The Khyber Pakhtunkhwa (KP) government has formally opposed the federal government’s decision to abolish the collection of Electricity Duty (ED) through power distribution companies (DISCOs), terming the move unconstitutional and a violation of provincial rights.
This stance comes weeks after the Sindh government also raised serious concerns on the federal directive.
KP Chief Minister Ali Amin Gandapur conveyed strong reservations in a letter to Federal Minister for Power Sardar Awais Ahmad Khan Leghari. Gandapur criticised the Power Division’s unilateral decision to discontinue ED collection without consulting the provinces or obtaining approval from the Council of Common Interests (CCI). He urged the federal government to reconsider the decision in the interest of constitutional integrity, cooperative federalism, and fiscal stability.
“The Power Division’s unilateral administrative decision, without CCI’s approval or consultation with the KP government, is unconstitutional and legally void,” Gandapur stated, warning that such moves could fuel unnecessary tensions between the federation and provinces.
Gandapur emphasised that under Article 157(2)(b) of the Constitution, provincial governments are authorised to levy taxes on electricity consumption within their territories. He also cited Section 13(2) of the KP Finance Act, 1964, which mandates that distribution licensees collect and remit ED to the provincial government. Rule 5(1) of the West Pakistan Electricity Duty Rules, 1964, requires that ED be listed as a separate item on electricity bills.
Additionally, the CM referred to the NEPRA Act, 1997, affirming provincial oversight on billing and metering by DISCOs, and the State-Owned Enterprises (SOE) Act, 2023, which preserves existing laws unless explicitly repealed. Articles 268 and 279 of the Constitution further reinforce the continuation of provincial taxation powers until amended by the appropriate legislature.
Three distribution companies—PESCO, HAZECO, and TESCO—operate in KP and are legally bound to provincial laws regarding ED collection through electricity bills. Gandapur reiterated that ED is not a general tax that could be collected through alternative means but a sector-specific levy enforceable only via the billing system.
The KP government expressed readiness for dialogue but insisted that any changes must respect constitutional and legal frameworks.
Reportedly, Sindh Chief Minister Murad Ali Shah had earlier also criticized the federal government for bypassing provincial consultation, advising Islamabad to “put its own house in order” before dictating terms to the provinces.
The dispute arose following a letter dated June 30, 2025, from Awais Leghari to all four provincial chief ministers, informing them of the Power Division’s plan to discontinue the collection of ED through electricity bills starting July 1, 2025. Leghari argued that this initiative is part of efforts to simplify consumer bills by removing non-electricity-related charges.
In his communication, Leghari requested the provinces to develop alternative methods for collecting provincial duties and sought their cooperation in implementing the transition. He emphasized that reducing multiple taxes and duties from electricity bills would ease consumer burden.
Currently, DISCOs collect approximately Rs 60 billion annually in Electricity Duty on behalf of the provinces. While the federal government claims that eliminating this charge from bills is meant to benefit consumers, the provinces insist it undermines their fiscal autonomy and constitutional authority.
