KP Challenges 7th NFC Award Extension in Federal Constitutional Court

The Khyber Pakhtunkhwa government has approached the Federal Constitutional Court (FCC), challenging the continued implementation of the 7th National Finance Commission (NFC) Award following the merger of the former Federally Administered Tribal Areas (FATA) into the province. The court has admitted the petition for hearing.

The petition argues that KP’s population, territory, and development responsibilities increased significantly after the 25th Constitutional Amendment in 2018, but its share under the NFC Award has not been revised to reflect the merged districts. The provincial government maintains that while the existing NFC formula does not need to be changed, it should be applied using KP’s post merger population and geographic data rather than outdated figures.

Addressing a press conference in Islamabad, Adviser to the Chief Minister on Finance Muzammil Aslam claimed that KP had effectively lost Rs. 964 billion under the current arrangement, with the province’s financial share being distributed among Punjab, Sindh, and Balochistan.

He also said KP had not committed any share of the proposed Rs. 1.1 trillion grant to the federal government at the National Economic Council (NEC) meeting and therefore did not include it in its provincial budget.

Aslam said the NEC meeting minutes state that Prime Minister Shehbaz Sharif committed to revising KP’s NFC share within six months, by December 2026, after which the President would promulgate an ordinance to increase the province’s share following the FATA merger.

The petition asks the court to determine whether extending the 7th NFC Award after 2018 is constitutional and whether the federation has fulfilled its obligations under Article 160 of the Constitution.

According to KP, the current arrangement violates the principle that public finances should follow administrative responsibilities, leaving the province underfunded despite its expanded responsibilities.

Aslam also criticized the federal government’s handling of the wheat and energy sectors, warning of a looming wheat crisis after Punjab and Sindh failed to meet procurement targets.

He said PASSCO currently holds only 1.7 million tonnes of wheat and argued that Pakistan may have no option but to import wheat. He also criticized the government’s proposed daily petroleum pricing mechanism, saying authorities had failed to develop a workable implementation plan.