ISLAMABAD: In a befitting response to industrialists’ claims about the erosion of the prime minister’s Rs4.04 per unit tariff relief package, the government on Thursday said it had provided Rs15 billion in free working capital to industry for 90 days and was now seeking to recover it through a Rs1.78 per unit fuel cost adjustment (FCA) in March.
“This is not an additional cost. You were given a lower tariff. You enjoyed Rs15bn in free working capital for 90 days. Now cost recovery is being done through the FCA,” said Rehan Akhtar, representing the Central Power Purchasing Agency (CPPA) of the Power Division, at a public hearing at the National Electric Power Regulatory Authority (Nepra).
He was responding to a tirade by representatives of the business community from Karachi and Lahore — Rehan Javed, Tanveer Barry and Aamir Sheikh — who said the prime minister’s Rs4.04 per unit tariff reduction had been partly offset by a Rs1.78 per unit higher FCA for electricity consumed in January and recovered in March. They said the tariff rebasing from a fiscal year to a calendar year had been introduced as a facility for consumers but was resulting in higher FCAs because of a lower base rate.
Mr Javed said the FY26 reference fuel cost for January would have resulted in only 54 paise per unit in additional FCA instead of Rs1.78 per unit if the base tariff had not been shifted to the calendar year starting Jan 1, thereby imposing an additional Rs1.24 per unit burden. He feared the trend would be disastrous in June for all consumers.
Industrialists claim tariff relief has eroded; govt insists Rs15bn ‘free’ working capital is being recovered
Mr Akhtar said there was no change in the cost of power supply in either case. The lower reference fuel cost meant consumers were charged a lower electricity rate in January, and its actual cost would be recovered in March. A higher reference rate for January would have allowed distribution companies (Discos) to charge a higher fuel cost in January, retain Rs15bn for the following two months and then adjust it in March bills.
He said that, subject to Nepra’s approval, the new Rs1.78 per unit FCA in March would replace the existing 28 paise per unit FCA in February, resulting in a net additional FCA of Rs1.50 per unit. This would lead to a Rs2.55 per unit negative adjustment in the quarterly tariff after two months.
Mr Akhtar also explained that 46 per cent of industrial consumers and 35pc of agricultural consumers had availed themselves of a cheaper incremental package, which resulted in 14.4pc (11 million units) demand growth. As a few cheaper power plants — including nuclear, LNG and coal-based plants — were on forced outage for technical reasons, relatively more expensive plants, including furnace oil-based ones, were utilised to meet demand, leading to a higher FCA.
The CPPA reported that electricity consumption was 14.4pc higher than the pre-approved reference, around 12pc higher than the same month last year, and 8pc higher than December 2025.
Published in Dawn, February 27th, 2026
https://www.dawn.com/news/1976014/fuel-cost-adjustment-row-erupts-over-pms-power-package