KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Rehan Hanif has categorically rejected the proposed Fuel Charges Adjustment (FCA) of Rs2.5182 per unit for July 2026 and urged the National Electric Power Regulatory Authority (Nepra) to also disallow the anticipated Quarterly Tariff Adjustment (QTA) of approximately Rs1.34 per unit, warning that the combined shock could push already struggling industries towards closure.
Rehan Hanif pointed out that if both adjustments were approved and reflected simultaneously, September electricity bills could carry an additional burden of nearly Rs3.86 per unit even before taxes.
More alarmingly, the existing negative QTA relief of Rs1.9857 per unit expires after August, while August bills already carry a positive FCA of Rs0.7503 per unit. Consequently, the shift from August’s net periodic adjustment to the proposed September adjustments could exceed Rs5.09 per unit before taxes.
“This is not an ordinary tariff adjustment; it is a power-tariff ambush on industry. At the highest level, Prime Minister Shehbaz Sharif repeatedly speaks of reducing the cost of doing business, reviving industry and accelerating exports, but decisions being taken and implemented at lower levels are moving in exactly the opposite direction and effectively sabotaging the Prime Minister’s economic vision,” he stated.
He warned that only industrial units with sufficient capital to install extensive solar or wind-generation systems might survive such repeated shocks, while grid-dependent small and medium enterprises would be steadily eliminated.
“Once small industries begin disappearing, the entire industrial supply chain will weaken. Large industries cannot operate in isolation because thousands of SMEs supply them with components, packaging, processing and other essential services.
If SMEs collapse, the country’s entire manufacturing ecosystem will suffer.”
Referring to CPPA-G’s official July 2026 energy-purchase data submitted to NEPRA, Rehan Hanif noted that approximately 15.12 billion units were generated during the month, while CPPA-G calculated the actual fuel cost at Rs9.6112 per unit against a reference cost of Rs7.0929 per unit, thereby seeking an FCA of Rs2.5182 per unit. NEPRA is scheduled to hear the request on August 27, 2026.
He questioned why consumers should be penalised whenever reference costs are underestimated or unrealistic assumptions are used in tariff setting. “When a reference price is deliberately or inaccurately kept below foreseeable costs, a positive FCA becomes inevitable. This converts faulty forecasting into a permanent collection mechanism under which consumers receive successive surcharges instead of stable and predictable tariffs.”
Turning to circular debt, Rehan Hanif said it was deeply disturbing that consumers continued to face the Debt Service Surcharge, FCA, QTA and multiple taxes, yet circular debt was resurfacing. The government had announced a historic Rs1.225 trillion circular-debt restructuring arrangement with 18 banks, comprising Rs660 billion in restructured existing loans and Rs565 billion in fresh financing, to be repaid through the already imposed Debt Service Surcharge of Rs3.23 per unit over six years.
“Despite this massive restructuring, the power-sector circular-debt stock still increased by Rs61 billion during FY2025-26, rising from Rs1.614 trillion to Rs1.675 trillion. Borrowing to clear past liabilities cannot resolve the crisis if fresh debt continues to be generated through inefficiencies, under-recoveries, disputed receivables and poor operational governance”, he cautioned.
He clarified that the reported Rs520 billion comprised major gross debt-flow drivers—Rs262 billion from Disco inefficiencies and losses, Rs64 billion from weak recoveries and Rs194 billion attributed to K-Electric’s payment shortfall—before subsidies, repayments and other offsets reduced the net annual increase to Rs61 billion.
He demanded transparent reconciliation of the Rs421 billion reportedly shown as receivable from K-Electric, including Rs197 billion in principal and Rs224 billion in markup, so that neither Karachi’s consumers nor consumers elsewhere were forced to pay disputed or unverified amounts.
Rehan Hanif warned that Pakistan’s industrial recovery remained too fragile to withstand another energy-price shock.
Pakistan Bureau of Statistics data shows that although Large-Scale Manufacturing grew by 4.98 percent during FY2025-26, output fell by 3.48 percent year-on-year and 6.08 percent month-on-month in June 2026.
Textiles declined by 0.63 percent over the year, while iron and steel production contracted by 7.84 percent.
Similarly, Pakistan’s merchandise exports reached US$2.962 billion in July 2026, showing year-on-year growth of 10.4 percent, but imports surged by 18.9 percent to US$6.94 billion, leaving a massive monthly trade deficit of US$3.978 billion.
“At a time when Pakistan urgently needs to protect every export order and reduce this enormous trade gap, another unbudgeted electricity increase will erode margins, make Pakistani products uncompetitive and hand over our export markets to regional competitors.”
He stressed that industry was not demanding an unjustified subsidy but a transparent, stable and rational tariff based on realistic reference costs, efficient generation planning and strict accountability.
Legitimate fuel-cost variations could be considered only after removing costs caused by incorrect assumptions, inefficient dispatch, transmission constraints, avoidable plant outages, mandatory expensive-fuel offtake arrangements and sectoral failures.
President KCCI called upon Nepra to reject or substantially reduce the July FCA at its August 27 hearing and to withhold notification of the proposed positive QTA until an independent technical and financial audit was completed.
He appealed to Prime Minister Shehbaz Sharif to urgently intervene and convene a high-level meeting with KCCI, major industrial associations, NEPRA, the Power Division, CPPA-G and the Independent System and Market Operator to reconcile power-sector policy with the government’s industrial and export objectives.
“Pakistan cannot achieve export-led growth by repeatedly making electricity more expensive and unpredictable. The choice is clear: either eliminate inefficiencies and protect productive industry, or continue passing every failure to consumers until factories close, employment shrinks, exports decline and the national grid loses even more paying consumers”, Rehan Hanif concluded.
Copyright Business Recorder, 2026