Peshawar's top finance official has leveled serious allegations against the federal government, claiming massive financial shortfalls are crippling the province's development and governance. Muzzammil Aslam, the Adviser to the Khyber Pakhtunkhwa Chief Minister on Finance, stated that while federal figures on fund releases might be technically accurate, the actual payments received are far less than the province's legal entitlement.
Breakdown of the Rs4 Trillion Liability
In a detailed statement issued from his office on Saturday, Aslam responded to a recent federal press release. He asserted that the central government owes Khyber Pakhtunkhwa a staggering sum of approximately Rs4 trillion in unpaid liabilities. This colossal amount encompasses several key areas where the province has been financially disadvantaged.
The adviser specified that payments for Net Hydel Profit (NHP) have been consistently delayed. Furthermore, the windfall levy on hydroelectric power has not been included in the straight transfers to the province. He also highlighted that the federal excise duty collected on petroleum has not been properly accounted for in the province's share, and the excise duty on gas has never been revised upwards.
Aslam pointed out a constitutional anomaly: despite the devolution of agriculture to the provinces after the 18th Amendment, the federal government continues to collect the excise duty on tobacco, depriving KP of a significant revenue stream.
Crisis in Merged Districts and Broken Promises
A major point of contention is the funding for the merged districts of the former Federally Administered Tribal Areas (FATA). Aslam stated that the Seventh National Finance Commission (NFC) Award has not been revised since the merger, forcing these regions to rely on inadequate special grants.
He revealed that these grants are lower than the allocations for other special regions like Gilgit-Baltistan and Azad Jammu and Kashmir. Shockingly, except for the 2024–25 fiscal year, KP has not received full payments even from the budgets specifically allocated for these merged districts.
The adviser provided concrete figures on broken commitments. He said that of the additional 3 percent share (equivalent to Rs100 billion in annual development funds) promised to the province in 2018, less than half has been provided so far. Under the Accelerated Implementation Programme (AIP), KP has received only Rs168 billion against a total commitment of Rs700 billion.
Severe Impact on Provincial Finances and IDPs
The cumulative financial neglect has had a devastating impact. Aslam claimed that due to the non-implementation of the Seventh NFC Award, Khyber Pakhtunkhwa has received an estimated Rs1.375 trillion less since the 2018–19 fiscal year. In the current fiscal year alone, more than Rs50 billion less has been allocated for the current expenditures of the merged districts.
He also highlighted a humanitarian issue, stating that none of the promised Rs17 billion for internally displaced persons (IDPs) has been released by the federal government. This has forced the provincial government to spend over Rs11 billion from its own scarce resources to support the IDPs.
While welcoming the federal government's move to place released funds on record, Aslam urged the Ministry of Finance to publish comprehensive, comparative data for all provinces. He demanded transparency, calling for the federal government to disclose province-wise details of road construction by the National Highway Authority, electricity and gas subsidies, and allocations under the Public Sector Development Programme since 2010.
