The provincial government of Khyber Pakhtunkhwa and the Federal Ministry of Energy, Power Division have locked horns over the settlement of Net Hydel Profit (NHP) using the Kazi Committee Methodology (KCM) formula.
In what can be called a setback for the KP government, which was expecting a sizeable chunk from the NHP for hydropower stations in its territory, the power division secretary, in a letter to the minister for Planning, Development and Reforms, has raised objections over the adoption of the KCM for calculation of the NHP. It has stated that, “The KCM is neither in line with the constitution nor implementable.”
After a debate on the NHP in two meetings of the Council of Common Interests (CCI) held on Arpil 4, 2018 and September 2018, a committee was formed for the determination of NHP for the provinces under the chair of minister for planning and reforms. This committee is referred as the “main committee” in the correspondence between the KP and federal governments on the subject. The main committee held its first meeting on October 26, 2018 to discuss the matter. It was decided that the NHP calculation is a technical matter and it needs technical people to work it out. So, a technical committee under the chairmanship of secretary power division was constituted which was to submit its report to the main committee in a month. The report was submitted to the chairman of the main committee and on June 14, the power division secretary sent a brief to the minister for planning/chairman of the main committee on NHP and KCM.
The document stated that the KCM had failed to develop consensus over a period of 40 years since it was formulated. Moreover, the KCM had failed to envisage the cost of various fuels which go into the creation of the energy basket and it also fails to realise the seasonality of hydel power generation.
“We believe that the NHP should be based on a practical and consensus-based formula in accordance with the provisions of the constitution and without encumbering the citizens of Pakistan unnecessarily.”
The letter states that in absence of consensus, the KCM can be detrimental to national interest. Not only does it raise the price of hydel electricity to exorbitant levels but the huge and unrealistic sums that it reflects makes it impossible to be paid. Hence, it has increasingly become a source of conflict. The letter says that the NHP was initially limited to KP but now the Punjab and Azad Jammu and Kashmir were also in the paradigm. It also noted Punjab’s objections over KCM.
“We need to work together on a consensual formula in the light of internal best practices and as per the spirit of the constitution,” it states.
On August 6, 2019, the KP government sent its response to the Ministry for Planning, saying that the CCI had not mandated the technical committee to reopen the KCM. The chairman of the technical committee is assuming a role the CCI did not entrust to it. The committee’s role is to determine the amount of NHP due to the provinces. “This is an attempt to make the matter controversial by re-opening settled matters,” the government states in the response.
“It is very irresponsible to say that the KCM is not in conformity with the constitution. The mandate to interpret the constitution lies exclusively within the Supreme Court of Pakistan,” the government said. It further noted that the statement was insubordination and defied multiple decisions of the CCI.
The government said that the KCM was developed through consensus of all stakeholders, including the federal government, the Punjab, KP, the federal cabinet, the National Finance Commission, the CCI and the Supreme Court putting the final seal on the matter with its judgment in 1997. “There is no need to re-open a settled matter as it will lead to further complications,” the government argued.
It also sought explanations on Punjab’s objections to the adoption of KCM. The government also objected over the words “KCM is detrimental to national interest” by calling it “very irresponsible statement.” It adds that reopening a settled matter put national interest in jeopardy. The KP government requested a meeting of the main committee for the determination of the NHP at earliest.
“We see these objections as delaying tactics of the cash-starved federal government and WAPDA. These objections are not justified,” said an official of KP government requesting anonymity. “They can pay for the power plants that are generating electricity at Rs53 per kilowatt-hour but they can’t pay us our profit for the much cheaper electricity which we are producing? Tarbela is generating electricity at Rs0.98 per kilowatt-hour but the consumer price is much higher due to these expensive power stations and subsidies given to the industries and agriculture consumers,” the official said. He added that the KP government had taken up the matter at every forum and was pursuing it rigorously. “We have written our response two days back and waiting for further developments,” he said.
The writer is a journalist based in Peshawar.
