Karachi Chamber chief Rehan Hanif says combined FCA and QTA increases could add nearly Rs3.86 per unit to September electricity bills and hurt industrial competitiveness.
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) President Rehan Hanif has rejected the proposed Fuel Charges Adjustment (FCA) of Rs2.5182 per unit for July 2026, urging the National Electric Power Regulatory Authority (NEPRA) to also reject the anticipated Quarterly Tariff Adjustment (QTA) of around Rs1.34 per unit.
Hanif warned that the combined increase could place an additional burden of nearly Rs3.86 per unit on electricity consumers in September, before taxes. He said the impact could be even higher because the existing negative QTA relief of Rs1.9857 per unit will expire after August, while August bills already include a positive FCA of Rs0.7503 per unit.
“This is not an ordinary tariff adjustment; it is a power-tariff ambush on industry,” Hanif said, arguing that repeated electricity price increases were undermining the government’s efforts to reduce the cost of doing business, revive industrial activity and boost exports.
He warned that continued tariff shocks could force smaller and medium-sized industrial units to shut down, particularly those unable to invest in alternative power sources such as solar and wind generation.
Hanif said the closure of SMEs would have a wider impact on Pakistan’s manufacturing sector because large industries rely heavily on smaller businesses for components, packaging, processing and other services.
KCCI questions FCA calculation
Referring to energy-purchase data submitted by the Central Power Purchasing Agency-Guarantee (CPPA-G) to NEPRA, Hanif said around 15.12 billion units were generated in July 2026.
According to the data, the actual fuel cost was calculated at Rs9.6112 per unit against a reference cost of Rs7.0929 per unit, resulting in the proposed FCA of Rs2.5182 per unit.
NEPRA is scheduled to hear the FCA request on August 27, 2026.
Hanif questioned why consumers should bear the cost when reference prices are based on inaccurate or unrealistic assumptions. He said repeated underestimation of reference costs effectively creates a system where consumers face recurring surcharges instead of predictable electricity tariffs.
Circular debt remains a concern
The KCCI president also raised concerns over the continued accumulation of circular debt despite multiple charges being recovered from consumers.
He noted that the government had announced a Rs1.225 trillion circular-debt restructuring arrangement involving 18 banks. The package included Rs660 billion in restructured loans and Rs565 billion in fresh financing, with repayments linked to a Debt Service Surcharge of Rs3.23 per unit over six years.
However, power-sector circular debt still increased by Rs61 billion during FY2025-26, rising from Rs1.614 trillion to Rs1.675 trillion.
Hanif said borrowing to settle existing liabilities would not resolve the crisis if new debt continued to emerge because of inefficiencies, weak recoveries, disputed receivables and governance problems.
He also called for a transparent reconciliation of the Rs421 billion reportedly shown as receivable from K-Electric, including Rs197 billion in principal and Rs224 billion in markup.
Industrial recovery faces fresh pressure
Hanif said Pakistan’s industrial recovery remained vulnerable to another increase in energy costs. According to Pakistan Bureau of Statistics data, Large-Scale Manufacturing grew 4.98% during FY2025-26, but output fell 3.48% year-on-year and 6.08% month-on-month in June 2026.
Textile production declined 0.63% year-on-year, while iron and steel output dropped 7.84%.
He also highlighted Pakistan’s widening trade deficit. Merchandise exports stood at $2.962 billion in July 2026, up 10.4% year-on-year, while imports increased 18.9% to $6.94 billion, resulting in a monthly trade deficit of $3.978 billion.
Hanif said higher electricity costs would further squeeze industrial margins, weaken the competitiveness of Pakistani products and put export orders at risk.
KCCI seeks review of tariff adjustments
The KCCI president stressed that industry was not seeking an unjustified subsidy but wanted a stable and transparent electricity tariff based on realistic reference costs.
He called for an independent assessment of costs arising from inefficient generation, transmission constraints, plant outages, expensive fuel arrangements and other power-sector inefficiencies.
Hanif urged NEPRA to reject or substantially reduce the proposed July FCA at its August 27 hearing and withhold notification of the proposed QTA until an independent technical and financial audit is completed.
He also called on Prime Minister Shehbaz Sharif to convene a high-level meeting involving KCCI, industrial associations, NEPRA, the Power Division, CPPA-G and the Independent System and Market Operator to align power-sector policies with the government’s industrial and export objectives.