Proposed amendments to NEP Strategic Directive-87: PD facing strong resistance from provinces
The Sindh government has raised constitutional and practical concerns, asserting that Article 157 of the Constitution empowers provinces to develop, transmit, and distribute electricity within their jurisdictions. Therefore, any federal directive must respect this mandate and not impose structural or pricing mechanisms that hinder provincial rights or market competition.
In comments submitted to the Cabinet Committee on Energy (CCoE), Sindh Secretary for Energy, Mushtaque Ahmed Soomro, highlighted concerns around 'stranded costs' during the market transition. He noted that linking these costs to the full generation capacity charges of the Supplier of Last Resort (SoLR) renders open access economically unviable, undermining the very purpose of market liberalization.
NE plan, SEC rules: Nepra concerned at proposed amendments
Sindh has proposed the following remedies: (i) adopting a phased or tapered approach to stranded cost recovery;(ii) ensuring efficiency gains are factored into stranded cost calculations; and (iii) conducting third-party validation of the stranded cost methodology with provincial input.
Sindh also criticized the proposed 800 MW cap for open access over five years, arguing that it disproportionately restricts industrial zones—particularly in Karachi, which holds the country's largest industrial load. The province called for this cap to be determined dynamically by the regulator based on grid capacity and market signals, and for provincial quotas to ensure equitable access.
The provincial government further emphasized that proposed frameworks and auction mechanisms will directly affect industrial policy and economic development. To ensure fair implementation, it recommended: (i) formal provincial representation in auction framework design and oversight; and (ii) regular consultations between ISMO, the Ministry of Energy, and provincial governments for transparent auction design and demand quantum allocation.
Soomro reiterated that any move toward market liberalization must align with Article 157. 'The goals of open access and market liberalization may be supported,' he stated, 'but not through a policy that discourages competition, restricts industrial growth, or marginalizes provincial participation.'
To that end, Sindh recommended key changes to Strategic Directive-87, proposing the following: (i) open access charges, including grid usage, metering, and cross-subsidy fees, should be recovered from consumers opting for open access for the duration of the NE Plan or as amended by the government; (ii) the federal government must consult provinces in developing policy frameworks for stranded cost recovery, incorporating market realities and introducing incentives for competitive transparency; and (iii) for intra-provincial bilateral trading, the relevant provincial government should define the open access charge frameworks.
Sindh further emphasized that capacity allocation is a regulatory function and should remain with the regulator. Where no framework exists, stranded costs should be shared by all bulk power consumers of a competitive supplier, based on the generation capacity charges applicable to similarly situated consumers of the SoLR.
The Balochistan government also raised objections, particularly over the financial burden imposed on export-oriented industries. It argued that under the Competitive Trading Bilateral Contract Market (CTBCM) framework, open access should be limited to Use of System Charges (UoSC). Including stranded costs or cross-subsidies would distort fair market competition, escalate electricity prices, and deter investments in renewable energy and local projects.
In a formal letter, Balochistan Secretary for Energy Dawood Bazai stated that the province does not support the inclusion of cross-subsidies or systemic inefficiencies in the open access tariff, warning that such an approach would render CTBCM ineffective and unaffordable for the province's industrial and export sectors.
He further recommended that: (i) open access allocations be determined based on comprehensive market needs assessments in consultation with provincial stakeholders; and (ii) a structured, time-bound plan be developed to phase out cross-subsidies from industrial tariffs to promote sustainable energy access and economic growth.
According to sources, the Khyber Pakhtunkhwa government also conveyed its concerns through official channels. However, it received the CCoE summary only hours before the meeting — chaired by the Prime Minister — that approved wheeling charges of Rs 12.55 per kWh.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
20 hours ago
- Express Tribune
PTI MNA faces ouster over absence
Shaikh Waqas Akram said that the first phase of the civil disobedience movement is ongoing, and it is aimed at Pakistanis living abroad. PHOTO: WIKIMEDIA COMMONS PTI lawmaker Sheikh Waqas Akram may be in trouble as a decision on a motion by PML-N member Nosheen Iftikhar is expected on August 11. In an earlier session, MNA Nosheen had moved a motion proposing the termination of Akram's membership, stating that his absence for 40 consecutive days warranted action under the Constitution. Responding to the motion, National Assembly Speaker Sardar Ayaz Sadiq on August 5 indicated that the membership of Akram could be terminated. The speaker pointed out that Akram had not attended the assembly for the last 40 days and had not submitted a leave application.
Business Recorder
21 hours ago
- Business Recorder
SRO to be reinstated soon, Jam tells APSGJTA
ISLAMABAD: Minister for Commerce, Jam Kamal Khan, on Friday assured the All Pakistan Small Gems Jewellers & Tools Association (APSGJTA) that SRO 760 will be reinstated soon, expressing satisfaction with the arguments presented by industry representatives and exporters. The Ministry of Commerce also held a Zoom meeting with gold exporters, who urged the minister to prioritise the reinstatement of the SRO. Exporters highlighted that their import and re-export consignments have been delayed, with a 50-kg gold consignment currently stuck at the port. The SRO expired on July 8, 2025. 'Buyers of Pakistani exporters are considering legal action against their local partners for failing to meet commitments,' said Shabir Ahmad Awan, Convener of APSGJTA's Export Standing Committee, while speaking to Business Recorder. Both the Commerce minister and secretary Commerce assured exporters that the suspended SRO would be reinstated as soon as possible. However, exporters remain concerned that the matter could once again stall at the Prime Minister's Office (PMO) — as in the past. Earlier, the additional secretary of Commerce had informed the National Assembly Standing Committee on Commerce that a special committee had cleared the matter. However, the PMO returned the proposal for reconsideration. Speaking to Business Recorder, Jawed Hanif Khan, Chairman of the NA Standing Committee on Commerce, said he has convened a meeting on August 18, 2025, to raise the issue once again. 'Officials from the Commerce Ministry gave their word that the matter has been resolved,' he said. The gold jewellery export sector operates under SRO 760(I)/2013, which offers tax exemptions under Clause 6: 'Import duty and taxes on the import of precious metals and gemstones under this order shall be exempt from normal import tariffs and taxes. Import of other raw materials, tools, machinery, and equipment required for the production and export of items shall also be exempt from normal import tariffs and taxes.' However, contrary to this provision, sales tax exemptions are not available across all schemes related to the import of precious metals and associated items. While Customs Duty, Additional Customs Duty, and Withholding Tax are exempt under relevant laws, the Sales Tax Act only provides exemption for gold imported under the Entrustment Scheme (S No 178, Sixth Schedule). Imports under the Self-Consignment Scheme, and other related items, remain subject to the standard 18 percent sales tax. Copyright Business Recorder, 2025
Business Recorder
21 hours ago
- Business Recorder
Auction suspension: SC turns down Bahria Town's plea
ISLAMABAD: The Supreme Court turned down M/s Bahria Town (Private) Limited's plea to halt the auction of its properties, but issued notices to the respondents. A three-judge bench headed by Justice Aminuddin Khan and comprising Justice Naeem Akhtar Afghan and Justice Miangul Hassan Aurangzeb on Friday heard an appeal of Bahria Town against the IHC's short order. A division bench of the IHC on August 5, 25, dismissed the petitions of Bahria Town, and stated: 'The injunctive orders issued by this Court vide order dated 15.04.2025 passed in W.P No.1368 of 2025 and order dated 04.06.2025 passed in W.P No.2248 of 2025 are hereby recalled.' During the proceeding, Farooq H Naek, appearing on behalf of Bahria Town, prayed that stay order be granted against the IHC's order. However, Justice Amin declined the request saying how come the stay order be issued without hearing the other side. Justice Naeem questioned what the National Accountability Ordinance says about plea bargain? He noted that if an accused challenges the plea bargain process then it becomes inoperative, adding in the instant matter the accused has challenged the plea bargain, and the applications against them are pending, but the properties are being auctioned. Justice Naeem observed that instead of main petition only the Civil Miscellaneous Applications (CMA) were fixed for hearing Friday (Aug 8), adding how come they can hear the CMAs without hearing the main petition. Naek told that he came to know about this case late at night, adding still the case is not issued on the cause list. The counsel stated thanks God that he was in Islamabad, therefore, appearing before the bench. The bench ordered Naek to file more documents pertaining to the case. Justice Naeem noted that Bahria Town's case is based on three NAB references, while they do not have copies of the references before the Court. Justice Naeem, therefore, ordered Farooq Naek to attach the documents with the application, so that may know what is the actual case? Naek said he would supply the documents tomorrow. M/s Bahria Town (Private) Limited on August 6, filed an appeal against the IHC's order under Article 185(3) of the Constitution. It asked the apex court that a regular bench hear the appeal, as no vires of any law have been challenged or interpretation of any constitutional provision is involved in the case. The petition raised questions whether, in view of the amended proviso to Section 25(b) of the National Accountability Ordinance, 1999, the plea bargain agreement automatically becomes inoperative and unenforceable upon the accused's failure to fulfill the terms and conditions stipulated therein? Whether the NAB authorities can lawfully determine or attribute any liability arising out of a plea bargain agreement in the absence of the accused and without associating the accused in such proceedings? The case is adjourned until August 13. Copyright Business Recorder, 2025
