ISLAMABAD: Federal cabinet’s Economic Coordination Committee (ECC) has approved the uniform application of Fuel Charges Adjustment (FCA) across the country, a decision that will bring K-Electric consumers under the same FCA regime as state-owned distribution companies through tariff rationalization.
As per details, the decision, taken on Tuesday, is intended to maintain a uniform tariff structure nationwide and end the existing disparity under which K-Electric and DISCOs were subjected to separate FCA mechanisms. The Power Division had placed a summary titled “Uniform Application of Fuel Charges Adjustment across the Country” before the ECC, seeking approval for this alignment.
According to industry sources, the ECC’s decision authorizes NEPRA to determine and apply DISCOs’ FCAs on K-Electric consumers on the same timelines and terms, while considering the financial sustainability of the power sector and the federal government’s uniform tariff policy. Any gap between the monthly FCA calculated for K-Electric and that of DISCOs will be covered through subsidies or cross-subsidies. The new arrangement will take effect from the FCA of June 2025, to be reflected in electricity bills issued in August 2025.
The National Electricity Policy 2021, approved by the Council of Common Interests (CCI), provides that while financial self-sustainability is the long-term goal, the government may continue to maintain uniform tariffs across regions in line with socio-economic objectives and budgetary constraints. So far, while base tariffs and quarterly adjustments have remained uniform across the country, the FCA mechanism has been different for K-Electric and DISCOs. Because of higher fuel cost references in K-Electric’s tariff determinations, the federal government has been bearing the difference in the form of subsidies. Officials said the new mechanism would streamline this process and gradually reduce reliance on direct subsidies.
Section 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, requires NEPRA to be guided by the national electricity policy, the national electricity plan, and any government guidelines in determining tariffs. This provision has now been invoked to harmonize the FCA regime for both K-Electric and DISCOs.
According to sources, the summary was circulated to the Finance Division and NEPRA for comments. The Finance Division supported the proposal on the condition that it should not create additional financial obligations for the government. It further suggested that if in the future K-Electric’s FCA impact turns out to be higher than that of DISCOs, the arrangement may need reconsideration. NEPRA, while insisting that FCAs for both K-Electric and DISCOs should continue to be independently calculated based on their respective fuel cost data and generation mix to ensure transparency, agreed that consumer-end uniformity could be achieved through policy alignment backed by subsidies or cross-subsidies. The regulator also recommended that the implications of introducing a single dispatch model be examined.
After weighing the recommendations, the ECC approved the Power Division’s proposal. NEPRA has now been directed to implement the uniform FCA application from the billing cycle of August 2025.
