NEPRA grills Power Division over FCA deferral

Consumers, regulators slam last-minute move to block Rs4.69/unit FCA relief as CPPA warns of upcoming tariff hike

ISLAMABAD:

The National Electric Power Regulatory Authority (NEPRA) held a heated hearing on the Power Division's request to defer April 2025's Fuel Cost Adjustment (FCA) of Rs4.69 per unit for K-Electric (KE) consumers. The proposal drew sharp criticism from NEPRA members and Karachi's power consumers, who questioned both its legality and timing.

NEPRA Member Legal Amina Ahmed criticised the Power Division's abrupt change of stance, noting that the reference price of Rs15.99 had remained unchanged for two years. She argued there was no legal or practical basis for the deferral and called out the ministry for its delayed response. When asked about policy guidelines and cabinet approval, the ministry's representative gave a 10 to 15-day timeline. KE's representative informed the regulator that Rs7.173 billion in relief was due to be passed on to consumers, noting that the utility had offered negative FCA adjustments since September 2024.

The Power Division argued that deferring the FCA was necessary to safeguard the federal budget, warning that immediate implementation could place further fiscal strain on public finances. NEPRA, however, dismissed the plea, stating that it lacked legal merit and procedural basis.

NEPRA Senior Legal Advisor Ahmed Ibrahim asserted that NEPRA held exclusive jurisdiction over tariff matters. He said no court order existed to halt the process and that the ministry's petition was premature. Without a stay order, NEPRA's earlier determination remains binding. He further clarified that the Ministry of Energy's administrative role did not entitle it to interfere in regulatory decisions. NEPRA chairman echoed these sentiments, noting the hearing had been scheduled in advance and the deferral request came too late. He questioned why the legal process hadn't been followed earlier.

KE CEO Moonis Alvi said KE would comply with NEPRA's decision but urged that fairness be considered. He added that industrialists planning production and exports faced uncertainty due to the ambiguity. Karachi-based industrialist Rehan Javed said the Power Division never objected when positive FCA adjustments led to higher tariffs for Karachi. He called the sudden concern selective and biased, pointing out that Karachi consumers also paid the PHL surcharge despite not contributing to the circular debt. He reminded NEPRA of International Monetary Fund (IMF) demands for timely tariff adjustments and greater efficiency.

Javed stressed that any subsidy settlements between the government and KE were unrelated to the current FCA issue and demanded NEPRA act independently. He added that while Karachi stood to gain this time, it had often borne the brunt of losses in the past.

Participant Arif Bilvani voiced frustration over the Power Division's belated intervention. He argued that Karachi consumers deserved the relief now, just as they had borne excessive charges earlier. KCCI representative Tanveer Barry called the Power Division's objections "unfair," highlighting that Karachi was being penalised despite not contributing to the circular debt.

The session concluded with NEPRA reaffirming that decisions must be made transparently and free from ministry pressure. A final ruling is awaited and is expected to have wide implications for Karachi's power consumers.

DISCOs tariff may rise Rs1/unit

Separately, NEPRA also held a hearing on the May 2025 FCA request for DISCOs, in which the Central Power Purchasing Agency (CPPA-G) warned that power tariffs could rise by up to Rs1 per unit from July 1 due to increased gas prices for power generation.

CPPA-G initially sought a 10 paisa per unit increase for May, which NEPRA said it would consider after reviewing the data. According to CPPA-G, the 10 paisa hike—if approved—would be applicable for one month only and add Rs1.25 billion to consumer bills. The reference fuel cost for May was Rs7.39/unit, compared to Rs7.49/unit in April. CPPA officials warned that higher gas prices would likely push tariffs up by Rs1 per unit. They also cautioned that without improved bill recoveries, the government may resort to raising surcharges to manage the ballooning circular debt.

Currently, consumers are paying a Rs3.23 per unit surcharge solely for interest payments on circular debt. This amounts to Rs323 billion annually.

According to CPPA-G data, actual fuel cost for May was Rs7.4940 per kWh, while the reference cost was Rs7.3925—an increase of Rs0.1015/unit.