Hydel settlement

How much a province gets paid for the use of its resources has been a long-standing issue in the country. For over 15 years, the centre and Khyber Pakhtunkhwa have been in a tussle over the issue of how to divide the profits from hydel power in the country. A breakthrough has apparently been reached after a long meeting at the Ministry of Finance between the KP government and the finance minister. Represented by the increasingly vocal KP chief minister Pervaiz Khattak, the KP government stood its ground over the division of profits from hydel power as well as other outstanding issues including the provision of gas and financing of the Chashma Right Bank Canal. Over the last year, the KP CM has joined protests against the perceived Punjab bias of the China-Pakistan Economic Corridor projects, which have increased centre-province tensions in the country. KP has been at loggerheads with the centre since the early days of independence; injustice in the division of collective resources and the sharing of revenues has been central to the conflict.

The meeting at the Ministry of Finance came to an agreement over the payment of Rs70 billion in arrears on account of Net Hydel Profit to the KP government; the agreement is to be ratified by the prime minister. However, one must caution that the issue had been resolved in the past too but the agreed measures were not implemented. The arrears will still not be paid lump sum and an instalment plan has been agreed over the next three financial years. Additionally, an agreement was also reached over the timeline to make a power purchase agreement with respect to the Pehur Hyrdo Power Project. On the Chashma Right Bank Canal project, which was hampered by floods and flawed design, the government agreed to carry out another feasibility study of the project; in this a 65:35 ratio of financing between the federal and provincial governments was agreed to. While the federal government has presented the agreement as a success of its policy of reconciliation, the issue has frankly taken too long to be addressed. In the context of what has been a rather precarious federation in Pakistan’s history, the fact is that meetings of the Council of Common Interest (CCI) are held after very long delays. Eventually, the KP government has had its legitimate demands accepted. But this is an issue that should have been resolved decades earlier. The federal government would be well-advised to ensure coordination with provinces, especially as it pursues the ambitious CPEC. If these concessions to KP were given to pacify the objections on CPEC, the centre should get ready for doing more for other provinces as well.