RECORDER REPORT
ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly objected to the proposed positive adjustment in fuel charges for July 2026, arguing that a substantial portion of the claimed increase is attributable to costs that should not be passed on to non-incremental consumers.
In a detailed submission to the Registrar, National Electric Power Regulatory Authority (Nepra), FPCCI said the marginal cost gap under the Incremental Consumption Package (ICP) should now be recovered only from consumers availing the package rather than being spread across all consumers through the general FCA/QTA mechanism.
FPCCI said the ICP decision fixed the incremental industrial and agricultural consumption rate at Rs22.98 per kWh. Under Para 67 of the decision, if actual marginal cost exceeds this rate, the difference may temporarily be shared among consumers until the Ministry of Energy files a revision request and Nepra decides the matter.
However, Para 68(vi) provides that where the resulting loss is greater than what could reasonably have been foreseen when the rate was fixed, the loss should be borne only by ICP consumers.
According to FPCCI, actual marginal prices remained below Rs22.98 per kWh in only three of the eight months since the package became effective in December 2025—December 2025, February 2026 and March 2026—while they remained substantially above the benchmark during the other five months, particularly from April 2026 onward.
It pointed out that the average marginal price during December 2025-July 2026 stood at Rs26.62 per kWh, which was Rs3.64 per kWh above the ICP rate of Rs22.98. “Even on a since-inception average, the number does not come back down to Rs22.98/kWh—it stays above it,” FPCCI maintained.
The federation asked Nepra to direct CPPA-G to stop passing the ICP-related gap through the general FCA/QTA pool and instead recover it from ICP-availing consumers. It also sought directions to the Ministry of Energy and CPPA-G to file the overdue revision request under Para 67 so that the Rs22.98 per kWh rate could be revised.
FPCCI also rejected PPMC’s position that the marginal price should be averaged from the commencement of the package because lower prices during the initial months offset subsequent increases. It said its calculation for the full eight-month period showed that the average remained Rs26.62 per kWh.
The federation further pointed out that FCA is calculated and billed monthly while QTA is billed quarterly, meaning that a later reduction in marginal cost does not reverse costs already recovered from consumers.
FPCCI also highlighted Para 70(v) of the ICP decision, which requires a semi-annual review of the marginal tariff and provides for termination of the scheme if two consecutive reviews indicate that an upward adjustment is required.
It said the scheme became effective in December 2025 and its first six-month review period ended in May 2026, but the review did not appear to have been conducted. The federation urged Nepra to order the review without further delay.
It also sought a separate line item for the ICP-attributable gap in every FCA and QTA filing to enable stakeholders to distinguish the cost from ordinary fuel-price movements.
FPCCI also questioned the reference Power Purchase Price approved for July 2026, saying it was considerably lower than the reference approved for the same month during each of the previous four years.
According to the federation, the July reference price during each of the last four years was more than Rs8 per kWh higher than the reference approved for July 2026. It argued that a lower reference automatically produces a larger gap between actual and reference costs, resulting in a higher FCA.
FPCCI said CPPA-G had prepared five priced scenarios for calendar year 2026 with quantified sensitivities, including an additional Re0.58 per kWh impact from a Rs10 depreciation against the US dollar and Re0.26 per kWh from a 5 percent increase in fuel prices.
It questioned why Nepra approved only a single point estimate instead of adopting a contingency-banded reference that could automatically shift to a higher-cost scenario when exchange-rate or fuel-price assumptions were breached.
The federation asked Nepra to place the July reference PPP figures for the previous four years on record and seek an explanation for the unusually low 2026 reference.
FPCCI also strongly objected to the impact of RLNG on July’s fuel bill, arguing that mandatory take-or-pay arrangements were undermining merit-order dispatch.
It said CPPA-G’s own forecast acknowledged that a mandatory 50 percent take-or-pay offtake clause required RLNG to be dispatched regardless of price, overriding the cheapest-first merit order.
RLNG and HSD together cost Rs77.96 billion for 1,630.5 GWh of generation during July, giving a blended rate of around Rs47.4 per kWh against Nepra’s reference price of Rs20.33 per kWh, according to FPCCI.
RLNG alone accounted for around 47 percent of the month’s total fuel bill while contributing only about 11 per cent of total energy generation.
FPCCI also noted a difference of nearly Rs8.5 per kWh—more than 20 percent—in the rates at which different RLNG-fired IPPs were billed.
It called for renegotiation or suspension of mandatory offtake clauses whenever their cost exceeded available alternatives. It also sought disclosure of cargo sources and contract prices, competitive pooling of RLNG procurement and a regular cost-variance report comparing RLNG costs with the Rs20.33 per kWh reference.
The federation also raised questions over the performance of K-3, the 1,018 MW Karachi Nuclear Power Plant.
According to CPPA-G’s July 2026 Energy Purchase Data, K-3 generated only 1.43 GWh during the month, effectively remaining unavailable, while K-2 at the same site generated 697.7 GWh.
FPCCI said nuclear generation was among the cheapest sources in the system, costing around Rs2.50 per kWh compared with Rs20-35 per kWh for RLNG and RFO. The loss of K-3 generation therefore required more expensive sources to fill the gap while capacity payments to the idle unit continued.
It called for availability-linked penalty provisions to be applied equally to public-sector nuclear and GENCO plants and sought disclosure of outage causes and restoration timelines in monthly FCA filings.
FPCCI concluded that the July 2026 FCA should not be approved in its present form, arguing that the proposed adjustment contained costs arising from flawed mechanisms, unusually low reference prices, expensive RLNG dispatch and inadequate plant availability.
It warned that Pakistan’s industrial and export sectors were already facing severe cost pressures and that further pass-through of avoidable electricity costs could accelerate plant closures, encourage migration to captive and off-grid generation and undermine export competitiveness.
