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Power to the Frontier
A tribunal has given its verdict on the long outstanding issue of sharing hydroelectric power profits. But the critics say the decision fails to resolve the issue for good
By Raza Khan Muhammadzai
A decision has finally been given by the tribunal set up to resolve the longstanding row between the federal government and the North West Frontier Province (NWFP) on the sharing of profits generated by hydro-electricity production. But, as anticipated, the critics of the decision say it fails to address the real issue.
The tribunal has not made its decision public but, according to the provincial government of Muttehida Majlis-e-Amal (MMA), Water and Power Development Authority (Wapda) has been told by the tribunal to pay Rs 193.763 billion to the Frontier as cumulative arrears since 1991. These arrears will be paid in five years. This still leaves the big question unresolved: The tribunal has not decided how much money the province should get from the net profit earned on hydro-electricity generation between 1974 and 1990. Those who favour the provincial case claim the amount of money outstanding on this count is as high as Rs 500 billion.
To be fair to the tribunal, it was not supposed to adjudicate this claim. But the MMA leaders have been telling people that they had successfully compelled the federal government to resolve this critical issue which has been lingering since 1974. Chief Minister Akram Durrani has spared no occasion to claim that the federal government owed the provincial government as much as Rs 545 billion in outstanding share of the profit, implying that the tribunal's decision would cover all this money and not just a small portion of it. In fact, soon after the agreement for the setting up of the tribunal, he had vowed that the provincial government would claim the payment of Rs 450 billion (which obviously included unpaid profits since 1974) from the federal government instead of its earlier claim of Rs 340 billion. He had said: "The provincial government would prove its fresh claim at the arbitration tribunal..." (The News, December 2, 2005). (The exact amount of the unpaid profits
varies due to differences in the computation of interest rates.)
But now it seems the provincial government has softened its stance considerably. Sirajul Haq, senior minister in the NWFP cabinet, claims that the tribunal's decision is a big victory for the province, even though the money it has decided upon falls well short of what the MMA government was asking for. When asked by The News on Sunday how the provincial government reacted to the tribunal's decision, which does not take into account the unpaid profits for the period between 1974 and 1990, the minister says: "We haven't given up our claim on the hydro-electricity profits for that period, but we also believe it's a big achievement to make the central government pay something instead of nothing at all, which has been the case so far."
Siraj argues that every year the province had to virtually beg the federal government to get as little as Rs 6 billion from its share in the profit, but now the provincial government will not have to do this because the tribunal has raised the annual payment to around Rs 24 billion rupees. "It is really an achievement, " he says.
But Haji Adeel, a former finance minister of the province and a prominent leader of the Awami National Party, believes that the MMA government deliberately kept secret the terms of reference of the tribunal to claim credit for whatever decision it gave. He claims that he came to know through private sources that the hydro-electricity profits for the period between 1974 and 1990 were to be taken up separately. He alleges that the MMA government, by agreeing to keep the two periods separate, has done a gross injustice to the province.
The issue of sharing of net hydroelectric power profits has cost the NWFP, the province which produces that major portion of the hydroelectric power in the country, dearly. The failure to resolve the issue has directly affected the development of the most underdeveloped parts of Pakistan. In fact, the dispute has a number of times put the very economic and financial sustainability of the province at stake, which in turn has generated numerous socio-economic and political problems.
That the issue is important is shown by the fact that the agreement to set up the tribunal to resolve it was signed in the presence of Prime Minister Shaukat Aziz at his official residence. Another significant aspect of the agreement was that it came just weeks ahead of President Pervez Musharraf's statement that he was going to build Kalabagh Dam, come what may.
What the prime minister said at the signing ceremony also confirms what Haji Adeel claims. Shaukat Aziz has said "...tribunal would resolve the 15-year-old dispute of net profit from hydroelectric projects." This clearly shows that in his view the issue does not date back to 1973. It also confirms that the federal government had predetermined ideas about the tribunal's mandate and verdict, exhibiting an unwillingness to recognise the real bone of contention.
To put the issue in its proper context, the NWFP started receiving meagre amounts of money as its share from hydroelectric power generation in 1991 after a decision by the Council of Common Interest (CII). In 1991, the province received Rs 5.987 billion from the federal government in this head. The highest amount of money received by the province on this count was Rs 7.80 billion in the fiscal year 1994-95. In theory, at least, this should not mean that the dispute started in 1991. But somehow the federal government managed to limit the terms of reference of the agreement to form the tribunal only to the period starting from that year. The agreement clearly states that the NWFP government has to take up the (real) issue of unpaid profits from hydroelectric power between 1974 and 1990 "separately" with the federal government. Though this reference to the period between 1974 and 1990 recognises that the province has the right to get a share from the profit from those years
and not from 1991, the attempt to separate the two periods is aimed at further perpetuating the confusion. The critics of the agreement say the bifurcation has been incorporated to benefit the federal government and Wapda. The MMA government should have asked the federal government to solve the entire issue at once and not just a portion of it, they argue. But by becoming a signatory to the agreement, the provincial government has ignored and breached the trust of its electorate and compromised the economic interest of people of the NWFP, they add.
According to Haji Adeel: "Through the tribunal's decision, the MMA government has been either deceived (by the federal government) or it has deceived itself." He says it is totally unjustified to claim the tribunal's decision an achievement. "It's beyond comprehension to be satisfied with only Rs 100 billion when your original claim amounts to Rs 500 billion. This is not the private income of MMA leaders. It's rather the trust of the people of the NWFP, which the provincial government has betrayed," Adeel tells TNS.
He claims the MMA government, by accepting the tribunal's decision, has rubbished an earlier formula given by a committee headed by a former bureaucrat, AGN Kazi. "In its decision the tribunal says the NWFP counsel Hafeez Pirzada has sought only 10 per cent annual increase in the province's share of the profit. This is a clear violation of the Kazi formula. Most importantly, the tribunal decision covers the time period between 1991 and 2005. There is no reference in it that the 10 per cent increase will continue after 2005. The MMA leaders' statements on this count are plain lies," Adeel argues. He claims that the NWFP, by agreeing to the the terms of reference of the tribunal, has also forfeited accumulated interest over the unpaid profits which equals Rs 2.56 billion.
He says people of the NWFP must know that Wali Khan (Awami National Party's founder and president) only signed the 1973 Constitution when he forced Zulfikar Ali Bhutto to include Article 161 (A), related to the natural gas royalty and Article 161 (B) related to the electricity royalty.
The opposition parties in the Frontier also criticise the provincial government for nominating wrong people to represent the province on such an important issue. One of them, Senator Khursheed Ahmed, is not even a resident of the NWFP and his very election as a Senator from the NWFP happened in the face of vociferous agitation from the opposition parties. The other nominee, Abdullah, is not a public representative at all, though he is a very seasoned retired bureaucrat. Both the men are staunch loyalists of the Jamaat Islami, a party which does not have a longstanding stance on the issue and is, therefore, unlikely to know all its pros and cons.
The critics of the tribunal's decision point out that it has the potential to become a reference point in the future disputes on the sharing of hydroelectric power profits, thus bypassing the constitutional provisions in this regard. Prime Minister Shaukat Aziz, during the signing of the agreement to set up the tribunal, had said the "solution to the problem would be based on justice and would provide clear guidelines to interpret the legal aspects regarding the profits of hydroelectric projects" (The News, November 1, 2005). Does this means that the decision on the tribunal's mandate and temporal jurisdiction will have precedence over Article 161 (B) of the Constitution, which allows the NWFP to get profits from the hydroelectric power projects located there from the day the constitution took effect?
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