Justice Ali Baqar Najafi of the Lahore High Court (LHC) declared the addition of Fuel Charge Adjustments (FCA) in electricity bills as unlawful on Monday. He directed the government to compensate residential consumers with subsidies of up to 500 units.
The decision was based on 3,659 petitions filed by Advocate Azhar Siddique and others, and it also found quarterly tariff adjustments and converting industrial rates to commercial tariffs to be illegal.
Justice Najafi’s 81-page ruling emphasized the potential financial burden that levies might impose on the general public, and urged government officials to devise a strong plan to minimize financial damage. The judge stated that domestic customers should not be taxed more than they can afford and declared Section 3 of the National Electric Power Regulatory Authority (NEPRA) Act to be unlawful.
During the court proceedings, the petitioners argued that the government had violated the law by improperly including FCA in the bills. They sought the court’s declaration of FCA and all other levies as illegal. After considering all sides of the case, the court reserved its decision on October 10, 2022.
The judge instructed the federal government to explore alternative energy sources such as nuclear, hydel, wind, and solar energy to provide low-cost power and to ensure electricity supply as per demand. It also called for the development of resources to acquire low-cost power from other countries, as Pakistan currently generates the most expensive electricity in South Asia, which has led to a decrease in exports as well.
NEPRA was directed to take action against overcharging power providers, and the high court ruled that electricity rates should not be changed without first consulting customers and ensuring a continuous power supply.
This judgment follows the decision of the LHC Rawalpindi Circuit bench in August 2022 to eliminate FCA from power bills. Justice Jawad ul Hassan ordered the Water and Power Development Authority (WAPDA) and NEPRA not to include taxes in consumer bills.