PESHAWAR: The Khyber Pakhtunkhwa government has urged the federal government to convene a meeting of the `out-of-the-box committee` to ensure a just and equitable resolution of the province`s Rs1.5 trillion net hydel profit (NHP) issue.

In a letter to Prime Minister Shehbaz Sharif, KP Chief Minister Ali Amin Khan Gandapur noted that given the province`s `dire financial constraints,` it was imperative to expedite the resolution of this issue.

`I urge your esteemed office to direct the deputy chairman of the Planning Commission to convene a meeting of the out-of-the-box committee at the earliest to ensure a just and equitable distribu-tion. Your leadership facilitating this process will be instrumental in securing the rightful share of resources for the people of KP in line with the constitutional provisions and prior Council of Common Interest decision,` the chief minister insisted.

He drew the prime minister`s attention to Article 161(2) of the Constitution, which, he said, mandated that the net profits earned from the hydroelectric stations will be paid to the entitled provinces at a rate determined by the CCI.

`The Kazi Committee Methodology (KCM) was approved by CCI in January 1991, and to that effect, the first payment of Rs6 billion was made to the then North-West Frontier Province [now KP] in 1992,` he pointed out.

Mr Gandapur also said the KCM was endorsed by the National Finance Commission, upheld by the Supreme Court in 1997 and reaffirmed in CCI meetings in 1991, 1993, 1997, 1998, 2016, 2018,2019 and2022.

He added that in 2016, the then federal government, recognising the financial challenges faced by the KP government; introduced an interim agreementthat was endorsed by CCI afterwards.

`This agreement provided for NHP payments at the rate of Rs1.10/KWH with a five per cent annual indexation, incorporated in Water and Power Development Authority`sgenerationtariff.Accordingly, Wapda makes payments to Punjab and KP. However, these payments have not been made consistently as per the agreed agreement, resulting in an outstanding shortfall of Rs75 billion for KP.

The chief minister noted that in response to a summary moved by the KP government for the full implementation of KCM, the CCI, in a meeting on April 24, 2018, constituted a committee headed by the deputy chairman of the Planning Commission to deliberate on the determination of NHP in light of its decisions.

He added that the committee presented its report in December 2019, which was endorsed by CCI.

`The report confirmed Rs128 billion as KP`s rightful share and Rs52 billion for Punjab in the fiscal year 2016-17, based on KCM,` he noted in the letter.

Mr Gandapur said that in order to address the broader issue of provincial hydropower payments, another commit-tee (out-of-the-box committee) was subsequently formed, which sought input from all stakeholders.

The committee has thus far held five meetings, with the latest taking place on Jan 10, 2025, in which the KP government shared its proposal with the federal government.

The KP government has calculated its NHP dues at Rs1.5 trillion from 2016-17 to 2022-23in line with KCM.

Details available with Dawn show that the KP government, in a meeting on January 10, floated three proposals, including payment of outstanding NHP amounts in accordance with the CCPs decisions, granting control of Wapda`s power stations to the province and implementing an interim NHP payment agreement by enhancing consumer tariff by Rel/Kwh to generate requisite funds.

It also requested the federal government to fund the power house component of Wapda development projects through the Public Sector Development Programme instead of revenues generated through Wapda generation tariff to make funds available for the payment of NHP to the entitled province.