The Chief Minister of Khyber Pakhtunkhwa, Ali Amin Gandapur, has sent a letter to Prime Minister Shahbaz Sharif, demanding the payment of the province's hydropower profit arrears.
In the letter, it is mentioned that Article 161(2) of the Constitution of Pakistan clarifies the matter of hydropower profit. According to the Constitution, the profit earned from hydropower projects should be given to the respective provinces, while its rate is to be determined by the Council of Common Interests (CCI).
The CCI approved the Qazi Committee Methodology (KCM) in 1991, under which a payment of six billion rupees was made to the then North-West Frontier Province (Khyber Pakhtunkhwa) in 1992. The KCM formula was further endorsed by the National Finance Commission and the Supreme Court of Pakistan in 1997.
In 2016, the federal government introduced an interim mechanism on this matter, which was also approved by the CCI. According to this mechanism, the hydropower profit rate was set at Rs. 1.10 per kilowatt-hour, with an annual increase of five percent. However, due to irregular payments under this mechanism, arrears of Rs. 75 billion accumulated for Khyber Pakhtunkhwa.
In 2018, the Khyber Pakhtunkhwa government approached the federal government for full implementation of the KCM formula, resulting in the CCI forming a committee led by the Deputy Chairman of the Planning Commission to determine the hydropower profit rate. This committee presented its report in December 2019, which the CCI approved. The report confirmed Rs. 128 billion in arrears for Khyber Pakhtunkhwa under the KCM formula for the fiscal year 2016-17.
Subsequently, another committee was formed to propose an "out-of-the-box" solution for the provinces' hydropower profit payments. This committee sought suggestions from all stakeholders, and the Khyber Pakhtunkhwa government submitted its proposals to the Planning Commission.
The Chief Minister of Khyber Pakhtunkhwa has requested the Prime Minister to direct the Planning Commission to convene a meeting of the "out-of-the-box" committee as soon as possible, considering the financial crisis faced by Khyber Pakhtunkhwa. The aim is to find a fair solution to this longstanding issue in accordance with constitutional requirements and CCI decisions. The Chief Minister expressed hope that the Prime Minister will play a leading role in ensuring the constitutional and legal rights of the people of Khyber Pakhtunkhwa.
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