ISLAMABAD : The National Electric Power Regulatory Authority (NEPRA) is facing a complex situation following a recent decision by the Appellate Tribunal (NEPRA) regarding the classification of cold storage facilities under commercial or industrial tariff categories.
The Tribunal directed NEPRA that, based on a consensus reached between the parties, if the appellants file applications, NEPRA is expected to decide them swiftly and in accordance with the law—while also providing all stakeholders an opportunity to be heard.
NEPRA, in its majority decision of December 23, 2024 had stated that ” the Authority is of a considered view that cold storage facilities do not fulfill the criteria as laid down in the consumer end tariff determinations for application of industrial supply tariff. In view thereof, all Discos, including K-Electric, are directed to consider all cold storages under commercial tariff category as already notified in terms and conditions of tariff of July 25, 2022,”
NEPRA had further stated that the tariff terms and conditions approved by the Authority specify that the commercial tariff applies to commercial offices and establishments, whereas the industrial tariff is intended for entities involved in manufacturing, value addition, or processing of goods. Cold storage facilities, however, typically serve as storage units used by grocery chains, food distributors, restaurants, and other retail businesses, primarily for holding goods such as fruits, vegetables, dairy, and meat products. These goods are stored in their original form without any additional processing, transformation, or enhancement—only to maintain freshness until they are ready for sale.
The cold storage facilities essentially function as intermediaries, providing a crucial link between wholesalers and retailers, or between producers and consumers, by preserving perishable items at the required temperature during storage or transit. This enables goods to remain in optimal condition until they reach the final point of sale but does not involve any industrial processes, such as manufacturing, value addition, or product transformation. Given that cold storage facilities engage solely in these commercial activities, with no industrial or value-added processes taking place, they are more appropriately classified under the commercial tariff category rather than the industrial tariff.
Chairman NEPRA, Waseem Mukhtar, in his note had stated that since Member (Tariff) was “on leave” on the day of decision and Member (Technical) and Member (Law) dissented to the Decision of the Authority, therefore, being a presiding person and having powers of casting vote in case of a tie in terms of section 5(4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997), He casted his vote in favour of the decision
Member (Technical ) Rafique Ahmad Shaikh, in his dissent note stated that based on the research & comments of CAD and Interveners, he dissents with the majority decision to classify all cold storages under a single commercial tariff for the reasons: (i) Cold Storages, which are involved in large scale processing, value addition & long term preservation of goods-especially in sectors like agriculture, food processing, pharmaceuticals shall be placed under the “Industrial Tariff’ ;(ii) Cold Storage, which handle short-term storage for retail and distribution without significant value addition, should be given under Commercial Tariff and ;(iii) blanket commercial classification of all types of cold storages (large & small) would unfairly increase costs for this particular industrial sector, which is critical to Pakistan’s economy.
Member (Law), Amina was of the view that as per NEPRA approved tariff terms and conditions, for the purpose of the application of industrial tariff an “Industry means a bona fide undertaking or establishment engaged in manufacturing value addition and/or processing of goods.” Therefore, to qualify for the industrial tariff, cold storage facilities are to satisfy’ the condition of manufacturing, value addition and for processing.
Cold storage facilities are typically large establishments that use technology to maintain precise temperature conditions. They generally employ heavy electrical, mechanical, chemical, and specialized equipment to preserve or enhance the physical, chemical, and nutritional properties of goods under controlled conditions. The actions performed in cold storage facilities enable the long-term storage of perishable items, while effectively maintaining their quality, which is much like the processing of goods. Similarly, enabling the accessibility and usage of goods when needed, without compromising quality, is the key value added by these facilities.
In many jurisdictions, cold storage facilities are classified as industrial or manufacturing operations rather than commercial/retail. Many U.S. states, such as California, New York, and Texas, classify cold storage as an industrial activity, charging these facilities industrial electricity and utility rates. The cold storage facilities in India are generally charged industrial electricity tariffs by state-level power distribution companies. However, practices vary across EU member states, but countries like the Netherlands and Poland apply industrial tariffs to cold storage based on their energy intensive nature and industrial zoning. In view thereof, she had disagreed with her learned colleagues’ decision to categorize the cold storage facilities under commercial tariff category.
The decision of NEPRA Authority had been challenged by 108 owners of Cold Storage at the Appellate Tribunal (NEPRA) titled ” Javed Iqbal Ch s/o Mushtaq Ahmad Prop; M/s Ever-Green Cold etc. Vs Federation of Pakistan etc. The Appellate Tribunal’s decision of April 16, 2025 has been sent to NEPRA and three Discos for necessary action.
According to the judgement, signed by Chairman Appellate Tribunal Zafar Ullah Khan Khakwani and Member (Electricity) Salman, Mian Sardar Ali Gehlan, Counsel for the Appellants, assisted by Ch. Arfan Raikwal (Advocate) and Barrister Syed Mudassir Hussain Shah Naqvi, Senior Legal Advisor for NEPRA were present during the hearing.
The judgement says that the Counsel for the 108 appellants having cold storage business (the Appellants) through this appeal has assailed the order of December 23, 2024 (the Impugned Order), passed by NEPRA Authority, whereby, representations / complaints filed in NEPRA by the Appellants against the change of tariff category of cold storage facilities consumers of LESCO from industrial tariff to commercial tariff has been declined through the Impugned Order.
The Counsel after placing on record Notification No.1(42)/2005-Inv-III, of February 06,2025 issued by the Government of Pakistan, Ministry of Industries and Production, Islamabad, submitted that the grievances of the appellants have been redressed with the issuance of the said Notification, whereby, the warehousing sector has been declared as an “Industry”. He further submitted that Appellants’ grievance now remains, to the extent that the refund of the excess charges received by LESCO during the period be adjusted, in favour of the Appellants.
The Counsel for the NEPRA Authority on court call responded to the appeal that in view of the presented Notification, the titled appeal has become infructuous. However, a time was given to both the parties for brief consultation on the issue in hand and after due deliberation of both the counsels, counsel for NEPRA, undertook that if the appellants filed appropriate applications to NEPRA Authority for redressal of their remaining grievance the same shall be decided expeditiously, in accordance with the law.
In view thereof, the appeal stood infructuous in view of the Notification of February 06, 2025, as well as the consensus arrived at between the parties. However, the Appellate Tribunal has also clarified that if the appellants file application /s, in view of the above consensus, it is expected from NEPRA that the said application/s shall be decided swiftly and in accordance with law, extending the opportunity of hearing to all stakeholders.
The source said, NEPRA is in very tricky position as the Tribunal has attributed some remarks to its Counsel, adding that the Authority might be filed an appeal against the decision of Appellate Tribunal, however, no final decision has been taken in this regard.
Ends
