With the current fiscal crunch in Khyber-Pakhtunkhwa, the government is all set to amend the Hydel Development Fund (HDF) Act 2006 to use these funds to make up for the monetary shortfall. The funds would be used to fulfill requirements of other development projects.
“The changes to the law will be made through an ordinance as the assembly is not in session,” said an official close to these developments. “If the amendment is brought to the house, the government will most probably face criticism and resistance from the opposition,” he added. “However, things can move along with great ease if the matter is moved through an ordinance.”
According to officials, the K-P government is desperately looking for money to meet the province’s financial requirements and borrowing money from the HDF is one such attempt.
They added the energy and power department has around Rs32 billion in the HDF. However, under Section 3(4) of the HDF Act, 2006, “the fund shall be exclusively utilised for the development of hydel electricity in the province.”
A senior government official pointed out the law needs to be amended to use the funds for other purposes. Officials added the energy and power department moved a summary to the chief minister to make changes to the act. The purpose was to ensure the funds could be used for all types of power generation projects such as hydel energy, solar energy and thermal energy schemes.
In the cabinet meeting held last Monday, the finance department made a different proposition altogether. It said it needed to use these funds. The department urged the legislation be amended in a way that the government could use the funds “for any purpose” when needed.
“The wording ‘for any purpose’ is not appropriate,” highlighted another senior official privy to the matter. He continued the law needed to be amended in accordance with the proposals of the energy and power department rather than finance.”
He said the government should be allowed to use the fund in cases of extreme necessity.
“The finance officials further stated they wanted Rs15 billion from the fund and it would be returned with a mark-up.” However, he added the government will decide the mark-up value and time period.
Official present at the meeting said the chief secretary and chief minister also wanted the HDF to be used by the finance department to overcome the financial crises. However, Minister for Energy and Power Atif Khan, Minister for Irrigation Sikandar Sherpao and Minister for Local Government Inayatullah Khan were against the move.
“Atif, Sikandar and Inayat were all opposed to finance’s stance on the matter. Atif stated the fund would be exploited with these [proposed] changes,” said the official who was at the meeting.
When contacted, Atif confirmed he did not support this action. “The chief minister and chief secretary said the fund has been reflected in the budget so it can be used.”
Officials added after the cabinet meeting, the energy and power department was asked to move a summary for the proposed amendment to the CM House for approval as soon as possible.
Sources in the energy department confirmed the funds will be made available and a summary will be prepared for the purpose.
“The government needs to take approval from the members of the HDF board which include the CM, CS, ACS, minister and finance secretary, minister and energy and power secretary, Bank of Khyber managing director, Pakhtunkhwa Energy Development Organization managing director,” said an official.
“If we get the HDF, Rs25 billion of Net Hydel Profit arrears, we achieve 100% of provincial tax receipt. In addition, if we get Rs18 billion from NHP, the situation can change drastically.”
The official added the provincial government is facing a Rs100 billion budget deficit and has yet to get the Rs25 billion tranche of arrears from the Centre.
Published in The Express Tribune, April 5th, 2016.