PESHAWAR: Efforts are progressing to resolve the financial challenges facing Khyber Pakhtunkhwa (KP) in coordination with the federal government. A high-level meeting, chaired by Chief Minister Ali Amin Gandapur, brought together federal and provincial stakeholders to deliberate on critical fiscal matters.
The meeting was attended by the Federal Minister for Finance, the Minister for Water Resources, relevant federal secretaries, members of the provincial cabinet, the Chief Secretary of KP, and other key officials. The agenda centered on the province’s outstanding financial claims from the federal government, including net hydropower profits, the revision of the National Finance Commission (NFC) award, and the allocation of development funds for the merged districts.
Provincial representatives gave a comprehensive briefing on these issues, to which the federal authorities responded positively, indicating agreement in principle with the KP government’s stance. The federal government assured attendees that resolving these financial matters would be treated as a priority.
Khyber Pakhtunkhwa is currently owed Rs 1,900 billion by the federal government in net hydropower profits. Additionally, Rs 77 billion is due under the interim payment mechanism related to hydropower earnings. To address these matters, it was proposed that a meeting of the “Out-of-the-Box Committee” be convened promptly to deliberate on the payment mechanism. The committee’s recommendations are to be submitted at the upcoming Council of Common Interests (CCI) meeting for final approval.
Chief Minister Gandapur has also formally raised these concerns with the Prime Minister through a written communication. While the administrative merger of the former tribal areas with KP has been completed, financial integration remains unaddressed. This merger has increased the province’s population share from 14.7% to 17.7% of the national total, thereby raising its NFC share from 14.2% to 19.46%. Accordingly, KP is now entitled to receive Rs 350 billion annually under the NFC formula.
However, the current NFC award does not reflect these demographic changes. The federal government has been urged to initiate a comprehensive review and revision of the NFC award without delay.
For the current fiscal year, the expenditure on the merged districts stands at Rs 127 billion, but only Rs 66 billion has been allocated by the federal government. The provincial government is covering the Rs 61 billion shortfall through its budget. Additionally, Rs 66 billion is required for the resettlement of temporarily displaced persons in the region.
The federal government had committed to providing Rs 100 billion annually for a ten-year rapid development program in the merged districts. However, to date, only Rs 122 billion has been disbursed out of the promised Rs 600 billion.
The KP government also raised objections to the federal government’s formation of a committee for the Annual Implementation Plan (AIP), terming it an unconstitutional step. The provincial leadership emphasized that their demands—about hydropower profits, NFC entitlements, and funds for the merged districts—are grounded in constitutional and legal obligations.
The Chief Minister stressed that these demands are not extraordinary but are rooted in the province’s rightful share and needs. Given the unique challenges faced by the merged districts, the federal government must pay special attention to their development. Swift economic and social development is essential to reduce insecurity and restore public confidence in these areas.
The provincial government reiterated its call for the immediate convening of a federal meeting to review and revise the NFC award, ensuring justice and equity for the people of Khyber Pakhtunkhwa.
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