CCI, SC rule violation: NHP being paid to IPPs for tariff adjustment

ISLAMABAD: The billions of Net Hydel Profit (NHP) collected from consumers and payable to the provinces is being paid to expensive Independent Power Plants (IPPs) for tariff adjustment in violation of the Council of Common Interest (CCI) and Supreme Court of Pakistan decisions.

This was revealed before the Senate Standing Committee on Water Resources which met with Shamim Afridi in the chair here on Tuesday. The committee discussed the starred question raised by Senator Mushtaq Ahmed in the House regarding the payment of royalty on account of electricity generation to the province of Khyber Pakhtunkhwa under AGN Kazi formula and the reasons of delay in payment so far.

Mushtaq said that NHP is being paid for the last four decades in the light of CCI, National Finance Commission (NFC), Federal Cabinet and SC decisions and interpretation. However, in violation of all the four fora, WAPDA has opened new Pandora box while disputing Kazi formula for not paying NHP arrears which is also contempt of the court.

The committee recommended that KCM methodology should not be disputed, give a framework with timeline for paying NHP, besides the payment should be made in dollars.

WAPDA informed the committee in writing that a committee (headed by A.G.N Kazi the then Dy. Chairman Planning Commission) developed a methodology (called KCM) for working out NHP payable to the provinces, which was approved by the CCI in 1991.

However, there were certain fundamental limitations embedded in the internal structure of the A.G.N. Kazi Committee Report which are not in line with the spirit of the constitutional provisions and also gave rise to the conflicting claims and different interpretations by GoKP (previously NWFP) and WAPDA due to which the KCM could not be implemented.

In August 1992, GoP mediated on the issue and directed WAPDA to pay NHP of Rs.500 million per nonth to GoKP as adhoc payment, subject to adjustment after computation of NHF by the Auditor General Pakistan as per KCM. However, the GoKI did not agree on computation of NHP made by the Auditor General Pakistan. Subsequently, GoP ormed an Arbitral Tribunal in 2005 which observed the KCM as impracticable.