Non-payment of NHP arrears to KP

Non-payment of KP’s hydro profit

Realising that Wapda was too weak financially and reluctant to provide the money, KP has focused on the federal government, being guarantor of the AT award. – File photo

An all-party conference held in Peshawar recently has urged the federal government to pay the net hydro-profit arrears owed by the Water and Power Development Authority to Khyber Pakhtunkhwa at the earliest.

Expressing concern over the capping of the profit at Rs6 billion, the conference backed the provincial government in its efforts to get the arrears.

Prime Minister Yousuf Raza Gilani had recently asked the federal finance secretary to sit with his KP counterpart to sort out the matter.

The Arbitration Tribunal (AT), headed by Justice Ajmal Mian, had decreed that the Wapda would pay Rs110 billion profit arrears in equal installments of Rs25 billion to KP in July each year. Last year, the federal government paid Rs25bn but it has released only Rs4.6bn so far this year. The delay in payment of arrears has exposed the province to financial strains.

The issue has been a major irritant since the 1973 constitution took effect. In September 2008, in a meeting with a KP jirga, Gilani had formed a committee of experts to present its report within two months on the issue of capped net hydro profit (NHP) amount. However, the committee is yet to give its decision.

While participating in the committee, KP has opposed the reopening of issues already decided/settled in the AT and NFC awards.

The KP chief minister has also opposed the adjustment of NHP against federal government loans as is being suggested by some quarters.

Senator Haji Muhammad Adeel, a former KP finance minister and NFC member, says Wapda owes us around Rs300bn now.

“Apart from Rs75bn NHP arrears, Wapda owes us over Rs55bn for 10 per cent interest on the outstanding amount and Rs203bn unpaid increased NHP amount post AT award and another Rs40 billion for this year’s NHP,” he says.

Adeel laments that Wapda has capped the annual NHP at Rs6bn, deviating from A.G.N Kazi formula, unanimously endorsed by the NFC in February 1988, approved by the Council of Common Interests in January 1991 and validated by the presidential NFC order No3 of 1991. The NFC had recommended increase of 10 per cent on Rs6 billion for future years.

“While Punjab is being paid Rs5bn for 100MW of electricity produced at the Ghazi Barotha power project, KP is given Rs6bn for 4,000MW produced by it, while power tariff has also been increased manifold since then,” he adds.

Wapda, however, proposed Rs72bn against Rs83bn already paid, thus claiming Rs10.9bn as overpayment to KP while maintaining that surcharges of Rs829bn and other revenues of Rs195bn could not be used for NHP determination. It also stubbornly rejected as unconstitutional the Kazi formula.

Realising that Wapda was too weak financially and reluctant to provide the money, KP has focused on the federal government, being guarantor of the AT award.

Based on the NFC award, the AT award was binding on all parties. But Wapda challenged it in a civil court. Feeling betrayed, KP also went to the Supreme Court against this move where the case is still pending.

Aftab Ahmad Khan Sherpao says: “Arbitration was unnecessary in the matter. The NHP was/is the constitutional right that was accepted by A.G. N. Kazi Commission established in 1987, also by the Council of Common Interest and guaranteed by the constitutional provisions; no federal government could deny net hydro profit to the province. The KP government must stick to the Kazi formula. But we would also like to know as to what has happened to the Hydro Development Fund and the money provided thus far,” he adds.

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Original text of the article

The Net Hydel Profit dispute between KP and WAPDA/federal govt

By Tahir Ali

An all parties’ conference in Peshawar recently called upon the federal government to pay to Khyber Pakhtunkhwa its net hydel profit (NHP) arrears the Water and Power Development Authority (WAPDA) owes to it as soon as possible. The conference also expressed concern over capping of NHP at Rs6 billion and resolved to back the KP government in its endeavours to get NHP arrears.

Khyber Pakhtunkhwa intends to take up the issue forcefully in coming days. Prime Minister Gilani recently asked the federal finance secretary to sit with his KP counterpart to sort out the matter.

The Arbitration Tribunal (AT) headed by Justice Ajmal Mian had decreed that WAPDA would pay Rs110bn NHP arrears in equal instalments of Rs25 billion on July each year.  Last year, the federal government paid Rs25bn but it has released only Rs4.6bn till date and intends to release the amount in bits and pieces. KP abhors this scenario as it has projected the money in its revenue estimates and the denial or delaying of the amount could expose the province to financial problems.

The issue has been a major irritant since 1973 when the present constitution took effect. In September 2008, in a meeting with a KP jirga, Gilani had formed a committee of experts to present its report within two months on the issues of capped NHP amount, NHP up to 2004-05 and from 2005-06  onwards along with mark up but the committee is yet to give its decision.

KP finance ministry’s white paper says while participating in the committee, KP shall not accept reopening of issues already decided/settled, that any settlement must conform to the parameters of AT and NFC awards, and that calculation of NHP shall be in accordance with AGN Qazi formula (QF).

Khyber Pakhtunkhwa chief minister wants the NHP amount in cash and would not accept its adjustment against federal government loans as is being suggested by some quarters.

Senator Haji Muhammad Adeel, former KP finance minister and member of KP national finance commission (NFC) team says WAPDA owes us around Rs300bn now. “Apart from Rs75bn NHP arrears, as per QF and AT award, WAPDA owes us over Rs55bn for 10 per cent interest on the outstanding amount and Rs203bn for due but unpaid increased NHP amount post AT award and another Rs40 billion as this year’s NHP,” he says.

Adeel laments that WAPDA has capped the annual NHP at Rs6bn against the dictates of QF that had been unanimously endorsed by NFC meeting in February 1988, approved by Council of Common Interests in January 1991 and validated by presidential NFC order No3 of 1991. The NFC had recommended increase of 10 per cent on Rs6 billion for future years.

“While Punjab is being paid Rs5bn for around 100MW of electricity produced at Ghazi Barotha power project, KP is given Rs6bn despite the fact that it produces around 4000MW and power tariff  has been increased manifold since then,” he adds.

The AT had agreed with QF for calculating NHP for 1991-92 but did not apply the QF mechanism for the years onward and rather adhered to a mechanism of compound indexation of 10% per year in NHP using Rs6.9bn as benchmark which was calculated on the basis of QF by WAPDA for 1991- the year prior to restructuring and also when no surcharges and additional surcharges were levied.

In the AT, the then MMA government had claimed Rs595 billion from 1991-2005 but it had abandoned NHP demand from 1973 to 1991 as well as interest on the amount WAPDA owed to KP. It further demanded the revenues should include all the revenues paid by the consumers, including surcharge and additional surcharges.

WAPDA however proposed Rs72bn against Rs83bn already paid, thus claiming Rs10.9bn as overpayment to KP and said that surcharges of Rs829bn and other revenues of Rs195bn could not be used for NHP determination. It also stubbornly rejected as unconstitutional the QF.

KP, realising that WAPDA is too weak financially or reluctant to provide the money, has focussed on the federal government being guarantor of the AT award.

Based on the NFC award, AT award was binding on all parties. But WAPDA challenged the award in a civil court. Sensing betrayed, KP also went to the Supreme Court against this move where the case is still pending.

Aftab Ahmad Khan Sherpao, an opposition politician in the province, says the same coalition at the centre and province should have no problem in increasing annual NHP, giving the province its arrears along with mark up for the entire period. But in case they fail to do so, ANP should come out of the federal government.

“Arbitration was unnecessary in the matter. NHP was/is the constitutional right that was accepted by AG N Qazi commission, established in 1987 by CCI and guaranteed by constitutional provisions and no government could have denied NHP to the province. However KP government must stick to the QF. But we would also like to know as to what happened to the Hydel Development Fund and the money provided thus far,” he adds.

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Unfair Net hydel profit share

Water and Power Development Authority

Water and power development authority

 share

Steps should be taken to ensure actual amount of hydel profits to Khyber Pakhtunkhwa

By Tahir Ali

http://www.jang.com.pk/thenews/sep2011-weekly/nos-18-09-2011/pol1.htm#5

The debate on the net hydel profit (NHP) arrears the Water and Power Development Authority (WAPDA) owes to Khyber Pakhtunkhwa has resurfaced with an all parties’ conference in Peshawar, unanimously calling upon the federal government to pay the NHP arrears of Rs258 billion as soon as possible.

Held under the chairmanship of Chief Minister Amir Haider Khan Hoti and attended by all major political parties within or without the assemblies, the conference expressed concern over capping of NHP at Rs6 billion and resolved to back the KP government in its NHP endeavours.

Senator Haji Muhammad Adeel, former finance minister and member of KP national finance commission (NFC) team, laments that WAPDA has capped the annual NHP at Rs6bn against the dictates of AGN Qazi formula (QF), which was unanimously endorsed by NFC meeting in February 1988, approved by Council of Common Interests in January 1991 and validated by presidential NFC order No3 of 1991. The NFC had recommended increase of 10 percent on Rs6 billion for future years. He says as per KP’s calculation based on the QF, its annual NHP for 2010-11 stands at Rs40bn against Rs6bn.

“While Punjab is being paid Rs5bn for around 100MW of electricity produced at Ghazi Barotha power project, KP is given Rs6bn despite the fact that it produces around 4000MW and power tariff has been increased manifold since then,” he says.

Besides the fact that Rs6bn was determined based on power tariffs of 1987 at the rate of Rs0.33 per unit, in dollar terms in 1991, Rs6bn equaled $200 million. Now it can fetch around $70 million with the current rate of return.

The Arbitration Tribunal (AT) headed by Justice Ajmal Mian had agreed to QF for calculating NHP for 1991-92 but did not apply the QF mechanism for the years onward and rather adhered to a mechanism of compound indexation of 10 percent per year in NHP, using Rs6.9bn as benchmark which was calculated on the basis of QF by WAPDA for 1991. While the provincial conference projected the arrears at Rs258bn,

Adeel says it is around Rs300bn now. “Apart from Rs75bn NHP arrears (the AT decreed it at Rs110bn but Rs35bn have been paid to the province till now), as per QF and AT award, WAPDA owes us over Rs55bn for 10 percent interest on the outstanding amount and Rs203bn for due but unpaid increased NHP amount post AT award and another Rs40 billion as this year’s NHP,” he says.

Had that period and amount also been included, KP’s outstanding amount against WAPDA would have been much more than at present. It further claimed that according to the QF, the revenues should include all the revenues paid by the consumers, including surcharge and additional surcharges.

WAPDA, however, proposed Rs72bn against Rs83bn already paid, thus claiming Rs10.9bn as overpayment to KP and said that surcharges of Rs829bn and other revenues of Rs195bn could not be used for NHP determination. It also stubbornly rejected as unconstitutional the QF.

KP, realising that WAPDA is too weak financially or reluctant to provide the money, has focussed on the federal government being guarantor of the AT award and rightly so.

Para 3 and 4 of the Presidential NFC order No3 of 1991 states: The net profits from the bulk generation of power at the hydro-electric stations located in the provinces shall be paid by the concerned undertaking established or administered by the federal government (i.e. WAPDA) to the provinces and that the federal government shall guarantee payment of net profits to the provinces concerned by the above undertaking on a regular basis.

Based on the NFC award, AT award was binding on all parties. It had been signed by the then WAPDA chairman Tariq Hamid and secretary finance KP and endorsed by the federal secretary water and power from the federal government. But WAPDA challenged the award in a civil court. Sensing betrayed, KP also went to the Supreme Court against this move where the case is still pending.

When the present ANP-led coalition government was installed, it soon formed an all parties Jirga headed by CM Hoti that met Prime Minister Yousaf Raza Gilani in September 2008 and apprised him of their grievances on capped annual NHP and arrears.

The PM promised to solve the problems and formed a committee of experts to present its report within two months on the issues. Later in October 2009, the PM announced payment of Rs110 billion arrears on behalf of WAPDA in five annual installments to be given on July 1 each year with the promise to release first installment of Rs10 but it was paid only in December when the provincial NFC team threatened boycott of its proceedings.

The technical committee is yet to give its decision. KP finance ministry’s white paper says that while participating in the committee, KP shall not accept reopening of issues already decided/settled, that any settlement must conform to the parameters of AT and NFC awards, and that calculation of NHP shall be in accordance with QF.

Last year, the federal government paid Rs25bn simultaneously but it has released only Rs4.6bn till date and intends to release the amount in bits and pieces.

Aftab Ahmad Khan Sherpao, president of Pakistan Peoples Party (S) says the coalition at the centre and province should have no problem in increasing annual NHP, giving the province its arrears along with mark up for the entire period. “Our party would support the government in its bid to get NHP arrears and increase the NHP annual amount as a matter of provincial right. But in case they fail to do so, ANP should come out of the federal government,” he says.

“Arbitration was unnecessary in the matter. NHP is the constitutional right that was accepted by AG N Qazi commission, established in 1987 by CCI and guaranteed by constitutional provisions and no government could have denied NHP to the province. However KP government must stick to the QF and never renege on provincial rights,” he adds.

Sub-clause 2 of Article 157 of the Constitution clearly empowers the provinces to construct power projects, levy taxes on, and fix tariff, for electricity, construct distribution and transmission lines for distribution of power and the provinces should insist on provincial management rather than the central bodies like WAPDA, Nepra and Pepco, etc, but provinces have reneged on their rights.

 

””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””

Text of the article as it was sent to the paper

The Net Hydel Profit dispute between KP and WAPDA/federal govt

 

By Tahir Ali

 

The debate on the net hydel profit (NHP) arrears the Water and Power Development Authority (WAPDA) has to pay to Khyber Pakhtunkhwa resurfaced again with an all parties’ conference in Peshawar recently calling upon the federal government to pay the due NHP arrears of Rs258 billion as soon as possible.

 

Held under the chairmanship of chief minister Amir Haider Khan Hoti and attended by all major political parties, the conference expressed concern over capping of NHP at Rs6 billion and resolved to back the KP government in its endeavours to get NHP arrears.

 

Khyber Pakhtunkhwa intends to take up the issue with the federal government forcefully in coming days and the issue, inter alia, has the potential to harm the PPP-ANP coalition if it remains unresolved.

 

The Arbitration Tribunal (AT) headed by Justice Ajmal Mian had decreed that WAPDA would pay Rs110bn NHP arrears in equal instalments of Rs25 billion.  Last year, the federal government paid Rs25bn but it has released only Rs4.6bn till date and intends to release the amount in bits and pieces. KP abhors this scenario as it has projected the money in its revenue estimates and the denial or delaying of the amount could expose the province to financial problems.

 

CM Hoti recently said Khyber Pakhtunkhwa wanted the NHP amount in cash and would not accept its adjustment against federal government loans as was being suggested.

 

Senator Haji Muhammad Adeel, former KP finance minister and member of KP national finance commission (NFC) team says WAPDA owes us around Rs300bn now. “Apart from Rs75bn NHP arrears, as per AGN Qazi formula (QF) and AT award, WAPDA owes us over Rs55bn for 10 per cent interest on the outstanding amount and Rs203bn for due but unpaid increased NHP amount post AT award and another Rs40 billion as this year’s NHP,” he says.

 

Adeel says as per KP’s calculation based on the QF, its annual NHP for 2010-11 stands at Rs40bn against Rs6bn but laments that WAPDA has capped the annual NHP at Rs6bn against the dictates of QF that had been unanimously endorsed by NFC meeting in February 1988, approved by Council of Common Interests in January 1991 and validated by presidential NFC order No3 of 1991. The NFC had recommended increase of 10 per cent on Rs6 billion for future years.

 

“While Punjab is being paid Rs5bn for around 100MW of electricity produced at Ghazi Barotha power project, KP is given Rs6bn despite the fact that it produces around 4000MW and power tariff  has been increased manifold since then,” he adds.

 

Besides, Rs6bn was determined based on power tariffs of 1987 at the rate of Rs0.33 per unit, in dollar terms in 1991, Rs6bn equalled $200 million but it comes to around $70 million with the current rate of return.

 

The AT had agreed with QF for calculating NHP for 1991-92 but did not apply the QF mechanism for the years onward and rather adhered to a mechanism of compound indexation of 10% per year in NHP using Rs6.9bn as benchmark which was calculated on the basis of QF by WAPDA for 1991- the year prior to restructuring and also when no surcharges and additional surcharges were levied.

 

In the AT, the MMA government had claimed Rs595 billion (Rs292bn principal amount and the rest mark-up) from 1991-2005 but it had abandoned NHP demand from 1973 to 1991 as well as interest on the amount WAPDA owed to KP.

 

Had that period and amount also been included, KP’s outstanding amount against WAPDA would have been much more than at present.

 

It further claimed that according to the QF, the revenues should include all the revenues paid by the consumers, including surcharge and additional surcharges.

 

WAPDA however proposed Rs72bn against Rs83bn already paid, thus claiming Rs10.9bn as overpayment to KP and said that surcharges of Rs829bn and other revenues of Rs195bn could not be used for NHP determination. It also stubbornly rejected as unconstitutional the QF.

 

KP, realising that WAPDA is too weak financially or reluctant to provide the money, has focussed on the federal government being guarantor of the AT award and rightly so.

 

Para 3 and 4 of the Presidential NFC order No3 of 1991 states: The net profits from the bulk generation of power at the hydro-electric stations located in the provinces shall be paid by the concerned undertaking established or administered by the federal government (i.e. WAPDA) to the provinces and that the federal government shall guarantee payment of net profits to the provinces concerned by the above undertaking on a regular basis.

 

Based on the NFC award, AT award was binding on all parties. It had been signed by the then WAPDA chairman Tariq Hamid and secretary finance KP and endorsed by the federal secretary water and power from the federal government. But WAPDA, showing its intransigence, challenged the award in a civil court.

 

Sensing betrayed, KP also went to the Supreme Court against this move where the case is still pending.

 

When the present ANP-led coalition government was installed, it soon formed an all parties Jirga headed by CM Hoti that met PM Gilani in September 2008 and apprised him of their grievances on capped annual NHP and arrears thereof besides mark up, and also complaining that the province was being subjected to worst load-shedding and highest electricity tariff.

 

Gilani promised to solve the problems and formed a committee of experts to present its report within two months on the issues of capped NHP amount, NHP up to 2004-05 and from 2005-06  onwards along with mark up.  Later in October 2009, PM announced payment of Rs110 billion arrears on behalf of WAPDA in five annual instalments to be given on July 1 each year with the promise to release first instalment of Rs10 but it was paid only in December when the provincial NFC team threatened boycott of its proceedings.

 

The technical committee is yet to give its decision. KP finance ministry’s white paper says while participating in the committee, KP shall not accept reopening of issues already decided/settled, that any settlement must conform to the parameters of AT and NFC awards, and that calculation of NHP shall be in accordance with QF.

 

Attempts to contact central leader of Jamaat-e-Islami Sirajul Haq, provincial president of Pakistan Muslim League-Q Amir Muqam Khan and Akram Khan Durrani, former CM KP, didn’t succeed.

 

Aftab Ahmad Khan Sherpao, president of Pakistan Peoples Party (S) said the same coalition at the centre and province should have no problem in increasing annual NHP, giving the province its arrears along with mark up for the entire period. “Our party would support the government in its bid to get NHP arrears and increase the NHP annual amount as a matter of provincial right. But in case they fail to do so, ANP should come out of the federal government,” he said.

 

“Arbitration was unnecessary in the matter. NHP was/is the constitutional right that was accepted by AG N Qazi commission, established in 1987 by CCI and guaranteed by constitutional provisions and no government could have denied NHP to the province. However KP government must stick to the QF and never renege on provincial rights,” he added.

 

“But we would also like to know as to what happened to the Hydel Development Fund and the money provided thus far. The provincial finance commission would also be amended accordingly,” he said.

 

Sub-clause 2 of Article 157 of the constitution clearly empowers the provinces to construct power projects, levy taxes on, and fix tariff, for electricity, construct distribution and transmission lines for distribution of power and the provinces should insist on provincial management rather than the central bodies like WAPDA, Nepra and Pepco etc, but provinces have reneged on their rights.

 

WAPDA has always been reluctant to either increase the annual NHP instalment and has been delaying the payment with one pretext or the other. NHP to the province is due since 1973-74 after the constitutional provisions took effect. But no profits were paid upto 1991-92. For the first time, in March 1978, General Ziaul Haq ordered the disbursement of the profits but with no outcome. Several resolutions by KP assembly have also proved futile.

 

tahir_katlang@yahoo.com

Table 1-details of mark up

Details of outstanding mark up on NHP
   (Rs in Billion)  
· Principal Award Amount (F.Y 1991-92 to 2004-05) 110.101
· Mark-up as per Award of Arbitration Tribunal 10%
· Left over amount from Principal 0.101
· Mark-up (9.10.06 to 30.6.07) 7.993
· F.Y 2007-08 (1.7.07 to 30.6.08) 11.010
· F.Y 2008-09 (1.7.08 to 30.6.09) 11.010
· F.Y 2009-10 (1.7.09 to 16.11.09) 4.159
Sub Total 34.273
· Mark-up on Rs. 100 billion 6.170
(From 17.11.09 to 30.06.2010)  
· Mark-up on Rs. 75 billion 7.500
(From 1.7.2010 to 30.06.2011)  
· Mark-up on Rs. 50 billion 5.000
(From 01.7.2010 to 30.06.2012)  
· Mark-up on Rs. 25billion 2.500
(From 1.7.2012 to 30.06.2013)  
Sub Total 21.170
Total (Future Payable) 55.443

 

Table 2- Details of increased NHP

Year wise details of NHP with mark-up (Post Award period on Compound indexation @ 10% per-annum)
I             FY 2005-06  
           a) Provincial Claim 26.32
           b) Amount Received 6
           c) Balance Amount 20
   d) Mark up @ 10% (1.7.2006 to 30.6.2011) 10.51
          Total 30.45
   
ii          FY 2006-07  
a)  Provincial Claim 28.93
 b)  Amount Received 6
 c)  Balance amount 22.9
 d)  Mark up @ 10% (1.7.2007 to 30.6.2011) 9.7
            Total 32.1
iii         FY 2007-08  
a) Provincial Claim 31.82
b) Amount Received 6
c) Balance amount 25.82
d) Mark up @ 10% (1.7.2008 to 30.6.2011) 7.74
            Total 33.56
Iv           FY 2008-09  
a) Provincial Claim 35
b) Amount Received 6
c) Balance amount 29
d) Mark up @ 10% (1.7.2009 to 30.6.2011) 5.794
Total 34.80
v          FY 2009-10  
a) Provincial Claim 38.50
b) Amount Received 6
c) Balance amount 32.50
d) Mark up @ 10% (1.7.2010 to 30.6.2011) 3.24
Total 35.75
Vi        FY 2010-11  
a) Provincial Claim 42.35
b) Amount Received 6
c) Balance amount 36.35
Total 203.03
Grand Total along with Rs55.44 mark up 258.47

 

Khyber Pakhtunkhwa industry’s blues

The Petrochemical Industry dominates the Bayto...

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Industry: Stalled at the start

Industrial sector in Khyber Pakhtunkhwa looks for relief in the budget 2011-2012

By Tahir Ali

Industrialists and traders in the Khyber Pakhtunkhwa, terming the federal budget as jugglery of words, have rejected it for having no package for the revival of the militancy-hit industrial sector in the province.

Industrialists had hoped the federal government would come to the rescue of sick industrial units in Khyber Pakhtunkhwa by announcing province-specific incentives and package, expanding the duration of the relief package and suggesting several mega hydel-power generation projects. They were disappointed.

The only thing they welcomed in the budget was the lowering of sales tax rate from 17 to 16 percent which, according to them, would decrease inflation a bit. The budget, according to them, had no long-term plan and, therefore, lacked the potential to ensure a robust economic and industrial growth.

The industrial sector in Khyber Pakhtunkhwa, mainly comprising the marble, furniture, pharmaceutical, match and cigarette and hospitality industries, has been badly affected by high power/gas tariffs, load-shedding, low voltage, insecurity and insufficient infrastructure besides long distance from seaport which increases cost of production and makes them less competitive.

Factories working in the iron, marble and furniture need latest training for capacity-building of their workers and machinery, marketing, and technical support from the government. The budget failed to provide any workable plan and programme for these problems.

Industries should have been given incentives such as discount in power and gas tariff, rescheduling of loans for two years, or suspension of mark-up thereon, rebate in other taxes and duties, and halting of audit of businesses and industries for two years. New investors should have been given tax exemption for a few years and relief in duties on import of machinery. All these issues have been neglected in the budget.

Soft loans, preferably interest-free ones, and separate industrial estates with modern machinery pool and common facility centres for different clusters and value addition, especially the mineral and furniture, are some steps that should have been taken.

Sharafat Ali Mubarak, president Markazi Tanzeem-e-Tajiran Khyber Pakhtunkhwa and former president of KPCCI, says prolonged power/gas load-shedding and terrorism have not only scared new investors away but also forced existing industrialists not to expand their businesses and many have shifted to other provinces.

“The extent of the damage to industrial sector in the province could be judged from the fact that off the 2200-plus total units working here, only 572 are functional these days and the number of industrial labour has decreased from around 200,000 in 1996 to a dismal 20000-plus these days,” he says.

“A couple of years ago Prime Minister Yousaf Raza Gilani had declared the province a war-hit zone and announced a relief package for industries but it, unfortunately, was not implemented in a letter and spirit. Bureaucracy continues to create hurdles in its implementation. For example, we had been exempted form general sales tax on electricity but it is being collected in the bills in clear violation of relief package. Industrialists and traders waited for another package or extension of the earlier one for a few more years but there is no roadmap for the revival of sick industrial sector in the province,” he complains.

“The problem of power-shortage, that has been afflicting the sector for quite some time, has been ignored once again and no emergency plan and mega projects have been suggested for the purpose. The target could be easily achieved by public-private partnership schemes in the sector,” Mubarak adds.

According to him, “We have over 40000MW of hydel-power potential which can be utilised by constructing power plants here. The government has unfortunately allocated around Rs50 billions for the Benazir income support programme. If funds form this and other wasteful initiatives are diverted to build power infrastructure, this would boost the economy and generate job opportunities, a requisite for permanent prosperity. Some mega projects for hydel power generation, gas exploration and exploitation, development of human capital and technology transfer must have been included in the budget for long-term sustainable economic growth.”

“Khyber Pakhtunkhwa produces about 4200 mega watt of electricity from Tarbela dam alone and its peak consumption is around 2300MW but it is subjected to 12 hours of loadshedding. Similarly, 341 million cubic feet (MCF) gas is produced here while its total requirement is 227 MCF. If Punjab is not ready to supply its wheat to other provinces unless its own wheat needs are met first, we have also right to demand non-stop and cheaper supply of gas and power before others,” he argues.

Usman Bashir Bilour, president of Khyber Pakhtunkhwa Chamber of Commerce and Industry (KPCCI), says that being adversely affected, the industrial sector in the province deserves a comprehensive package or at least, the package announced by the prime minister should be extended for another two years.

“The State Bank reports that industrial growth rate has been as dismal as 0.01 percent this year. The government should ascertain why most of the industries are closing one after the other. We have sent to the government a detailed strategy paper for the revival of industries but no one has bothered to contact us so far. We need to sit together to chalk out a 10-15 years’ plan for revival of industries in the province,” he says.

According to him, their businesses are ruined and the government is contemplating the imposition of reform general sales tax. “We would never tolerate it as it would increase inflation and overburden the people. The government had announced it will expand direct taxation base but it has once again reneged on this commitment. Special relief orders are regularly announced that exempt certain industries from taxes while other industries are subjected to additional tax burdens intermittently. This should be avoided and all those who earn money be brought into the tax net — there should be minimum tax but maximum taxpayers,” Bilour says.

“Credit is the basic requirement of industrialists but it has been made difficult for us as all leading banks have shifted their head offices to Islamabad. One will have to travel hundreds of kilometres to get a loan of even Rs10 million. How can we modernise our industries in this backdrop,” he asks.

Khyber Pakhtunkhwa is rich in oil and gas reserves. Official estimates suggest it has one billion barrel oil and four trillion cubic feet gas reserves, which, if utilised, will meet energy requirements of industries for a long time and give fillip to provincial and national economy.

Marble reservoirs in the province are estimated to be at four billion tons found in 30 varieties in the province. But most of the 2000 marble factories in the province and tribal belt, besides the factors cited above, suffer from use of outdated techniques, inconsistent supplies of raw material, lack of proper infrastructure, absence of value addition and of public-private cooperation.

Khyber Pakhtunkhwa is an ideal place for summer and winter tourism, adventure tourism, eco-tourism, culture/heritage tourism, spiritual tourism and sports and commercial tourism. This sector also needs hefty funds and public-private coordination to build tourism infrastructure and strong media campaign to attract tourists but no such thing has been announced despite promises in the 2009 tourism policy draft.

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