Industrial Consumers Slam Rising Fuel Cost Adjustment

ISLAMABAD: Industrial power consumers have raised serious concerns over the escalating fuel cost adjustment (FCA), criticising it as a direct contradiction to the government’s pledges of reducing electricity tariffs through sector reforms and tariff renegotiations.

At a public hearing on Thursday led by National Electric Power Regulatory Authority (Nepra) Chairman Waseem Mukhtar, stakeholders challenged the Rs1.27 per unit fuel cost adjustment proposed by distribution companies (Discos). Several interveners, mainly from Karachi and representing industrial bodies like the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), expressed frustration over the unpredictable pricing and insufficient transparency in the process.

They argued that the increased FCA effectively slashed the power tariff relief earlier announced by Prime Minister Shehbaz Sharif—from Rs7.41 to about Rs3 per unit for April—undermining confidence and business planning. The concerns were exacerbated by inaccessible or incomplete data on Nepra’s website, which many said was “illegible even with a magnifying glass.”

Participants also criticised the government for failing to implement commitments made to the IMF regarding shifting industrial captive power to the national grid without establishing a weighted average cost of gas (WACOG). This, they claimed, had kept tariffs high due to greater-than-anticipated use of expensive LNG, while also depriving the export-oriented industrial sector of sufficient gas supply.

The continued unavailability of the Rs500 billion Neelum-Jhelum hydropower project was another major grievance, as it reportedly caused a loss of 1.5 billion low-cost electricity units in April. Similarly, partial and inefficient use of the Guddu 747MW power plant was also flagged as a missed opportunity to stabilize tariffs.

Overall, stakeholders urged Nepra to withhold any decisions until complete, transparent data was disclosed to allow a thorough evaluation of the fuel cost adjustment mechanism.