Khyber Pakhtunkhwa (KP), the largest hydropower producer in Pakistan, received Rs33 billion in net hydel profits (NHP) for the last fiscal year, while Punjab, which is second in NHP receipts, was allocated Rs65.8 billion, Dawn reported, citing finance ministry’s data.
NHP is paid to provinces under Article 161(2) of the Constitution based on the location of power plants. Despite KP being the primary generator of hydroelectric power, the province argues that its share of the NHP is disproportionately low compared to Punjab’s allocation.
In FY24, KP projected its NHP revenues at Rs111.3 billion, later revised to Rs113 billion, with current fiscal projections set at Rs105.9 billion. However, the federal government released only Rs33 billion in NHP to KP, far less than Punjab’s allocation.
Muzzamil Aslam, adviser to the KP chief minister on finance, expressed frustration, stating that the imbalance highlighted “bias and prejudice” from the federal government and the Water and Power Development Authority (WAPDA). “KP generates the majority of the country’s hydropower, but Punjab receives more funds,” he said.
Aslam added that the federal government had delayed a meeting to resolve the issue, initially scheduled for August 5, describing this as a tactic to frustrate the provincial government.
The NHP dispute dates back to 2016, when both federal and KP governments signed a memorandum of understanding (MoU) to address pending issues, including uncapping NHP payments. However, KP claims that the agreed-upon five percent annual increase in NHP has not been implemented, leading to significant arrears.
KP took the matter to the Council of Common Interest (CCI) in 2018, and despite multiple meetings, no agreement has been reached on how to pay KP’s NHP share, which totals Rs1.5 trillion for the period from 2016-2023. The province has proposed that the federal government pay the arrears according to constitutional provisions and CCI decisions.
In addition, KP has requested that WAPDA’s hydropower projects be transferred to the province, with the centre covering the outstanding NHP payments, while WAPDA retains responsibility for operation and maintenance.
