NEPRA okays negative FCAs for KE and DISCOs

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 a provisional basis, and 50 paisa per unit for DISCOs’ consumers for May 2025 under the monthly Fuel Charges Adjustment (FCA) mechanism.
The Authority conducted hearings on June 30, 2025, attended by officials from relevant entities and the private sector.
K-Electric FCA
On the issue of K-Electric, the Power Division on June 27, 2025, once again requested a 15-day deferral of the hearing, citing increased workload due to Annual Tariff Rebasing and finalization of the Annual Budget for FY 2025-26. However, the Authority did not accept the Ministry of Energy’s (MoE) request to defer the hearing.
During the proceedings, the Power Division reiterated its request, noting that in the past, FCAs for KE consumers had been delayed — as was the case from July 2019 to May 2020, and more recently from July 2023 to March 2024.
It was explained that KE’s FCA mechanism differs from that of XWDISCOs, and that the impact of higher FCA references for KE is absorbed by the Government of Pakistan (GoP) as subsidy. The MoE stated that Rs 125 billion is already being provided in base tariff subsidies for KE consumers to bring the base tariff and quarterly adjustments in line with the rest of the country.
On this basis, the MoE argued that KE’s FCA should also be made uniform with other distribution companies, and that a summary is being submitted to the Cabinet to enable this adjustment, with the goal of easing pressure on the exchequer. The Ministry therefore requested the Authority to defer the FCA decision for April 2025 until the Cabinet approves the uniform FCA policy.
In response to a query from Member Law about the timeline for issuing policy guidelines on FCA uniformity, the MoE stated that it would take 10–15 days to finalize and forward the policy to NEPRA.
To a question from Member Technical, the MoE clarified that it was seeking a prospective application of the uniform FCA, since the FCA for April 2025 would be charged in the billing month of July 2025.
The Authority observed that provisional FCA proceedings have been ongoing for nearly two years, yet the MoE had not raised any objection to the reference Fuel Cost Component (FCC) of Rs 15.9947/kWh. The FCA proceedings for April 2025 were initiated via a public notice on June 12, 2025, and the hearing was already rescheduled twice, but no policy guidelines or Cabinet decision has been submitted to date. As such, the Authority concluded that the MoE’s deferral request is premature in the absence of a formal Cabinet decision.
NEPRA further noted that Section 31(7) of the NEPRA Act allows the Authority to adjust the approved tariff on a monthly basis, within seven days, to account for fuel cost variations. Although the timeline is directory, not mandatory, the Act does allow for tariff uniformity among public sector licensees. The National Electricity Policy 2021 also allows the government to maintain a uniform consumer-end tariff for KE and state-owned DISCOs (even after privatization) through direct or indirect subsidies.
However, the Authority stressed that it remains to be determined whether the NEPRA Act and other applicable legal instruments permit uniformity of FCAs, and that the mere pendency of Motion for Leave for Review (MLRs) does not prevent the Authority from continuing FCA proceedings, as no court stay order is in effect.
The Authority also emphasized that the definition of the “Federal Government” stems from the Constitution of Pakistan, which establishes that the Prime Minister and Cabinet constitute the Federal Government, as affirmed by the Supreme Court in the Mustafa Impex case. Therefore, a request from the MoE—an administrative unit, not a separate juristic entity—cannot be treated as a decision of the Federal Government unless backed by Cabinet approval.
DISCOs FCA for May 2025
During the hearing on the FCA for DISCOs, Rihan Javed, a representative of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), and Aamir Sheikh, a commentator, voiced concerns about the Furnace Oil levy. They warned that operating RFO-based plants could adversely impact power costs on the national grid.
Based on the hearing and past decisions, the FCA for each DISCO has been determined individually, accounting for energy purchased from CPPA-G, bilateral contracts (captive power and SPPs), and net metering, forming each DISCO’s unique energy basket. However, since a uniform tariff regime is required 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 to all DISCO consumers.
CPPA-G has been instructed to ensure inter-DISCO settlement of the calculated FCAs and the amounts charged to consumers, in order to accurately reflect each DISCO’s actual energy cost.
The Authority decided that the adjustment will apply to all consumer categories except: (i) lifeline consumers ;(ii) protected consumers ;(iii) Electric Vehicle Charging Stations (EVCS); and (iv) pre-paid electricity consumers who have opted for the pre-paid tariff
DISCOs shall apply the fuel charges adjustment for May 2025 in the billing month of July 2025. The adjustment will appear separately on consumer bills based on the number of units billed in May 2025. If any bills for July are issued prior to the notification, the adjustment will be applied in the subsequent month.
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