The National Electric Power Regulatory Authority (Nepra) has reversed its earlier decision and withdrawn approximately Rs. 42 billion in penalties imposed on the National Transmission and Dispatch Company (NTDC), marking a major policy shift after more than three years.
In its latest ruling, Nepra stated that the continued withholding of funds from NTDC’s Use of System Charges did not fully align with the intent of the regulatory framework. The penalties were originally imposed over alleged violations of the economic merit order in electricity dispatch.
The regulator emphasized that issues such as delays in removing transmission constraints should be addressed through enforcement, compliance monitoring, and performance-based mechanisms rather than financial deductions during monthly fuel cost adjustments.
The deductions—amounting to about Rs. 41.44 billion—had been ongoing since 2019, with regular recoveries taking place between August 2020 and October 2023. NTDC had consistently argued that the penalties were damaging its liquidity and delaying critical infrastructure projects.
The case eventually reached the Islamabad High Court, which stayed the deductions and later directed Nepra to reconsider the matter on merit.
Following a fresh review, Nepra acknowledged that its earlier interpretation of economic dispatch had been too narrow. While the framework prioritizes low-cost electricity generation, the regulator noted that system security and grid reliability must also be considered.
It added that the Nepra Act allows flexibility in dispatch decisions, especially in situations where maintaining voltage stability and operational reliability is critical. In such cases, generation companies may be entitled to compensation.
Nepra has now ordered an end to the practice of provisionally withholding funds from NTDC’s dues at the fuel cost adjustment stage. The mechanism for releasing the previously withheld amount will be determined separately.
The decision is expected to improve NTDC’s financial position and support ongoing and planned transmission projects.
In a separate development, Nepra approved an additional fuel cost adjustment of around 10 paisa per unit for electricity consumers, including those served by K-Electric, to be charged in the current billing cycle.
The latest developments signal a broader shift in regulatory approach, balancing cost efficiency with the operational stability of Pakistan’s power sector.
