Electricity arrears: Punjab moves CCI against at-source deduction
ISLAMABAD: The Punjab government has approached the Council of Common Interests (CCI) over the unauthorised deduction of Rs 7.769 billion at source by the Federal Adjuster from Punjab’s share of the divisible pool.
On May 29, 2014, the CCI had considered a proposed procedure presented by the Minister for Finance after consultation with representatives of the provincial governments, particularly the Government of Sindh. It was agreed that at-source deductions for electricity charges related to provincial government departments would be made at the rate of 25 percent of the bill amount.
However, it was made mandatory to reconcile the bill between the concerned Power Distribution Company (Discos) and the relevant government department within 60 days. If reconciliation failed, no further deductions were to be made until the process was completed.
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In its submission to the CCI, the Punjab government stated that two meetings were held under the chairmanship of the Federal Adjuster on July 7, 2014, and July 18, 2014, to operationalise the CCI’s decision. Following these meetings, the Standard Operating Procedures (SOPs) for implementing the 25 percent at-source deduction were finalised and issued on July 22, 2014.
In line with these SOPs, the Reconciliation Cell of the Punjab Energy Department adopted a structured reconciliation mechanism with all Discos operating in Punjab. Since July 1, 2014, the Cell has been reconciling 25 percent claims of monthly and quarterly electricity bills raised by Discos against Punjab government departments. Once reconciled, these amounts are forwarded by the respective Discos to the Federal Adjuster, Finance Division, for deduction from Punjab’s NFC share and subsequent release of funds.
A consolidated summary of at-source deductions amounting to Rs 25.524 billion —made by the Federal Adjuster based on signed reconciliation statements for the period from July 2014 to June 2025 — has also been shared.
However, through an order dated June 19, 2025, the Federal Adjuster authorised an additional at-source deduction of Rs 7.769 billion for the period from July 2014 to March 2025. This authorisation was issued without any reconciliation between the Discos and the Reconciliation Cell of the Punjab Energy Department. As such, the deduction is considered excessive, unauthorised, and a direct violation of both the CCI decision of May 29, 2014, and the SOPs issued on July 22, 2014 — especially since the 25 percent deductions for the same period had already been executed.
The Punjab government has also emphasised that, due to the structured reconciliation mechanism, the settlement of payables and receivables between the Punjab government and PEPCO was last conducted in May 2016. During that process, the Finance department cleared Rs 3.583 billion in net payable electricity dues up to November 2015 in the first phase, and an additional Rs 3.174 billion for dues up to May 2016 in the second phase. Meanwhile, PEPCO remitted Rs 1.110 billion in payable Electricity Duty up to April 2016 to the Punjab government.
Additionally, the Reconciliation Cell recently finalised reconciliation of all payable electricity dues up to June 2024 with all Discos in Punjab. As per the signed reconciliation statements, the net payable amount by the Punjab government was Rs 14.958 billion.
To operationalise the settlement, the Energy Department held two high-level meetings on June 2, 2025, and July 29, 2025, with CEOs and CSDs of Discos, along with the CFO of PPMC. During these meetings, no Disco raised any objections to the reconciled amount of Rs 14.958 billion.
Given the comprehensive reconciliation and settlement of Punjab government’s payables up to May 2016 and receivables up to April 2016, the submission of un-reconciled claims by Discos to the Federal Adjuster — and the subsequent deduction of Rs 7.769 billion—constitutes a duplicate charge and contravenes the spirit and intent of the CCI decision.
In light of Punjab government’s reservations and pursuant to Article 157(3) of the Constitution—which stipulates that any dispute between the federal and a provincial government on matters under this Article may be referred to the CCI—it has become necessary to escalate the matter for resolution. This step is aimed at ensuring a fair, transparent, and constitutional resolution of the dispute, safeguarding Punjab’s financial interests and upholding federal-provincial harmony.
In view of the foregoing, the Government of Punjab proposed that the CCI direct the Federal Adjuster to withdraw the unauthorised at-source deduction of Rs 7.769 billion from Punjab’s share in the divisible pool. Furthermore, it has requested that the CCI instruct the Federal Adjuster to strictly adhere to the SOPs issued on July 22, 2014, in light of the CCI’s decision of May 29, 2014.
Copyright Business Recorder, 2025