K-P presses Centre for fair hydel profits

The spokesperson said that contrary to the claim of Rs96.8 billion payment to Punjab in the last fiscal year alone, the provincial government actually received Rs23 billion. "This was Rs10 billion lower than the money that was transferred to Peshawar as its share in hydel generation," the spokesperson said.

The K-P government of the Pakistan Tehreek-e-Insaf (PTI) had written to the Power Division to rectify the wrongdoing by judiciously distributing the profits, based on the power generation and in line with the Article 161(2) of the Constitution.

Despite having estranged political ties, the PTI's provincial government has been supporting the federal government on financial matters having larger implications for the country and the dispute over hydel profits could undermine this understanding, a senior K-P government official said., K-P has the major share in the hydel generation but "the actual release of net hydel profits has been disproportionately higher" for the Punjab.

"This practice is not in conformity with Article 161 (2) of the Constitution," an official correspondence reads. "It reflects preferential treatment in disbursement, and it has also resulted in an accumulation of huge arrears, particularly for Khyber-Pakhtunkhwa," reads the correspondence with the federal secretary Power Division.

During the last three years, The K-P government said it received only Rs87.8 billion compared to Rs160.8 billion paid to the Punjab., its share in hydel generation was equal to 70% of the total generation from water-based power compared to 30% share of Punjab.

In the last fiscal year, K-P received only Rs30 billion compared to nearly Rs96.8 billion paid to Punjab, the provincial government claimed. "The reported figure of Rs96.8 billion as net hydel profit paid to Punjab is incorrect.

During the last financial year, Punjab received Rs23 billion on account of net hydel profit", said the Power Division spokesperson. He said that based on billing data, K-P had an opening balance of Rs53 billion and accrued a further Rs33 billion, while Punjab had an opening balance of Rs44 billion and accrued Rs11 billion.

Thus, the combined amount stood at Rs141 billion. "Against this, Rs56 billion was provided to Wapda [Water and Power Development Authority], of which Rs33 billion was paid to K-P and Rs23 billion to Punjab as net hydel profit", the spokesperson said.

"Any calculation suggesting that Punjab received Rs96.8 billion as net hydel profit during the last financial year is factually incorrect. "The K-P government said that the regular net hydel profit amounting to Rs22.6 billion up to August 2026, along with arrears on account of 5% indexation amounting to Rs56.1 billion were still outstanding.

This aggregates to a total outstanding amount of Rs78.7 billion, it added. It said that the shortfall has adversely affected the fiscal position of the province and its ability to meet development and operational requirements.

It urged the Power Division to examine the matter and take appropriate action to ensure judicious distribution of the profits in light of the Constitution of Pakistan.

161(2) of the Constitution, the net hydel profits (NHP) earned by the federal government, from the bulk generation of power at a hydro-electric station shall be paid to the province in which the hydro-electric station is situated.

The constitutional principle is that the province bearing the environmental, social and economic impact of hydel generation should receive the corresponding net hydel profit. In 2024-25, K-P produced 21.4 billion units from hydel sources – mainly Tarbela Dam, Warsak, Khan Khwar, Allii Khwar, Duber Khawar and Golen Gol.

Compared to this, the hydel production by Punjab was equal to 8 billion units, with Ghazi Brotha hydropower project producing the bulk of the units. The difference between the hydel production by both the provinces and the disbursements of the funds suggest that the federal government was not fulfilling its obligations, the K-P government says.

K-P reiterates that it remains the largest hydropower-producing province of Pakistan, contributing more than 70% of total hydel generation to the national grid. Punjab's hydel generation is comparatively limited and is mainly attributable to Ghazi Barotha Hydel Power Project and a few other projects.

Hence, K-P has a major constitutional entitlement to NHP based on hydel generation within the province. The K-P government stated that the Wapda has also reported that Central Power Purchase Agency Guaranteed (CPPA-G) payments were substantially delayed, with payments being made only against invoices of December 2024, resulting in a gap of around 16 months, while arrears remain unpaid.

Wapda has requested CPPA-G to release Rs17 billion per month to address the outstanding position, against the monthly NHP requirement of approximately Rs3 billion each for K-P and Punjab. The existing pace of payment, however, remains insufficient to clear the accumulated arrears,.

But the spokesperson for the Power Division said that the CPPA-G provides the NHP amount to Wapda as part of overall tariff, including operation and maintenance and other approved costs. Wapda determines the allocation of its available resources, including the amount required to meet NHP obligations, based on its operational requirements, said the spokesperson.

The spokespersons added that the CPPA-G transfers Wapda's share in accordance with the mechanism approved by the National Electric Power Regulatory Authority (Nepra), which governs the relevant payments.