ECC grants 60-day extension for mediation on KE’s financial disputes

ISLAMABAD: The Federal Cabinet’s Economic Coordination Committee (ECC) has granted a 60-day extension for the mediation process aimed at resolving financial disputes involving K-Electric (KE), the Karachi Water and Sewerage Board (KWSB), and various state-owned enterprises (SOEs), with a clear stipulation that the extension would not result in any increase in electricity tariffs.

According to industry sources, the ECC, in its meeting on February 3, 2025, held under the chair Finance Minister Muhammad Aurangzeb, reviewed and approved the Power Division’s summary titled “Amendment of Mediation Agreement Dated 16-02-2025 Pertaining to Claims of KE for Tariff Differential Subsidy and KWSB and Payables of KE to Different State-Owned Enterprises (CPPA/NTDC and SSGC).”

The ECC extended the deadline for completion of mediation proceedings between the KE and government entities, including SSGCL, NTDC, and Karachi Water & Sewerage Board, said sources, adding, “ The ECC’s approval allows the mediation process to continue under a revised timeline, ensuring structured negotiations to settle KE’s outstanding claims and liabilities”.

As per sources, the mediation process was initiated following a federal government decision on December 16, 2023, to address KE’s claims related to tariff differential subsidies (TDS), unpaid receivables from KWSB, and KE’s payables to NTDC/CPPA-G and SSGC. However, complications arose when KWSB refused to participate, making it difficult to settle KE’s claims regarding unpaid dues.

The mediation, led by senior legal expert Ashtar Ausaf Ali, began on March 4, 2024, but could not be concluded within the initial 60-day period due to the complexity of financial disputes and regulatory constraints. KE also introduced additional claims, including write-offs, end-of-term adjustments, and a new multi-year tariff (MYT) framework for 2024-2030, which remain under review by NEPRA.

Prior to presenting the summary before the ECC, the power division shared the draft summary with relevant government departments, including the Law & Justice, Finance, and Petroleum Divisions, the Government of Sindh, the Attorney General’s Office, and NEPRA, seeking their comments. The Law & Justice Division and NEPRA had no objections, while the Finance Division and Petroleum Division supported the extension. The Petroleum Division also suggested that the mediation period be further extendable with mutual consent. The Government of Sindh backed the proposal but insisted on full participation in all negotiations before committing to any financial liabilities.

Considering the legal and financial complexities, the Power Division proposed amending the Mediation Agreement to extend the process by another 60 days. With key stakeholders backing the proposal, the ECC’s decision paves the way for continued negotiations to resolve outstanding financial disputes without impacting electricity tariffs for consumers.

Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected].

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