ISLAMABAD: The Power Division has urged the federal government to delink Net Hydel Profit (NHP) payments from electricity tariffs, warning that passing on Rs170 billion in arrears to consumers would jeopardize power sector reforms and investor confidence.
In a report submitted to the Council of Common Interests (CCI), the division proposed that NHP dues owed to Khyber Pakhtunkhwa and Punjab be settled through the federal budget or from WAPDA’s hydropower earnings, rather than being included in electricity bills. It noted that the existing tariff-based NHP model is outdated, fiscally unsustainable, and incompatible with current legal and constitutional frameworks.
The Power Division, along with the Sindh government, also rejected provincial demands for transferring hydropower assets. It emphasized that WAPDA’s projects—financed through PSDP, loans, and national resources—serve broader national objectives, including irrigation and flood control, beyond electricity generation.
Currently, KP receives Rs39–40 billion annually, mainly from Tarbela Dam, and demands an additional Rs300 billion. Punjab, owed around Rs115 billion, receives payments from projects like Ghazi Barotha. NHP is currently recovered via a Rs1.155 per unit surcharge on electricity, based on the 1985-86 AGN Kazi Methodology, when hydropower constituted 74% of the energy mix. That share has since dropped to 27%.
Citing Article 161(2) of the Constitution, the Power Division argued that NHP should reflect actual generation within provincial borders and should not be treated as a blanket levy on all electricity consumption nationwide.
The division also opposed creating an escrow account for NHP, dismissing KP’s proposal as inconsistent with constitutional and financial regulations. Sindh echoed these concerns and called for consultations with the Indus River System Authority and Economic Affairs Division on the national use of water reservoirs.
The Power Division concluded that revising NHP calculations and shifting payments away from tariffs would safeguard power affordability and support structural reforms.
Story by Khaleeq Kiani
