KEY POINTS
- Khyber Pakhtunkhwa claims federal government owes over Rs2 trillion in hydropower dues.
- Billions meant for merged tribal districts remain unpaid, province alleges.
- Khyber Pakhtunkhwa received Rs168 billion instead of promised Rs700 billion over seven years.
- No new NFC Award constituted despite merged districts’ population inclusion.
- Hydropower profits under AGN Qazi formula exceed Rs2.2 trillion, unpaid.
- Province also claims over Rs70 billion petroleum levy, Rs100 billion gas royalty.
PESHAWAR, Pakistan: As lawmakers debated inside the Khyber Pakhtunkhwa Assembly on December 10, a simmering dispute with Islamabad came sharply into focus.
Provincial Housing Minister Dr Amjad Ali told the House that the federal government had, for years, withheld Khyber Pakhtunkhwa’s (KP) rightful share — claiming that unpaid hydropower dues alone have crossed Rs2 trillion, while billions meant for the merged tribal districts remain outstanding.
An unequal province
As Dr. Amjad Ali pressed on with his speech, the House briefly lost one of its members. Sajjadullah, a Jamiat Ulema-i-Islam-Fazl (JUI-F) legislator, rose from the opposition benches, quietly walked out, and led this reporter to a nearby room — away from the din of the assembly floor.
“What I’m about to tell you may sound unbelievable. There is not a single girls’ high school in the entire district of Lower Kohistan,” he said.
He contrasted this with the facilities available elsewhere in the province. “In Dr. Amjad’s home district of Swat, there are four universities. In my constituency, there isn’t even one high school for hundreds of girls — let alone a college,” he said.
“What I’m about to tell you may sound unbelievable. There is not a single girls’ high school in the entire district of Lower Kohistan.” – Sajjadullah, MPA
He hastened to add that because of local customs, most girls in his home district are forced to drop out after middle school.
Kohistan, he remarked, ranks among the lowest in education nationwide, and the absence of schools is pushing thousands of girls to drop out at the primary and middle levels.
For Sajjadullah, the irony cuts deep.
“The Khyber Pakhtunkhwa government cries foul when it comes to the federation denying its share. But does it itself allocate funds to districts based on need? Absolutely not,” he contended.
According to him, the opposition districts are left high and dry. The same government that demanded its rights from Islamabad when it sat in opposition now refuses to extend those rights within the province. “You can’t have it both ways.”
Facts on record
Data obtained from the Khyber Pakhtunkhwa Elementary and Secondary Education Department verifies Sajjadullah’s claim.
It confirms that there is not a single girls’ high school in the Khyber Pakhtunkhwa Assembly’s constituency PK-32 or anywhere in Lower Kohistan.
The entire district has only two girls’ middle schools, located nearly 32 kilometres apart.
An official also confirmed that Sajjadullah had repeatedly pushed for the construction of girls’ high schools in Kohistan, but his demand never gained traction — largely because he sat on the opposition benches.
Reviving old grievances
Two days later, heading the cabinet meeting on December 12, 2025, Khyber Pakhtunkhwa Chief Minister Suhail Afridi revived the province’s long-standing grievance with Islamabad.
He said the merged districts were promised Rs100 billion annually, but over seven years the province received only Rs168 billion instead of Rs700 billion — leaving a shortfall of Rs532 billion.
He said the provincial government would continue to knock on every door to press the federal government on the issue.
Afridi also disclosed that the federal government had convened an important meeting on the new National Finance Commission (NFC) Award, where he raised the funding needs of the merged districts.
According to him, a sub-committee headed by the provincial finance minister has now been formed to finalise recommendations for the central committee.
What the numbers say
But is the federation really denying Khyber Pakhtunkhwa its due share?
According to the provincial Finance Department, the federation makes direct transfers to the province under several heads.
Under the Seventh NFC Award 2010, the province receives a 14.62 per cent share of the Federal Divisible Pool, transferred regularly on the 14th and 28th of every month.
“The merged districts were promised Rs100 billion annually, but over seven years the province received only Rs168 billion instead of Rs700 billion — leaving a shortfall of Rs532 billion. The provincial government will continue to knock on every door to press the federal government on the issue.” – Suhail Afridi, KP CM
Beyond this, the province receives around Rs3 billion per month in hydropower profit and arrears. Even so, more than Rs60 billion in hydropower-related payments remain outstanding.
The provincial government argues that after the 2018 merger of the tribal districts, Khyber Pakhtunkhwa should have received an additional three per cent share.
With the inclusion of a population of around five million from the merged districts, a fresh NFC Award would raise the province’s share from 14.62 per cent to 19.4 percent. However, no new NFC Award has been constituted by the federal government so far.
A counter narrative
Opposition Leader and Pakistan Muslim League-Nawaz (PML-N) lawmaker Dr Ibadullah questions the provincial government’s narrative.
“From 2018 to 2022, PTI ruled for nearly four years. Did the merged districts receive their due share during Imran’s tenure? They did not. Today, the same government uses the merged districts as a stick to beat the federation with — nothing more.”
According to the provincial Finance Department, the Eighth NFC Award was not constituted in 2015, while the ninth could not be finalised in 2020 due to the Covid-19 pandemic.
The Tenth NFC Award expired on July 21, 2025, and the Eleventh NFC Award has now begun — still relying on the same figures agreed upon under the Seventh NFC Award.
Beyond the NFC
The province’s financial demands extend well beyond the NFC framework.
In 2019, during Imran Khan’s tenure as prime minister, a Planning Commission sub-committee recommended that Khyber Pakhtunkhwa be paid hydropower profits under the AGN Qazi formula of 1990, with respective payments from 2017.
While the proposal was initially accepted in principle, it never translated into a formal notification.
By 2025, hydropower profits under the AGN Qazi formula had crossed Rs2.2 trillion, according to the provincial government.
Yet the federation continues to pay under the 2017 formula — at Rs1 per unit — amounting to Rs35–40 billion annually, and even those payments arrive sporadically.
“The province’s problem boils down to four letters: A for oil, B for bijli (electricity), P for pani (water), and T for tayl (fuel). If the provincial government seriously fights on these four fronts, it can force the federation’s hand. Instead, it remains bogged down in political battles with the Centre.” — Ahmed Karim Kundi, lawmaker
Additionally, the province claims over Rs70 billion in petroleum levy, more than Rs100 billion in gas royalty, and over Rs300 billion tied to water resources — all unpaid.
Pakistan People’s Party (PPP) parliamentary leader in the Khyber Pakhtunkhwa Assembly, Ahmed Karim Kundi, sums up the dispute bluntly.
“The province’s problem boils down to four letters: A for oil, B for bijli (electricity), P for pani (water), and T for tayl (fuel). If the provincial government seriously fights on these four fronts, it can force the federation’s hand. Instead, it remains bogged down in political battles with the Centre.”
He believes even if half the energy spent trying to secure a meeting with imprisoned Imran Khan were devoted to provincial resources, the province would be miles ahead of Punjab and Sindh. “Right now, all provincial politics revolves around Qaidi [prisoner] Number 804 [Imran Khan].”
Protests politics
After Imran Khan’s federal government was removed through a vote of no confidence in April 2022, PTI’s Mahmood Khan continued as chief minister. The following month, Imran Khan led a march from Khyber Pakhtunkhwa towards Islamabad, issuing a five-day ultimatum.
Following the February 8 general elections, Chief Minister Ali Amin Gandapur launched a fresh wave of protests, leading five major marches towards Islamabad during his 19-month tenure.
After the November 24, 2024, protest, however, the party scaled back its confrontational approach and shifted to rallies within the province.
Ahmed Karim Kundi criticises this strategy.
“The federation has never fully given Khyber Pakhtunkhwa its share — but the province has hardly seriously helped its own cause,” he says.
Instead of pursuing constitutional avenues, it chose street power, confrontation, and vandalism. That approach has only poisoned relations, he observes.
He adds that while the prime minister congratulated Suhail Afridi on assuming office, the chief minister later skipped a key national security meeting in Islamabad.
“The office of chief minister is a constitutional one, not a party post. By staying away from constitutional forums, the province is cutting off its nose to spite its face.”
Referring to the resolution of the canals dispute in Sindh through the Council of Common Interests, Kundi says Khyber Pakhtunkhwa has reportedly sent only one formal request for a CCI meeting in the past two years.
“This is not a fight between the province and the federation. It is a political tug of war between PTI and PML-N,” he concludes.
