NEPRA grills power division for sudden wakefulness over FCA matter

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) held a fiery hearing over the deferral request regarding the Fuel Cost Adjustment (FCA) for KE. The hearing for April 2025’s FCA relief of Rs. 4.69 per unit, saw sharp criticism towards representatives from the Power Division (PD) from NEPRA and power consumers alike as they debated the fairness and legality of the request to defer the FCA by the Power Division.

Amina Ahmed, Member Legal at NEPRA, called out the PD for trying to freeze the FCA decision based on its sudden change of stance. She said that the reference price of Rs. 15.99 has been in place for two years, and there is no legal or practical basis to hold the FCA decision and now the Power Division wants to put everything on hold just because they have woken up from their slumber. She questioned them about the policy guidelines on FCA and when these would be approved from the cabinet to which their representative gave a timeline for ten to fifteen days.nepra announcement

Representative from KE presented the utility’s April FCA case by revealing that Rs. 7.173 billion were set to be passed on to consumers. The utility has been passing on relief to its consumers in the form of negative FCAs since September 2024.

The Power Division argued that the FCA hearing should be deferred to protect the federal budget and prevent undue pressure on the exchequer. It suggested that a decision on this matter could worsen the fiscal burden, particularly since the subsidy for the sector is already straining public finances. However, NEPRA was unimpressed, pointing out that the deferral request lacked a solid legal basis and had not been substantiated by any valid procedural grounds.

Ahmed Ibrahim, Senior Legal Advisor at NEPRA voiced concerns about the legal validity of the Power Division’s request to defer FCA decision. He reminded the forum that there was no court order or stay that would justify halting the FCA process. He emphasised that NEPRA had exclusive jurisdiction over tariff determinations, and the Ministry’s sudden objection was not supported by law. He argued that the Ministry’s objections were premature and lacked legal foundation and that there is a well-defined legal framework governing the FCA mechanism.

 He further explained that if there were concerns about FCA proceedings, they should have pursued other legal remedies instead of requesting a postponement based on a pending review petition. Ibrahim pointed out that without a stay order, the existing determination by NEPRA remains in force.

He added that the Ministry of Energy is an administrative unit of the federal government, stressing that their role in this matter was limited and that any further delays could undermine the legal framework established for such adjustments.

The Chairman of NEPRA also weighed in, stressing that the hearing was scheduled well in advance, and the Power Division’s request for a further deferment was unjustified. He pointed out that the deferment request was made too late and questioned the failure to consult or follow the legal process earlier. One of the central arguments revolved around the idea of uniformity in FCA adjustments.

CEO KE, Moonis Alvi, stated that KE will follow NEPRA’s notification and abide by its decision while requesting for the decision to be taken from a fairness perspective. He also added that had he been an industrialist planning production and exports based on this situation, it would have been considered unfair considering the current ambiguity.

Rehan Javed, an industrialist from Karachi, highlighted that the Power Division had never raised objections when FCA adjustments used to be positive leading to Karachi’s consumers paying a higher price, leading to accusations of bias. He argued that this inconsistency harmed Karachi’s industrialists and residents, who were also burdened by PHL surcharge despite having no contribution to the circular debt.

He discussed IMF’s call for timely tariff adjustments, along with the demand for improved power sector efficiency. Javed also clarified that the subsidy settlement between the government and KE was unrelated to the current year’s issue and made a call for NEPRA to make an independent decision, free from external pressure, highlighting that while Karachi consumers benefit now, they had previously borne losses.

Arif Bilvani, a participant from Karachi voiced frustration over the long-standing neglect of Karachi’s issues in the power sector. He asked why the Power Division had only now decided to intervene in the matter of FCA adjustments for Karachi consumers and that they should be allowed to benefit fully from the FCA adjustment.

Tanveer Barry, representative of Karachi Chamber of Commerce and Industries (KCCI), called the Power Division’s objections “unfair,” pointing out that Karachi was being unfairly targeted despite its zero contribution to circular debt.

The session ended with a firm reminder that regulatory decisions in the energy sector must be made transparently and independently, free from the external influence of the Ministry. The stakeholders await NEPRA’s final ruling, hoping it will offer a fair resolution for Karachi’s power consumers.

As the hearing drew to a close, NEPRA Chairman reaffirmed the regulator’s position, stating that their decision would be based strictly on the law.