APTMA for passing on full negative Jan 2025 FCA relief to KE consumers without deduction

ISLAMABAD: All Pakistan Textile Mills Association (APTMA) has requested the power sector regulator to pass on the full negative Jan 2025 FCA relief to KE consumers without any deduction.

In a letter to Registrar NEPRA, Secretary General APTMA Shahid Sattar has cited reference to the Notice of Hearing on request of K-Electric Limited (KE) for Provisional Monthly Fuel Charges Adjustment (FCA) for January 2025, saying we hereby submit the following for the consideration of the authority in this matter.

NEPRA’s handling of KE’s FCA raises serious concerns about its impartiality, regulatory priorities, and commitment to consumer protection. The latest FCA decision once again demonstrates a clear bias toward KE’s financial interests at the direct expense of Karachi’s consumers and industries.

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The APTMA is of the view that why is NEPRA deducting unverified costs from negative FCA but ignoring verified consumer claims? adding that KE has submitted a claim of Rs13.5 billion for partial load, open cycle, degradation curves, and startup costs for the period July 2023-January 2025, requesting that Rs5.4 billion be deducted from the negative FCA of November 2024. However, these costs remain unverified and, in many cases, unverifiable.

This raises critical questions: (i) on what legal or regulatory basis is NEPRA allowing KE to recover unverified costs while denying Karachi’s consumers their rightful FCA relief?; (ii) how can NEPRA justify cutting consumer benefits before even determining and verifying KE’s claimed costs?; and (iii) NEPRA’s mandate under Section 7(6) of the NEPRA Act is to protect both consumer and industry interests with transparency and impartiality, why is it prioritizing KE’s financial claims over consumer relief?

Furthermore, NEPRA’s own determinations would have stated that any such adjustments must be based on audited and verified numbers. Yet, NEPRA is approving these deductions without proper auditing and validation, contradicting its own regulatory framework.

APTMA has maintained that this selective enforcement exposes regulatory favouritism, where NEPRA quickly accommodates KE’s financial interests without proper scrutiny while delaying or ignoring fully verified claims from Karachi’s consumers and industries. Why is NEPRA supporting KE but refusing to release the verified Rs 33 billion Covid incremental subsidy?

The association has further stated that while NEPRA ensures KE recovers its costs-even unverified ones-it has failed to release Rs33 billion in undisputed Covid incremental subsidy that has been pending for over three years. KE lost its appeal at the NEPRA tribunal but managed to obtain a stay order from the Islamabad High Court to delay the payment further. Meanwhile, Karachi’s industries have suffered a cumulative competitive loss of Rs300 billion against industries in the rest of Pakistan that received this subsidy.

When NEPRA was asked during the tendency of the case that KE does not have a stay from tribunal and subsidy should be released, the request was ignored and not acted on; (i) if NEPRA can approve FCA adjustments for KE without verification, why hasn’t it ordered the release of the Rs33 billion Covid subsidy, which has already been verified?; (ii) if NEPRA is willing to cut consumer benefits to favour KE’s financial stability, why won’t it balance the scales by issuing a notification to provisionally release at least Rs30 billion of the Rs33 billion subsidy for Karachi’s consumers?; (iii) Is NEPRA a regulator acting in the public interest, or is it merely facilitating KE’s financial gains at the expense of Karachi’s industries and consumers?

By deducting unverifiable costs from negative FCA, NEPRA is creating a precedent where consumer relief can be arbitrarily withheld under the pretence of “cost adjustments.” This defeats the purpose of negative FCAs and increases financial uncertainty for consumers and businesses alike.

The NEPRA’s role is to ensure transparency and regulatory fairness, not to shield KE from financial accountability. If it is willing to facilitate KE’s recovery of costs, it must also ensure that verified consumer claims-such as the Covid incremental subsidy-are honoured without delay.

The APTMA has argued that NEPRA and the Power Division must set a defined margin for open cycle and start-up fuel costs in MYT. The lack of a predefined margin for open cycle, start-up fuel costs, and other similar expenses in the Multi-Year Tariff (MYT) has allowed KE to repeatedly recover such costs through discretionary FCA adjustments. NEPRA’s failure to incorporate these costs under a structured tariff framework has led to financial unpredictability and room for manipulation; (i) why has NEPRA failed to establish a clear margin within MYT for these costs?; (ii) if NEPRA can arbitrarily approve FCA deductions for KE, why not set structured guidelines in MYT to ensure cost predictability?; (iii) should KE’s inefficiencies continuously be offloaded onto consumers through fluctuating bills, instead of being controlled under an established tariff structure?; (iv) NEPRA must act responsibly and include these variable fuel costs under a regulated margining MYT to ensure fairness, transparency, and predictability in future tariff adjustments.

The APTMA has requested NEPRA to pass on the full negative Jan 2025 FCA relief to consumers without any deductions. KE’s unverifiable claims must not override consumer rights and issue a formal notification immediately for the provisional release of Rs30 billion from the Rs33 billion COVID incremental subsidy. This amount was never paid to Karachi’s consumers and industries, and KE’s legal delays should not prevent its rightful disbursement.

“If NEPRA does not take immediate corrective measures, it will reinforce the perception that it is no longer a neutral regulator but an advocate for KE. Karachi’s consumers and industries deserve a fair, transparent, and accountable regulatory framework-not one that is designed to benefit KE at their expense,” said Shahid Sattar.

Copyright Business Recorder, 2025