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Express Tribune
an hour ago
- Business
- Express Tribune
Karachi slams attempt to block FCA relief
Listen to article Karachi-based industrialists and consumers have voiced serious concerns over the Power Division's interference in blocking relief and rescheduling K-Electric's (KE) hearing. Various stakeholders have approached the national power regulator, National Electric Power Regulatory Authority (NEPRA), urging it to reject the Power Division's request to deny Rs7.173 billion (Rs4.69/kWh) in Fuel Charges Adjustment (FCA) relief for April 2025 to KE consumers. They have also expressed serious concerns over the rescheduling of KE's hearing. Prominent Karachi-based energy expert and intervener Arif Balwani has written a letter to the power regulator opposing the Power Division's last-minute request to defer the FCA hearing for K-Electric. The hearing, originally scheduled for June 19, 2025, was rescheduled to June 23, 2025. NEPRA has now fixed June 30, 2025, for the next hearing. "It must be stated unequivocally that the FCA mechanism is a statutory and formula-based process under the NEPRA Tariff (Standards and Procedure) Rules, 1998. It is not a petition, nor does it entail discretionary regulatory indulgence warranting intervention," Balwani stated, adding that the authority's notice — consistent with past practice and law — rightly invited "interested/affected parties to submit written/oral comments as permissible under the law." He said that the notice did not — and could not — invite any intervention, which is governed by specific provisions and procedures applicable to tariff petitions or licensing matters under the NEPRA Act and relevant regulations. "The belated oral objection raised by the Power Division (PD) — during the hearing itself and without prior written noticeis procedurally improper, contrary to principles of natural justice, and has no basis in the NEPRA Act (XL of 1997), the NEPRA Tariff Rules, or any codified regulation," he said, adding that there is no statutory provision empowering the authority to suspend or defer a lawfully convened FCA hearing at the unilateral behest of an executive division lacking any regulatory jurisdiction. He further added that the PD's contention regarding the reference fuel price of Rs15.9947/kWh — derived from the previous Multi-Year Tariff (MYT) 2016-2023 — has been repeatedly used for interim FCA determinations without objection. The Power Division has acquiesced to the continued application of this reference benchmark for several months post-MYT expiry. It cannot now be permitted to challenge its validity retroactively without citing any contrary provision of law or proposing an alternative interim methodology. More critically, the Additional Secretary of the Power Division admitted on record that the request for deferral was not backed by any formal decision of the federal government, cabinet, or Economic Coordination Committee (ECC). Balwani said this renders the request ultra vires, lacking both authority and democratic legitimacy. The absence of any Cabinet directive further underscores that this initiative is an unauthorised executive overreach attempting to influence the statutory functions of an independent regulatorcontrary to the separation of powers enshrined in the Constitution. He said the Power Division's further assertionthat the negative FCA should not be passed on to KE consumers due to International Monetary Fund (IMF) programme constraintsis not only irrelevant in the context of regulatory law but also unsupported by any statutory or contractual obligation.
Business Recorder
a day ago
- Business
- Business Recorder
Ministries oppose gas price increase
ISLAMABAD: The gas price increase has been opposed in its current form by several line ministries, citing concerns that it will disproportionately impact the industrial sector, lead to higher electricity prices, and result in cross-subsidization of the fertiliser industry at the expense of other industries. The concerns raised by ministries representing various sectors have also been made part of the summary which came under consideration of the Economic Coordination Committee (ECC) of the Cabinet. The Power Division stated that the proposed hike in gas rates for the power sector—from Rs 1,050/mmBtu to Rs 1,313/mmBtu—will increase electricity generation costs for thermal plants using domestic gas by approximately Rs 10 billion in FY 2025–26. This increase is expected to result in higher Fuel Cost Adjustments (FCA), ultimately passed on to consumers, raising electricity tariffs by around Rs 0.10 per unit. Pakistan now gas-surplus amid demand collapse, says Motiwala The Power Division further noted that rising generation costs could make electricity less affordable for all consumer categories. This may reduce the overall sales of Discos, with a knock-on effect on capacity payments in the power sector. Additionally, the price hike would reduce the merit order ranking of gas-based power plants, pushing them below imported fuel plants such as those using coal. This shift could result in an estimated foreign exchange exposure of around $140 million due to increased coal imports. The Division cautioned that such a change in the energy mix must be carefully considered due to its implications for energy affordability, the balance of payments, and broader macroeconomic stability. In a scenario where imported fuel-based plants replace gas plants, the Sui gas companies could face estimated revenue losses of Rs 39 billion, depending on global fuel price trends. The Power Division also addressed a reported Rs 41 billion revenue shortfall claimed by SNGPL, attributed to RLNG diversion. However, it emphasized that the cost of RLNG diversion is already covered under Gas Supply Agreements (GSAs) with government power plants and reimbursed through CPPA-G via NPD payments. Therefore, it recommended that only genuinely unrecovered amounts, if any, be allowed in SNGPL's accounts. The Ministry of Industries and Production (MoI&P) expressed concern that increasing gas prices for the general industry—from Rs 2,150 to Rs 2,350/mmBtu—will escalate the cost of doing business, hinder industrial growth, and damage export competitiveness. The Ministry warned this would further disadvantage Pakistani industries compared to regional competitors. MoI&P highlighted that the new National Tariff Policy 2025–30 aims to reduce Customs duties on finished goods and decrease input costs for locally manufactured products. These objectives would be undermined if the cost of industrial inputs like gas continues to rise. The Ministry recommended that the Petroleum Division reconsider its decision and refrain from increasing gas prices for the general industry. The Finance Ministry also raised objections, noting that while gas prices for the fertiliser sector have been kept unchanged, the process industry will face a Rs 200/mmBtu increase. It argued this effectively results in the process industry cross-subsidising the fertiliser sector. The Petroleum Division was urged to consider full cost recovery from the fertiliser sector to alleviate the subsidy burden on the rest of the industry. Furthermore, the Finance Ministry criticized the current practice of recovering Unaccounted-for Gas (UFG) losses through consumer pricing, which it said discourages utilities from improving operational efficiency. It recommended that the Petroleum Division brief the ECC on planned UFG reduction measures and their financial implications. The ministry also requested the Petroleum Division to inform the ECC whether lifting the moratorium on new gas connections could help address surplus RLNG issues and the curtailment of indigenous gas production. Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business
- Business Recorder
Muharram, Ashura: Fesco adopts all measures for continuous power supply
FAISALABAD: On the special orders of Federal Minister for Energy (Power Division), Sardar Awais Ahmed Khan Leghari, all necessary measures have been adopted in the Fesco region to ensure uninterrupted electricity supply throughout the region during Muharram and Ashura. Under the supervision of the Chief Executive Officer (CEO) Faisalabad Electric Supply Company (Fesco) Engr Muhammad Aamer, a Regional Control CentRE has been established at Fesco Headquarters to ensure continuous power supply during Muharram, while emergency centers have also been established in all six operation circles of Fesco, in which officers have been assigned duties. Copyright Business Recorder, 2025
Express Tribune
2 days ago
- Business
- Express Tribune
SCO cooperation in energy sought
The minister invited international partners to invest in the nationwide rollout of Advanced Metering Infrastructure (AMI), estimating a $3 billion need to serve over 30 million consumers. PHOTO: File Listen to article Federal Minister for Energy (Power Division) Sardar Awais Ahmed Khan Leghari on Thursday virtually addressed the Shanghai Cooperation Organisation (SCO) Energy Ministers Conference, where he outlined Pakistan's vision for a clean, secure, and collaborative energy future. Speaking under the theme "Integrate Innovation for Energy Future," Leghari stressed the urgent need for regional cooperation, technological advancement, and policy reforms to confront global energy challenges. According to an official statement from the Ministry of Energy (Power Division), the minister highlighted Pakistan's ongoing energy sector transformation, underscoring the shift from short-term fixes to long-term structural reforms in the energy sector. He pointed to the establishment of several new institutions — such as the Power Planning & Monitoring Company (PPMC), Energy Infrastructure Development and Management Company (EIDMC), National Grid Company (NGC), and Independent System and Market Operator (ISMO) — as a foundation for improved governance, modernisation of the grid, and promoting transparent market operations. Leghari reaffirmed Pakistan's clean energy targets, reiterating the government's commitment to reaching 60% renewable energy and 30% electric vehicle penetration by 2030. He outlined initiatives such as the deployment of smart meters, enhancement of operational efficiency through data-driven systems, and the launch of a dedicated Research & Development (R&D) Secretariat to encourage local innovation and technology transfer. Underscoring Pakistan's geographical position as a regional energy bridge between Central Asia, South Asia, and the Gulf, Leghari called for greater cross-border electricity trade, investment in shared infrastructure, and the creation of joint security frameworks for energy systems. He stressed the importance of completing the CASA-1000 project and urged Afghanistan to fully participate as both a transit and offtake country to support regional energy integration and stability. To strengthen collaboration under the SCO framework, Leghari proposed five initiatives: the creation of an SCO Secretariat for Energy Innovation and R&D Collaboration, an Energy Innovation Fellowship Programme for young researchers, joint demonstration sites in Pakistan for renewable and smart grid technologies, a web-based Energy Cooperation Dashboard for project tracking, and a Project Prioritisation Committee to focus on high-impact initiatives. Looking ahead, the minister announced Pakistan's upcoming energy infrastructure investment plan, which will offer international partners bankable opportunities, supported by promising a transparent and investor-friendly environment. He invited international partners to invest in the nationwide rollout of Advanced Metering Infrastructure (AMI), estimating a $3 billion need to serve over 30 million consumers. "Pakistan is not only seeking investment," Leghari said, "we are offering long-term partnerships built on trust, innovation, and mutual benefit. We are ready to work with all SCO member states to turn our shared energy goals into practical solutions that benefit our people and our region."
Business Recorder
3 days ago
- Business
- Business Recorder
No Apr FCA for Karachiites: Trade bodies demand Nepra reject PD plea
ISLAMABAD: In protest against the Power Division's intervention to block the application of negative Fuel Cost Adjustment (FCA) for April 2025 for Karachiites, several trade associations have written to the National Electric Power Regulatory Authority (Nepra), demanding that any such request be rejected outright. 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
