Nepra okays Rs4.043/kWh negative adjustment for KE, 50 paisa per unit for Discos

Business Recorder

10-07-2025

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved a negative adjustment of Rs 4.043/kWh for K-Electric (KE) for April 2025 on provisional basis, and negative adjustment of 50 paisa per unit for consumers of Discos for May 2025 under the monthly Fuel Charges Adjustment (FCA) mechanism.
The Authority conducted hearings on these matters on June 30, 2025, which was attended by officials from relevant entities and the private sector. On the issue of KE, Power Division on June 27, 2025, again requested to defer the hearing by 15 days as it is experiencing increased workload due to Annual Tariff Rebasing, as well as, finalisation of Annual Budget of FY 2025-26.
However, the Authority did not accept the request of the Ministry of Energy (MoE) to again defer the hearing. During the hearing, Power Division reiterated its submissions and again requested to defer the hearing.
The MoE stated that the Authority, in the past has been applying FCA's on KE consumers with delay as was done for the period from July 2019 to May 2020 and recently from July 2023 to March 2024. It was also explained that the FCA mechanism of ICE is different from XW Discos and impact of higher FCA references of KE is picked up by the government of Pakistan as subsidy.
The MoE further submitted that a subsidy of Rs.125 billion is being provided in base tariff for ICE consumers, to make the base tariff and quarterly adjustments uniform with rest of the country. On the same analogy, KE's FCA needs to be made uniform with rest of the country, for which a summary is being presented before the Cabinet, in order to provide relief to the exchequer. Accordingly, the MoE requested to hold the FCA decision of April 2025 till the time approval of the Cabinet is sought to implement uniform FCA across the country.
On inquiry by Member Law regarding the time it would take the MoE to bring policy guidelines for uniformity of FCA across the country, the MoE responded that it would take around 10-15 days before the policy guidelines are finalised and sent to Nepra.
Upon inquiry from Member Technical, the MoE clarified that it is a seeking a prospective application of uniform FCA, as FCA for April 2025 would be charged in the billing month of July 2025.
The Authority noted that provisional FCA proceedings have been taking place since approx. two years, yet the MoE never objected to the reference FCC of Rs.15.9947/kWh. The proceedings for the FCA of April 2025 were initiated through advertisement of June 12, 2025, and hearing was rescheduled twice, but MoE has not been able to file any policy guidelines/ obtain approval of the Cabinet. Thus, the request of MoE to defer the FCAs is premature in the absence of any formal decision by the Cabinet.
Moreover, Nepra Act under Section 31(7) provides that the Authority may, on a monthly basis and not later than a period of seven days, make adjustments in the approved tariff on account of any variations in the fuel charges, although, such timelines are directory in nature and not mandatory.
The Nepra Act allows for uniformity in tariff to public sector licensees; however, National Electricity (NE) Policy 2021 provides that additionally, the government may maintain a uniform consumer-end tariff for K-Electric and state-owned distribution companies (even after privatisation) through incorporation of direct/ indirect subsidies.
Therefore, it remains to be seen whether, the Nepra Act and other applicable documents allow for the uniformity of FCAs or otherwise. Additionally, the pendency of MLRs does not bar the Authority to proceed with the FCA proceedings, as there is not stay in field.
The Authority also understands that definition of Federal Government emanates from Constitution of Pakistan itself which states that Federal Government means Prime Minister and Cabinet as clearly enunciated by the Supreme Court of Pakistan in Mustafa Impex case.
As the intervention request is from the MoE itself, which is not a juristic separate person rather an administrative unit of the Federal Government. During the hearing on FCA for Discos, Reihan Javed, a representative of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), and commentator Aamir Sheikh expressed concerns regarding the Furnace Oil levy. They argued that reliance on RFO-based plants could adversely affect the cost of power on the national grid.
Based on the discussion and in light of previous decisions of the Authority, the FCA for each Disco has been worked out individually— accounting for energy purchased from CPPA-G, bilateral contracts (captive power, SPPs), and net metering—as part of each Disco's separate energy basket.
However, given that a uniform tariff regime is mandated under the Nepra Act, National Electricity Policy, and National Electricity Plan, the Authority has also calculated a National Average Uniform Monthly FCA to be charged from all Disco consumers.
CPPA-G has been directed to ensure inter-Disco settlement of the FCAs calculated for each XW Disco, and the FCA charged from consumers, in order to accurately reflect the energy procurement and cost structure specific to each Disco.
The Authority decided that the adjustment will apply to all consumer categories except lifeline consumers, protected consumers, Electric Vehicle Charging Stations (EVCS), and all categories of pre-paid electricity consumers who have opted for the pre-paid tariff.
Copyright Business Recorder, 2025