposal suggests a new interim arrangement to bridge the financial gap. The provincial government recommends that the federal government increase the electricity tariff by Re1 per unit at the consumer end to generate the required funds for clearing pending NHP dues.
Gandapur also raised structural concerns over the role of Wapda in making NHP payments. He argued that since Wapda no longer collects revenue in the power sector and the CPPA-G now serves as the central collection agency, the responsibility for NHP disbursements should shift to CPPA-G. He proposed that payments be made to provinces through an escrow account to ensure transparency and proper allocation.
Given the scale of the arrears and the financial pressures on KP’s budget, Gandapur emphasised the urgency of resolving the matter. He appealed to PM Shehbaz Sharif to play a facilitative role in finalising a just and transparent framework for NHP payments in line with legal and constitutional obligations. “I remain confident that, under your leadership, we can navigate these challenges and ensure a fair and transparent resolution that upholds the principles of justice and equity for all stakeholders,” Gandapur wrote.
The dispute over NHP has once again highlighted the tensions between provincial and federal roles in Pakistan’s energy sector. While legal and policy precedents have repeatedly confirmed the provinces’ entitlement, procedural delays and inconsistent payments have deepened intergovernmental friction. With KP’s latest proposals on the table and a renewed push from its leadership, the ball is now in the federal government’s court to take decisive action and address the long-pending issue.
