PMO asks PD for recovery-based loadshedding update

ISLAMABAD: The Prime Minister’s Office (PMO) has sought an update from the Power Division on its proposed policy to legalize recovery-based load-shedding, amid continued penalties imposed by the National Electric Power Regulatory Authority (Nepra) on Distribution Companies (Discos), and K-Electric for implementing such load management practices in violation of regulatory laws.

This initiative is part of a broader reform agenda assigned to the Power Division by the Prime Minister, aimed at removing legal barriers to unscheduled power load shedding across the country.

However, the Ministry of Finance (MoF) has expressed reservations about the plan. It argues that while load shedding may help avoid high electricity costs in low-recovery areas, the government remains liable for capacity payments on unutilized electricity—making the overall economic rationale questionable.

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At a public hearing on Fuel Cost Adjustment (FCA) last year, Nepra Chairman Chaudhry Waseem Mukhtar confirmed that revenue-based load shedding is currently illegal, which is why the regulator is penalizing utilities for enforcing it. He suggested that the government must legalize the practice if it intends to continue its implementation.

Following the Chairman’s remarks, the Power Division began drafting a proposal titled “Amendments in Legal Framework to Implement Economic Load Management in the Country.” The proposal aims to embed recovery-based and Aggregate Technical and Commercial (AT&C) loss-based load shedding into the legal and regulatory structure.

According to the Power Division, Prime Minister Shehbaz Sharif chaired a series of meetings on April 15, 18, and 25, 2024, during which he directed the division to review and suggest necessary amendments to existing laws and policies. A committee comprising representatives from the Private Power and Infrastructure Board (PPIB), Central Power Purchasing Agency (CPPA), Law Division, Nepra, and independent legal experts was formed to carry the initiative forward.

The Power Division circulated a draft summary to relevant ministries for feedback before submitting it to the Economic Coordination Committee (ECC), Cabinet Committee on Energy (CCoE), or the federal cabinet for approval.

In its feedback, the Finance Ministry noted the summary lacked empirical data to substantiate the claimed benefits. It stressed that while load shedding in high-loss areas may be justifiable to an extent, the fiscal impact of paying for idle generation capacity remains a major concern.

The Power Division, however, maintains that Discos are compelled to implement load shedding in high-loss areas due to economic constraints. With rising electricity costs from the central power pool, continuing to supply expensive power to areas with poor recoveries is financially unsustainable. Therefore, it argues, a structured and legally sanctioned load shedding mechanism is essential for the sector’s financial viability.

Nevertheless, sources suggest that Nepra remains opposed to the proposed amendments and has raised serious objections.

The Finance Division reiterated its stance, emphasizing the need for the Power Division to present a detailed comparative analysis of the economic trade-offs involved. The Cabinet has asked the Power Division to clearly explain the advantages of such a policy, particularly in terms of cost avoidance and system sustainability.

Copyright Business Recorder, 2025