ISLAMABAD: The Khyber-Pakhtunkhwa (K-P) government has accused the federal government of violating the Constitution by allegedly favouring Punjab in the disbursement of net hydel profits (NHP), despite K-P accounting for the bulk of Pakistan’s hydropower generation.
The provincial government claimed that Punjab received around Rs161 billion in hydel profits over the past three years, compared with only Rs88 billion paid to K-P. The Power Division, however, rejected the figures and said K-P had actually received more than Punjab in NHP payments during the last fiscal year.
The dispute centres on Article 161(2) of the Constitution, which provides that net hydel profits earned by the federal government from bulk electricity generation at a hydroelectric station are payable to the province where the station is located.
In a letter to the Power Division, the K-P government urged the federal authorities to rectify what it described as an imbalance in payments and ensure that hydel profits were distributed fairly in accordance with constitutional provisions.
The provincial government argued that K-P accounts for more than 70% of Pakistan’s total hydropower generation, while Punjab contributes a significantly smaller share. It said the actual release of NHP had nevertheless been disproportionately higher in favour of Punjab, resulting in substantial arrears owed to K-P.
According to K-P, it received Rs87.8 billion during the past three years, compared with Rs160.8 billion paid to Punjab. The province claimed that its share of national hydel generation was approximately 70%, against around 30% for Punjab.
For the last fiscal year, K-P claimed that it received only about Rs30 billion, compared with nearly Rs96.8 billion allegedly paid to Punjab.
The Power Division strongly disputed this figure.
Its spokesperson said Punjab received Rs23 billion in NHP during the last financial year, which was Rs10 billion less than the Rs33 billion transferred to K-P.
According to the Power Division, K-P had an opening balance of Rs53 billion and accrued another Rs33 billion during the year, while Punjab had an opening balance of Rs44 billion and accrued Rs11 billion. This brought the combined outstanding amount to Rs141 billion.
“Against this, Rs56 billion was provided to Wapda, of which Rs33 billion was paid to K-P and Rs23 billion to Punjab as net hydel profit,” the spokesperson said.
The Power Division maintained that any calculation suggesting Punjab received Rs96.8 billion in NHP during the last financial year was “factually incorrect”.
K-P cites Rs78.7bn outstanding
The K-P government, meanwhile, said Rs22.6 billion in regular NHP payments up to August 2026 remained outstanding, along with Rs56.1 billion in arrears relating to 5% indexation.
It placed the total outstanding amount at Rs78.7 billion, saying the delayed payments had adversely affected the province’s fiscal position and its ability to meet development and operational needs.
K-P has therefore called on the Power Division to review the payment mechanism and ensure a “judicious distribution” of hydel profits in accordance with the Constitution.
The province pointed to its substantial hydropower output from projects including Tarbela, Warsak, Khan Khwar, Allai Khwar, Duber Khwar and Golen Gol.
During 2024-25, K-P generated around 21.4 billion units of electricity from hydel sources, according to the provincial government. Punjab, by comparison, generated around 8 billion units, with the Ghazi-Barotha Hydropower Project accounting for a major portion of its production.
K-P argued that the disparity in hydropower generation and NHP payments indicated that the federal government was not fully meeting its constitutional obligations.
Payment mechanism disputed
The provincial government also raised concerns over delays in payments by the Central Power Purchase Agency-Guaranteed (CPPA-G), saying Wapda had reported that payments were being made only against invoices from December 2024, creating a gap of around 16 months.
According to K-P, Wapda had requested CPPA-G to release Rs17 billion per month to address accumulated arrears, compared with an estimated monthly NHP requirement of around Rs3 billion each for K-P and Punjab.
The provincial government said the existing pace of payments remained insufficient to clear the outstanding liabilities.
The Power Division offered a different explanation, saying CPPA-G provides the NHP amount to Wapda as part of the overall tariff, which also includes operation and maintenance expenses and other approved costs.
Wapda, according to the federal spokesperson, determines how its available resources are allocated, including funds required to meet NHP obligations, based on its operational requirements.
The spokesperson added that CPPA-G transfers Wapda’s share according to a payment mechanism approved by the National Electric Power Regulatory Authority (Nepra).
The dispute has renewed questions over the implementation of Article 161(2), with K-P insisting that the province hosting and bearing the economic, social and environmental impact of hydropower generation must receive its corresponding constitutional share of net hydel profits.
Story by Shahbaz Rana
