Prospects and Challenges of Power Sector in Khyber Pakhtunkhwa: the Post 18Th Amendment Era and the Way Forward

Abstract

The 18th amendment to the 1973 Constitution restored the true spirit of the federation and catered for political, fiscal, and administrative decentralization to fulfill long outstanding demands for provincial autonomy. Articles 157(1), 161(1), and 172(3), under the 18th amendment, are enabling provisions that provide the provinces with ownership and use of the local energy resources to fulfill the energy needs of its people. KP has 110 million barrels of oil and 1,282 million cubic feet of gas reserves, as well as a vast renewable energy potential including a hydropower potential of 30,000MW. However, despite the constitutional provisions under the 18th amendment and its abundant natural resources, the Government of Khyber Pakhtunkhwa (GoKP) has not performed well, thus far, in the generation, transmission, and distribution of electricity within the province. Except for adding 190MW of hydropower, community-based relief measures like the installation of 321 mini-micro hydro powers in far-flung areas, no visible and tangible results have been seen when compared to other provinces, especially Punjab. This study aims to analyze the impeding challenges facing GoKP in the power sector and suggests a way forward to overcome these challenges. The study utilized a mixed methodology for data collection and analysis. Both primary and secondary data were collected in this regard. The challenges faced by GoKP in the power sector stem from limited HR capacity and expertise, security concerns of investors, low priority and commitment, and poor financial management. Besides, there are a host of unresolved issues with the federal government (FG) like the constitutional and legal deadlock regarding the interpretation of the amended articles under the 18th Amendment, ineffectiveness of the Council of Common Interests (CCI), Net Hydel Profit (NHP), levy of Federal Excise Duty (FED) on oil and gas, and imposition of income tax on power projects. The internal inadequacies and issues with the FG can be tackled by creating a provincial task force for developing a strategy to effectively engage the FG, follow up with the Council of Common Interests, raise KP’s concerns through special committees of the provincial and federal legislatures, and coordinate with other provinces for jointly taking up the matter with the FG. Furthermore, organizational restructuring of the energy and power department and its subordinate offices on corporate lines, the establishment of an oil and gas development fund on the pattern of HPF, and the establishment of Khyber Pakhtunkhwa Transmission and Grid Company Limited (KPT&GCL) should be undertaken in order to overcome the impeding challenges.