KP Seeks Changes in NFC Award Formula

Khyber Pakhtunkhwa (KP) Chief Minister’s Advisor on Finance, Muzzammil Aslam, said that the provincial government will push for changes in the formula of horizontal resource distribution among federating units under the upcoming National Finance Commission (NFC) Award. Speaking at the inaugural two-day Prosper Pakistan conference in Nathia Gali, organized by the FPCCI Regional Office Peshawar in collaboration with KP’s Board of Investment and Trade, Aslam argued that the current formula disproportionately favors population as a criterion. He noted that 82 percent of resources are distributed on the basis of population and 10.6 percent on backwardness, while prosperity and forestation are not adequately factored in. “We will demand that population and backwardness be treated as disincentives for resource distribution,” he said, adding that under the vertical formula, provinces receive 57.5 percent of resources while the remainder goes to the federal government. The advisor also pointed out disparities in federal development spending, accusing the National Highway Authority of prioritizing Punjab and Sindh while neglecting KP and Balochistan. He criticized the federal government for underreporting the province’s forest cover, despite KP hosting 45 percent of the country’s forests, and said the provincial government had enhanced allocations to forestry and provided compensation packages to families affected by recent flash floods. On energy, Aslam highlighted 12 ongoing hydropower projects in KP with a capacity of 1,000MW, capable of producing electricity at 8 cents per unit. However, he alleged that the federal government had raised wheeling charges to Rs. 27 per unit to restrict the supply of cheaper provincial electricity. He also voiced concerns over water distribution, noting that while IRSA had allocated 110MAF among provinces, agreed projects such as the Left Bank Canal had yet to materialize. Quoting Federal Minister for Planning Ahsan Iqbal, Aslam warned that the country was heading towards “economic collapse” within five years due to an empty treasury and shrinking federal development budget. The conference also heard from Tajikistan’s Ambassador to Pakistan, who announced that the CASA-1000 power project would be completed by 2026, with bilateral trade already involving 250–400 trucks crossing borders daily. He called for stronger cooperation in the banking sector, disclosing that Tajikistan exported $120 million worth of cotton, though only $50 million was reflected in Pakistan’s records. Business leader Anjum Nisar, meanwhile, criticized successive governments for “blunders” that have deepened economic woes. He said State-Owned Enterprises (SOEs) were incurring annual losses of Rs. 850 billion ($3 billion), while ill-prepared Free Trade Agreements and Independent Power Producers (IPPs) had severely damaged the economy. He added that capital flight of $12 billion had occurred to the Gulf and UAE, while domestic investment had plunged to record lows. According to him, the corporate sector was effectively paying a 61 percent income tax rate, contrary to the perception of a 29 percent rate.