No Apr FCA for Karachiites: Trade bodies demand Nepra reject PD plea
Letters of protest have been submitted by the Bin Qasim Association of Trade & Industry, the Pakistan Association of Large Steel Producers (PALSP), the Pakistan Tanners Association, and industrialist Rehan Jawed.
During a public hearing on June 23, 2025, regarding K-Electric's FCA for April 2025, the Power Division presented a letter to Nepra, requesting a deferral of the hearing on the grounds that the government is preparing to implement a uniform FCA across the country.
'New electricity provider in Karachi': NA panel underscores need for exploring possibility
The business community has raised a series of detailed legal and procedural objections, urging Nepra to consider them immediately.
The Associations argue that the Ministry of Energy, as part of the executive branch, has no lawful authority to interfere in NEPRA's quasi-judicial proceedings or to delay statutory processes. Citing Sections 3 and 7 of the NEPRA Act, they emphasized that Nepra is mandated to function independently and is not subject to executive directives once a determination has been made.
They maintain that the FCA is a formula-based, mechanical adjustment and that any interference is both unwarranted and illegal.
The business community points to Nepra's own determination dated May 27, 2025, in the K-Electric Multi-Year Tariff (MYT) case, which clearly stated:'To maintain consistency and avoid revisions to already determined FCAs, and to ensure no additional burden is placed on consumers, the Authority has decided to allow the reference FCC of Rs. 15.9947/kWh on a units-served basis for each month of FY 2023-24.'
They argue that this constitutes a binding precedent and cannot be overturned without following due legal process. The Ministry's unilateral request, they claim, has no legal merit and contradicts this established order.
The Associations further state that no cabinet approval has been granted for a revised uniform tariff structure. Therefore, unless and until such approval is formally issued and notified under the relevant legal framework, NEPRA's existing FCA mechanism—based on the approved reference fuel cost—must continue.
They also cited a Supreme Court judgment in Anoud Power Generation vs. WAPDA (PLD 2001 SC 340), which ruled that even if the cabinet later approves a tariff mechanism, it cannot be applied retrospectively unless specifically authorized by law.
According to the associations, the Power Division's letter is no more than a recommendation and lacks any statutory authority to override Nepra's determinations or delay implementation. They emphasized that FCA adjustments are governed strictly by Nepra's Standard Procedures and the Tariff Rules, and any delay violates the requirement for timely adjustments, which are also commitments under the IMF's Memorandum of Economic and Financial Policies (MEFP).
'The Power Division's argument about subsidy management is without merit,' stated the Bin Qasim Association of Trade & Industry. 'K-Electric has already underutilized the allocated subsidy in the 2024–25 federal budget due to better recovery rates and cheaper electricity imports from the NTDC. The fiscal impact argument, therefore, lacks substance, and consumers should not be penalized for executive-level fiscal concerns.'
The associations are calling on Nepra to hold an open hearing on the Power Division's letter and its proposed deferral, allowing all relevant stakeholders—especially industrial consumers in Karachi—to be heard. They argue that the principle of audi alteram partem (the right to a fair hearing) must be upheld.
'Until a new Cabinet-approved benchmark or uniform tariff is formally notified, the existing FCA reference cost of Rs. 15.9947/kWh remains legally binding. There is no justification for any executive override or temporary deferral—particularly when it would delay relief to consumers,' the associations stated.
They further expressed frustration over what they perceive as selective intervention by the Power Division. 'When consumers in Karachi were burdened with higher FCAs and demanded a uniform rate, the Ministry ignored our concerns. Now, when the FCA is lower for Karachi and offers relief, the Ministry is actively trying to block it. This double standard is unacceptable and deeply troubling,' they added.
The associations stressed that implementing a uniform FCA at this stage requires formal cabinet approval and a corresponding direction to NEPRA. In the absence of such legal backing, neither the Ministry of Energy nor the Central Power Purchasing Agency (CPPA) has the authority to interfere.
'We urge Nepra to reject the Ministry's request and proceed with the timely implementation of the negative FCA for K-Electric consumers in accordance with the law,' said PALSP. 'Any deviation would not only undermine the sanctity of the regulatory process but also violate consumer rights and established judicial precedent.'
They also called for a requirement that any future Ministry communications affecting tariff mechanisms be subject to public and stakeholder hearings before implementation.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
a day ago
- Business Recorder
Auditor General of Pakistan asked to conduct IPPs' audit
ISLAMABAD: Parliament's Public Accounts Committee (PAC) has launched a renewed push for accountability in Pakistan's power sector, directing the Auditor General of Pakistan to conduct a special audit of Independent Power Producers (IPPs). The move comes amid growing concerns over soaring capacity payments, questionable policy decisions, and the economic burden placed on citizens. Chaired by MNA Junaid Akbar, the PAC meeting scrutinized nearly a decade of data related to the country's private power generation sector. Despite a sharp rise in installed capacity—from 9,765 MW in 2015 to 26,642 MW in 2024 — and a doubling of electricity generation, members questioned whether these investments delivered value for money. More alarming was the escalation in capacity payments to IPPs, which ballooned from Rs 141.5 billion in 2015 to a staggering Rs 1.434 trillion in 2024. These payments are made regardless of actual electricity supplied and are now seen as a major contributor to the spiraling cost of electricity in Pakistan. Chinese CPEC IPPs press Pakistan govt for Rs475bn dues 'This is not just about numbers—it's about decisions that have economically burdened millions,' one PAC member remarked during the session. The Committee criticized the Power Division and its affiliated agencies for failing to provide comprehensive data on energy generation, usage, and cost-effectiveness. The establishment of the Sahiwal coal plant using imported coal came under heavy fire, with lawmakers questioning the rationale behind choosing expensive and environmentally harmful energy sources. 'When the world is exiting coal, why is Pakistan digging deeper into it—literally and financially?' asked one member. Environmental costs and transport inefficiencies only added to the scrutiny. Another major issue raised was the apparent misappropriation of Rs 45 billion from fuel payments to capital expenditures. The matter was referred to the Federal Investigation Agency (FIA) for a full inquiry and potential recovery. Members also flagged the paradox of load-shedding continuing despite surplus generation capacity. The Committee demanded to know why the surplus power was not being directed toward industrial and agricultural growth. The Power Division Secretary said that limited surplus electricity was temporarily provided to industries during the winter with IMF consent—and a longer-term plan is under consideration. The Committee also targeted inconsistencies in energy policy, such as the continued reliance on imported LNG while cheaper domestic gas plants remain idle—yet still receive capacity payments. With millions living below the poverty line, members described this as 'an unacceptable failure of governance.' Concern was also raised about the complex criteria for 'protected consumers.' Lawmakers argued that the six-month condition for receiving subsidies unfairly excludes vulnerable households. Officials disclosed that protected consumers increased from 11 million in 2018–19 to 18.7 million in 2025, with subsidies now reaching Rs 389.9 billion annually. A shift to a targeted subsidy system via BISP data is planned by 2027. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business Recorder
PAC asks AGP to conduct IPPs' audit
ISLAMABAD: Parliament's Public Accounts Committee (PAC) has launched a renewed push for accountability in Pakistan's power sector, directing the Auditor General to conduct a special audit of Independent Power Producers (IPPs). The move comes amid growing concerns over soaring capacity payments, questionable policy decisions, and the economic burden placed on citizens. Chaired by MNA Junaid Akbar, the PAC meeting scrutinized nearly a decade of data related to the country's private power generation sector. Despite a sharp rise in installed capacity—from 9,765 MW in 2015 to 26,642 MW in 2024 — and a doubling of electricity generation, members questioned whether these investments delivered value for money. More alarming was the escalation in capacity payments to IPPs, which ballooned from Rs 141.5 billion in 2015 to a staggering Rs 1.434 trillion in 2024. These payments are made regardless of actual electricity supplied and are now seen as a major contributor to the spiraling cost of electricity in Pakistan. Chinese CPEC IPPs press Pakistan govt for Rs475bn dues 'This is not just about numbers—it's about decisions that have economically burdened millions,' one PAC member remarked during the session. The Committee criticized the Power Division and its affiliated agencies for failing to provide comprehensive data on energy generation, usage, and cost-effectiveness. The establishment of the Sahiwal coal plant using imported coal came under heavy fire, with lawmakers questioning the rationale behind choosing expensive and environmentally harmful energy sources. 'When the world is exiting coal, why is Pakistan digging deeper into it—literally and financially?' asked one member. Environmental costs and transport inefficiencies only added to the scrutiny. Another major issue raised was the apparent misappropriation of Rs 45 billion from fuel payments to capital expenditures. The matter was referred to the Federal Investigation Agency (FIA) for a full inquiry and potential recovery. Members also flagged the paradox of load-shedding continuing despite surplus generation capacity. The Committee demanded to know why the surplus power was not being directed toward industrial and agricultural growth. The Power Division Secretary said that limited surplus electricity was temporarily provided to industries during the winter with IMF consent—and a longer-term plan is under consideration. The Committee also targeted inconsistencies in energy policy, such as the continued reliance on imported LNG while cheaper domestic gas plants remain idle—yet still receive capacity payments. With millions living below the poverty line, members described this as 'an unacceptable failure of governance.' Concern was also raised about the complex criteria for 'protected consumers.' Lawmakers argued that the six-month condition for receiving subsidies unfairly excludes vulnerable households. Officials disclosed that protected consumers increased from 11 million in 2018–19 to 18.7 million in 2025, with subsidies now reaching Rs 389.9 billion annually. A shift to a targeted subsidy system via BISP data is planned by 2027. Copyright Business Recorder, 2025
Express Tribune
2 days ago
- Express Tribune
K-P unveils app for flood compensation
The Khyber-Pakhtunkhwa government has launched a mobile app-based digital payment system to ensure transparent and timely compensation for flood victims. Chief Minister Ali Amin Khan Gandapur formally inaugurated the initiative on Monday. The newly developed app, "Digital Disaster Compensation Management", was created by the K-P Information Technology Board in record time and integrated with the government's central service delivery platform "Dastak." Through the system, flood-affected families will receive compensation for damaged properties directly via online transfers. Victims will be able to upload details of property losses and submit claims digitally. Using geo-tagging, the mechanism aims to eliminate false claims, while verification of damages and disbursement of payments will be fully automated. Officials said the process would remain completely paperless and cashless. A dedicated dashboard will allow the Chief Minister, Chief Secretary, and senior officials to monitor real-time data on reported damages and disbursed payments. Calling the launch a "major step" toward swift and transparent relief, Gandapur praised officials for developing the app within a short time. "This will not only provide quick payments to the victims but also guarantee transparency in the process," he remarked. In addition, the Chief Minister announced that he will donate his one-month salary to support flood victims across the province. Provincial cabinet members will contribute 15 days' salary, MPAs seven days' salary, Grade-17 and above officers two days' salary, while employees from Grade-1 to 16 will give one day's salary. To ensure accountability, Gandapur directed that a special account be set up under the Provincial Disaster Management Authority (PDMA) with a clear and transparent mechanism for disbursing funds. He assured that every rupee would be properly accounted for and details made public. "The flood-affected people deserve our utmost attention and support," the Chief Minister said. "In this difficult time, all of us must come forward generously to help them." He said that government has intensified relief operations in the flood-affected districts, particularly in Buner, where emergency camps have been established to assist victims. In the first phase, compensation payments for the deceased and injured are already underway. Meanwhile, a survey to assess property losses is in progress. Chief Minister directed officials to ensure early completion of all compensation disbursements for fatalities and injuries. He further instructed the administration to expedite the survey of damages to private properties, including livestock and shops, and compile accurate data in the shortest possible time. Gandapur also emphasized providing cash assistance instead of ready-made food, enabling victims to utilize the funds according to their needs. The chief minister underlined the need for a transparent mechanism based on NADRA data to ensure fair distribution of aid. He also directed that district administrations must never face a shortage of funds for any relief activity, stressing the constant availability of financial resources.
