PESHAWAR: The Khyber Pakhtunkhwa government has demanded of the federal government to honour the commitments it had made earlier this year with the province regarding provision of funds to address major financial issues being faced by the province mostly related to the merged tribal districts.

The demand was made through a letter, which was sent by provincial finance minister Taimur Saleem Jhagra to federal finance minister Miftah Ismail.

The federal government had earlier agreed in the Memorandum of Economic and Fiscal Policies inked with the IMF to present a MoU signed by provinces for the provision of around Rs750 billion cash surplus by them.

The KP had signed the document when the centre agreed to finance the Sehat Card programme for the merged districts, increase the region’s current budget, transfer net hydel profit (NHP) to the province on a regular basis and revive the National Finance Commission.

Jhagra writes to Miftah, demands net hydel profit

‘Provincial surpluses in the IMF MOU’ is the subject of the letter, which has been sent to the federal government as a follow-up to the earlier one sent to the finance minister on the same topic on July 6 this year.

“When we last met, the federal government had committed to resolve our major financial issues,” Mr Jhagra reminded Mr Miftah.

In the letter, a copy of which is available with Dawn, the provincial government has drawn the federal government’s attention towards “criticality of the issues”, including budgetary allocation for merged districts, financing merged districts Sehat Card scheme and rehabilitation of displaced persons, payment of net hydel profit and National Finance Commission awards.

In the letter the provincial government has urged the federal government to resolve the issue of budget allocations for ex-Fata, which, in the absence of an updated NFC award, is decided at the discretion of the federal government; resolve the issue of current budget allocations for ex-Fata, which are insufficient to cover even the monthly salary costs of existing employees; finance the transfer of the Sehat Card programme for the six million residents of ex-Fata; and ensure adequate budgeting to cater to the needs of the Temporarily Displaced Persons.

The provincial government has also reminded the federal government to commit to monthly NHP transfers based on the MoU, which was signed between the federal government and KP government in 2016. This MoU was signed during the previous PML-N government.

Through the letter, Mr Jhagra also demanded of the federal government to immediately revive the NFC so that these issues could be resolved permanently, and to also commit to immediately engage and resolve other financial issues with the KP government.

These include clearing outstanding liabilities to the Pakhtunkhwa Energy Development Organisation; resolving the issues of energy wheeling; ensuring availability of natural gas to the province in line with Article 158; financing of Pesco to develop transmission and distribution infrastructure in the province; and execution of provincially-funded Pesco and Tesco projects.

“We estimate that the overall impact of not resolving these issues is actually to create Rs100 billion unfunded liability in the Khyber Pakhtunkhwa budget,” reads the letter.

The provincial government has also mentioned in the letter the new challenges created by the devastating floods. It states that the monsoon flooding has wreaked destruction in Swat, DI Khan and Tank that may make the damage from this year’s flooding greater than the super floods of 2010.

The letter states that the cost in terms of rescue, relief, rehabilitation and building back is likely to run into tens of billions.

Published in Dawn, August 27th, 2022