Net Hydel Profit payment: Wapda asks CPPA-G to release Rs17bn per month

ISLAMABAD: The Water and Power Development Authority (Wapda) has asked the Central Power Purchasing Agency–Guaranteed (CPPA-G) to release Rs17 billion per month for onward payment to the governments of Khyber Pakhtunkhwa and Punjab as Net Hydel Profit (NHP).

Responding to a letter from the Chief Executive Officer of CPPA-G, Wapda’s Member Finance said that Wapda’s hydroelectric receivables had reached Rs232.954 billion as of October 31, 2025. The breakup is as follows: (i) energy receivables – Rs42.868 billion; (ii) NHP payables to provinces – Rs108.814 billion (GoKP: Rs64.550 billion; GoPb: Rs44.264 billion); (iii) hydroelectric arrears – Rs81.272 billion.

According to Wapda, the aging analysis of unpaid receivables shows that CPPA-G is currently making payments only against Wapda’s hydroelectric invoices for December 2024, leaving a 10-month overdue billing gap. No payments have been made against hydroelectric arrears.

Federal govt and provinces: Senate body seeks ‘out of box’ fix for NHP dispute

Wapda further stated that during FY 2024-25, despite irregular fund releases by CPPA-G, it paid Rs36 billion in NHP to the Government of Khyber Pakhtunkhwa. At present, monthly releases from CPPA-G are insufficient for Wapda to pass on Rs3 billion each to both Khyber Pakhtunkhwa and Punjab while also meeting essential working capital needs, including O&M, development, and debt servicing.

The Member Finance added that during the clearance of circular debt in FY 2023-24, Wapda’s unbilled Circular Debt Liability (CDL) related to the Diamer-Bhasha Dam — amounting to Rs35.442 billion — was serviced against energy receivables instead of non-energy receivables, severely straining Wapda’s cash flow.

Regarding the increased share of NHP for Khyber Pakhtunkhwa, Wapda has requested that CPPA-G enhance the monthly release to Rs17 billion for onward payment to both provinces, in addition to clearing the overdue hydroelectric receivables at the earliest.

Separately, the Khyber Pakhtunkhwa government has sought the Prime Minister’s support for an “out-of-the-box” solution to the NHP issue, which remains unresolved between Wapda and the provinces.

In a letter to Prime Minister Shehbaz Sharif, the KP government recalled that the Kazi Committee Methodology (KCM) was approved by the CCI in January 1991, leading to the first payment of Rs6 billion to the then North-West Frontier Province in 1992. The methodology was later endorsed by the National Finance Commission, upheld by the Supreme Court in 1997, and reaffirmed in multiple CCI meetings in 1991, 1993, 1997, 1998, 2016, 2018, 2019, and 2022.

To address KP’s financial challenges, the federal government introduced an “interim arrangement” endorsed by the CCI in 2016. Under this, NHP payments were set at Rs1.10/kWh with a 5% annual indexation. This was incorporated into Wapda’s tariff, adding approximately 18 paisa per unit to consumer bills.

Wapda subsequently began making NHP payments to Punjab and Khyber Pakhtunkhwa; however, the KP Government says these payments have not been made consistently as per the agreed mechanism, resulting in an outstanding shortfall of Rs75 billion for the province.

The “Out-of-the-box committee” formed to resolve the issue has held five meetings so far, during which stakeholders were asked to submit their proposals. The government of Khyber Pakhtunkhwa has already submitted its proposal to the Planning Commission.

Copyright Business Recorder, 2025