Energy Ministry obstructs FCA benefit for KE Consumers
STAFF REPORT:
ISLAMABAD: The Federal Ministry of Energy has sought to delay relief for K-Electric’s (KE) customers under Fuel Cost Adjustment (FCA), arguing that it will impact the uniform tariff system across the country. The public hearing held on Monday, instead of deliberating upon the negative FCA request filed by KE, became a boxing match between uniform tariff and passing on the justified FCA relief for KE customers. KE had filed a request for a PKR 4.69 per unit reduction in fuel charges for the month of April 2025. This adjustment would have been the eighth successive monthly relief to consumers since September 2024.
The ministry cited concerns about the impact on the uniform tariff system, stating that there was a need to maintain fiscal discipline and avoid exacerbating the financial challenges posed due to the ongoing International Monetary Fund (IMF) programme. The Ministry also mentioned that the Federal Government had already allocated PKR 21 billion in subsidies for FCA adjustments, which, it argued, could be affected by any relief granted at this stage.
The Ministry cited concerns about the impact on the uniform tariff system quoting the need to maintain fiscal discipline and avoid exacerbating the financial challenges posed due to the ongoing IMF programme. The Ministry also mentioned that the Federal Government had already allocated PKR 21 billion in subsidies for FCA adjustments, which they argued could be affected by any relief granted at this stage.
Chairman NEPRA, Waseem Mukhtar responded firmly, expressing strong disapproval of this intervention during a public hearing. He mentioned that the timing of this request was highly inappropriate. He raised questions regarding the relationship between FCA adjustments and subsidies, dismissing the Ministry’s concerns about uniform tariffs and questioned this proposal and whereabouts of such a mechanism. The Chairman further emphasised that FCA, by nature, should not be linked to subsidy decisions and questioned why such issues were being raised during an ongoing hearing.
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He also questioned what the FCA treatment should be if the authority agrees to defer the FCAs, considering the motions which could take up to six months for a decision and whether the burden would be taken up or passed on to the consumers. Mukhtar also cited concerns regarding questions being potentially raised about the authority’s transparency in decision making. He also cited that the upcoming billing cycle would be affected to begin with because of this confusion.
CEO KE, Moonis Alvi, mentioned that KE would comply with the decision made by NEPRA, following the regulatory process and justice for consumers. He emphasised that the monthly negative FCA would have provided significant relief to Karachi’s industries and consumers and halting it now may not be justified. While drawing a comparison and difference to this approach, Alvi further pointed out that when KE’s FCAs were higher in the past, the concept of uniformity at a national level was not considered.
The FCA adjustment is a key part of the regulatory framework used to adjust electricity prices based on fluctuations in global fuel prices and changes in electricity generation mix. While KE has already seen reductions in its monthly FCA due to lower global fuel prices, this delay in Karachi is seen as a direct interference in a process designed to benefit the city’s consumers.
There is also concern about the impact this delay could have on Karachi’s economic activities, with customers already facing challenges from the high cost of energy at the national level. Moreover, the Ministry’s argument that this adjustment might interfere with a uniform tariff system is seen by many as a thinly veiled attempt to maintain control over pricing at th…