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KP, centre at odds over hydel payment formula

KP, centre at odds over hydel payment formula

PESHAWAR: A war of words has erupted between the Khyber Pakhtunkhwa and federal governments over the latter’s reluctance to agree to the settlement of net hydel profit (NHP) share of the province in line with the AGN Kazi formula.

With the issue of the province’s NHP share settlement in line with the Kazi formula a subject of discussion for more than a year, the KP government’s officials were under the impression that they will manage to get a good deal from the centre due to the prime minister’s interest in the province.

However, scepticism is gradually replacing the initial enthusiasm as the power division had written a letter to planning and development minister Makhdoom Khusro Bakhtiar earlier in June detailing its opposition to the implementation of the Kazi Committee Methodology (KCM) for the NHP payment.

Ministry insists Kazi methodology not implementable; dept says reopening of settled matter to harm national interest

The letter even went to the extent of calling the KCM a failure, which, it said, was ‘neither in line with the Constitution nor implementable’.

The letter has touched a raw nerve in the energy and power department, which has also shot an angry rejoinder to the minister calling the power division’s views ‘irresponsible’ and insisting that the reopening of a settled matter amounts to putting the national interest in jeopardy.

Dawn has copies of both letters.

Sources told Dawn that in April 2018 when the then chief minister, Pervez Khattak, made a hue and cry over the issue in a Council of Common Interest (CCI) meeting, the forum decided to form a committee headed by the deputy chairman of the Planning Commission to determine the NHP to be paid to the province.

In Sept 2018, Prime Minister Imran Khan directed the committee to present its report to the CCI within a month but even after the passage of almost one year, the issue stands unsettled.

“Our recent meetings with the federal officials on the subject remained heated and acrimonious as the federal power secretary appears to be hell bent on denying the province’s NHP payment under the KCM on one pretext or the other,” a senior KP government official told Dawn.

The letters show that both sides have contentious view of the role of the committee formed by the CCI as the power division thinks it was mandated to deliberate upon issues arising out of discussion in the forum.

“Any interpretation that limits this mandate to simple calculation [of NHP] is a huge oversimplification and would serve no purpose,” noted the power division.

However, KP’s letter declared that the CCI did not reverse its earlier decisions nor did it direct the committee to KCM for the computation of NHP.

“By attempting to reopen KCM, power division is assuming a role which the CCI has nowhere entrusted to it,” as committee role was determine NHP amount paid to province and power division is attempting to make it controversial by proposing reopening.

The power division is also of the view that KCM was not in conformity with the Constitution and that the KCM had never been implemented since its formulation in 1985-86 and even the 2006 arbitration award was not based on it.

The KP government insisted that the contention that the KCM is not in line with the Constitution was not only irresponsible but it also amounted to insubordination, defied the repeated decisions of CCI and contempt of the Supreme Court’s 1997 decision regarding NHP payment.

Referring to a 2016 memorandum of understanding signed between KP and federal, the power division said that then full and final settlement of all previous liabilities took place, which was not based on KCM and endorsed by KCM and still NHP to KP is being paid under this decision. It also equated CCI endorsement of the MoU as something that annuls forum previous decisions.

“KCM is a formula which not only fails to envisages the cost of various fuels which go into creation of energy basket but also fails to realise the seasonality of hydel generation,” and “NHP should be based on a practical and consensus based formula in accordance with provisions of constitution and in the absence of such consensus KCM can be detrimental to national interest,” it read.

However, the KP government said the 2016 MoU was an interim arrangement and insisting it overtakes all previous CCI decisions is ‘erroneous, misleading and exposes a clear bias’.

It said following the KP government’s protest, the word ‘onwards’ was deleted from the ‘2016-17 and onwards’ during the CCI meeting in May 5, 2017, the MoU being an interim arrangement and not permanent to cover the coming period.

The government said the KCM was developed through a consensus of all stakeholders, including the centre, KP, National Finance Commission, federal cabinet and CCI, with the Supreme Court putting a final seal on the matter with its 1997 judgement, so there was no need for reopen a settled matter as it would lead to further complications.

The government said it was very irresponsible to say that the KCM is detrimental to national interest and that the reopening of a settled matter was tantamount to putting the national interest in jeopardy.

Published in Dawn, August 7th, 2019

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