EDITORIAL: The Rs1.78 per unit fuel charge adjustment for January – proposed by the Central Power Purchasing Agency (CPPA-G) and pending before Nepra – coming within weeks of a headline Rs4.04 industrial tariff reduction exposes a familiar contradiction in Pakistan’s power pricing architecture. Relief is announced with emphasis; adjustment follows with equal force. By the time both are reflected on the same bill, the arithmetic tells a different story.
Industrial consumers were told that electricity tariffs would fall by Rs4.04 per unit for the January billing cycle. Within that very cycle, CPPA-G has sought a positive Fuel Charges Adjustment of Rs1.78 per unit. A quarterly adjustment of roughly Re0.40 per unit is also expected. The effective benefit therefore shrinks to around Rs1.70–1.80 per unit. More than half of the announced relief is neutralised almost immediately.
This is not a technical dispute over pass-through mechanics. It is a question of credibility. When policy relief evaporates in real time, planning certainty disappears with it. Exporters price contracts months in advance. They secure orders, allocate working capital and manage labour on the basis of expected input costs. If those expectations are altered within the same billing period, the entire premise of predictability collapses.
FPCCI (Federation of Pakistan Chambers of Commerce and Industry) is correct to demand a review of the fuel and quarterly references embedded in the current tariff framework. While fuel charges are legally treated as pass-through items, the structure of reference assumptions and true-up mechanisms determines how volatile end-user tariffs become. If references are set at levels that later require sharp upward adjustments, the headline reduction loses substance before it takes effect.
The January generation mix underlines the vulnerability. Hydel contribution was limited, while more expensive sources such as RLNG and imported coal accounted for significant shares of output. When reference fuel charges are set below realised costs in such an environment, the upward correction becomes inevitable. The problem, therefore, is not the existence of the FCA mechanism. It is the repeated reliance on reference assumptions that fail to reflect operational reality.
Two tariff resets within a short span, first in July and then in January, have intensified volatility. Industry does not operate on rolling monthly recalculations. It requires a defined stability horizon. Without it, competitiveness suffers. Pakistan’s energy costs are already high relative to regional peers. Manufacturers competing in global markets cannot absorb unpredictable swings layered on top of structurally elevated tariffs.
This is where governance responsibility becomes unavoidable. Political ministers often inherit complex technical frameworks and depend heavily on bureaucratic machinery for implementation. When that machinery prioritises internal accounting logic over economic impact, industry pays the price. It is easier to approve pass-through adjustments than to confront inefficiencies in fuel procurement, transmission losses, or structural distortions in the generation mix. The result is a system that protects institutional processes while transferring instability to consumers.
Energy pricing cannot be reduced to fiscal arithmetic. It is a central pillar of industrial policy. If export revival is genuinely a national priority, then tariff stability must be treated as strategic infrastructure. Frequent adjustments and corrective surcharges may satisfy regulatory formulas, but they undermine long-term investment decisions.
FPCCI’s call for revisiting the January FCA impact and rationalising fuel benchmark assumptions deserves serious consideration. Aligning projected fuel parameters with prevailing and forward market indicators would reduce abrupt corrections. Establishing a stability framework for industrial tariffs would restore confidence that announced relief will endure beyond the press release.
Pakistan’s economic fragility leaves little room for cosmetic measures. Announcing reductions while permitting contemporaneous adjustments to dilute them damages trust. Industry requires durable cost signals, not transient arithmetic. Unless structural reform addresses the roots of tariff volatility, each cycle of relief followed by correction will erode credibility further. The cost of that erosion is borne not only by manufacturers, but by the broader economy that depends on their growth.
Copyright Business Recorder, 2026
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