PD blocks Rs4.69/unit FCA relief

Business Recorder

24-06-2025

ISLAMABAD: In a surprise move, the Power Division on Monday blocked a proposed Rs 4.69 per unit relief in Fuel Charges Adjustment (FCA) for K-Electric (KE) consumers for April 2025, citing a new government policy aimed at uniform FCA application across all electricity consumers nationwide.
The development came during a public hearing held by the National Electric Power Regulatory Authority (NEPRA), chaired by its Chairman Waseem Mukhtar. The hearing was convened to consider KE's request for provisional FCA relief for April 2025.
During the proceedings, Additional Secretary (Power Finance) Mehfooz Bhatti—accompanied by CPPA-G representative Naveed Qaiser—requested NEPRA to defer the FCA determination until the federal government's review motion on KE's Multi-Year Tariff (MYT) determination is decided. However, Bhatti did not provide any supporting financial or technical data to justify the request.
March FCA: KE seeks Rs5.02 interim negative adjustment
The Power Division formally submitted a letter dated June 23, 2025 to NEPRA seeking the deferment, but the letter was not made public. 'We are under an IMF program, and consumers are being burdened,' Bhatti stated. A NEPRA official rebutted the claim, clarifying that FCA is a pass-through item, which does not impose a direct fiscal burden on the government—unlike the Quarterly Tariff Adjustment (QTA).
Chairman NEPRA Waseem Mukhtar expressed strong reservations over the Power Division's approach, stating that such a move compromises regulatory transparency and public trust. He questioned whether the request came directly from the federal government or the Power Division. Bhatti clarified that it was the Power Division's initiative, and that formal cabinet approval was still pending.
NEPRA Member Legal, Amina Ahmed, further challenged the justification of the deferment and inquired whether CPPA-G would continue subsidizing KE. Qaiser responded that an agreement exists between CPPA-G and KE for the subsidy. To this, Member Ahmed sarcastically noted, 'You also have agreements with others,' hinting at broader inconsistencies in policy enforcement.
Chairman Mukhtar underscored that as a public hearing, the process must be transparent and not conducted 'in the dark.' He raised concerns about the long delay associated with the federal review motion, questioning if the FCA for KE would remain unresolved for as long as six months, and how such a substantial negative adjustment would be managed in the interim.
Qaiser initially suggested that since a positive FCA of paisa 10 per unit was being charged to DISCO consumers for April, the same adjustment could be applied to KE customers. However, he immediately retracted the suggestion when the Chairman pointed out the contradiction in passing on positive adjustments while withholding negative ones.
Qaiser also claimed that a new FCA mechanism summary had been sent by the Power Division to NEPRA. This was contradicted by NEPRA's Mubashar Bhatti, who clarified that NEPRA had only commented on an earlier summary, and no new document had been received.
KE CEO Syed Moonis Abdullah Alvi said KE would comply with NEPRA's decision but voiced concern over the abrupt policy shift. 'In the past, KE consumers paid higher FCAs compared to the rest of the country. No one advocated uniformity then,' Alvi said. 'Now that FCA is lower for Karachi, withholding the relief is not only unfair but also undermines confidence in regulatory fairness,' he added. He emphasized that industries and consumers in Karachi were expecting the relief and deserved equal treatment.
Following internal deliberations, Chairman Mukhtar announced that NEPRA would reschedule the hearing for next week to allow further examination of the issues raised.
In its written communication, the Power Division referred to NEPRA's June 18, 2025 public notice announcing the June 23, 2025 hearing on KE's request for a provisional FCA for April 2025. KE had sought a negative FCA of Rs 4.69/kWh, amounting to Rs 7.173 billion in consumer relief. By contrast, consumers of state-run DISCOs were charged a positive FCA of Rs 0.9306/kWh for the same month, as per NEPRA's June 5, 2025 determination, notified via SRO 1046(I)/2025.
The Power Division argued that this significant discrepancy stems from KE's higher reference fuel cost of Rs 15.9947/kWh—provisionally allowed under NEPRA's May 27, 2025 MYT determination covering FY 2023-24 to FY 2029-30. It pointed out that the reference was originally established during the January–March 2023 quarter of the previous MYT and has continued to be used despite the passage of two years.
Highlighting the potential implications of this outdated reference, the Power Division stated that both it and CPPA-G have filed review motions to seek a re-determination of the FCA references under the applicable regulatory framework. Proceeding with the FCA decision based on these disputed provisional values, the Division warned, could lead to regulatory inconsistencies, retrospective adjustments, and unequal consumer treatment.
'This could contravene the principles of fairness, transparency, and due process laid out in the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 and the NEPRA Tariff (Standards and Procedure) Rules, 1998,' the letter added.
The Power Division urged NEPRA to defer KE's FCA decision for April 2025 until the motions are decided and new FCA reference values are formally adopted. The Division said the request was being made in the interest of regulatory consistency, consumer equity, and to prevent premature or potentially unjustified adjustments.
NEPRA is now expected to revisit the matter in its next scheduled hearing.
Copyright Business Recorder, 2025