Pakistan’s Net-Hydel Profits
Pakistan’s Net-Hydel Profits: The Constitution of Pakistan orders the federal government to pay hydroelectric profits directly to the province generating the power. Article 161 sets a simple rule: take the revenue earned at the power station and subtract its direct operating costs. Yet, the federal government completely withheld these payments from 1973 to 1992.
Flawed Hydel Formula
To settle the dispute, officials created the “AGN Kazi methodology” in 1991. However, this formula bends the constitutional rule. Instead of assessing each power station individually, it bases calculations on the entire national grid. This forces cheap hydro energy—costing 1.5 cents per unit—to absorb expensive thermal power costs, grid losses, and federal subsidies. Consequently, this practice severely slashes the profits owed to power-producing provinces.
Judicial Settlement Parallel
Courts have never overturned this flawed system. Instead, political leaders and judges have accepted it as a practical compromise, similar to how U.S. presidents deploy troops without waiting for formal Congressional war declarations.
Furthermore, the federal government routinely delays paying even these reduced amounts. An arbitration panel awarded billions in unpaid dues to the province in 2005, yet the federal government continues to fall behind. Today, the federal government owes Khyber Pakhtunkhwa roughly 2.3 trillion rupees in unpaid arrears. Officials turned a simple legal formula into a complex process to deny provinces their rightful funds.
Published in Dawn, 11th August 2026
