ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has decided to discontinue the longstanding practice of withholding financial amounts from the National Grid Company (NGC), formerly known as NTDC, on account of alleged Economic Merit Order (EMO) violations, while initiating separate proceedings over its failure to remove transmission constraints.
The decision was issued in compliance with directions of the Islamabad High Court in Writ Petition No. 1118/2023 titled “NTDC vs CPPA-G Ltd. etc.”, wherein the court had remanded the matter to NEPRA for adjudication within a stipulated timeframe.
According to NEPRA’s detailed order, the Authority acknowledged that deductions made through Fuel Charges Adjustment (FCA) on account of EMO deviations were aimed at protecting consumer interests and compelling the transmission utility to address system constraints.
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However, it concluded that such deductions do not fully align with the regulatory framework and should instead be dealt with through enforcement mechanisms provided under the law.
The dispute revolves around approximately Rs 41.4 billion withheld from NGC over a period spanning 36 months—from September 2019 to October 2023—due to the operation of relatively inefficient power plants despite the availability of cheaper generation sources.
NGC had challenged the deductions, arguing that they lacked legal basis and had severely impacted its financial health, liquidity, and ability to execute critical transmission projects. The company also warned of potential breaches of loan covenants due to the continued withholding of funds.
During the proceedings, NEPRA observed that while deviations from economic merit order may be justified under the Security-Constrained Economic Dispatch (SCED) framework for ensuring system stability, such deviations should not become a routine practice due to persistent infrastructure constraints.
Copyright Business Recorder, 2026
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