PESHAWAR: The Peshawar High Court ruled on Tuesday that fuel adjustment charge (FAC)/fuel price adjustment (FPA) levied by the National Electric Power Regulatory Authority (Nepra) on electricity bills in Khyber Pakhtunkhwa was unconstitutional and illegal.

A two-judge bench comprising Chief Justice Dost Mohammad Khan and Justice Nisar Hussain Khan issued the short order on 80 petitions filed by industrial units and other entities challenging the levy.

The court ordered the Peshawar Electric Supply Company (Pesco) to adjust through monthly bills the extra amount received from consumers on account of FAC.

Pesco’s counsel Abdur Rauf Rohaila told reporters that the company would challenge the PHC order in the Supreme Court.

During the proceedings, Mr Rohaila said the Lahore High Court and the Islamabad High Court had declared the fuel adjustment charge as illegal and the petitioners had challenged the orders in the Supreme Court.

He said the Supreme Court had decided most of these issues in the Gadoon Textile Mills case in 1996. He contended that electricity generated through hydel power became part of the national grid from where it was distributed across the country and the provincial government received net profit for hydel power generation.

Chief Justice Dost Mohammad observed that there was no mechanism available in the law to check pilferage taking place during supply of fuel to power generating units. He said the efficiency of power generating units set up many years ago had reduced and now they had to consume more fuel for generating electricity, but Nepra had turned a blind eye to the matter.

Advocate Attaullah Kundi, representing Nepra, said that under the 1997 act, the authority was empowered to determine electricity tariff -- both for power generation and distribution companies.

He said there was a misperception among the petitioners that the hydel power generating unit in KP belonged to the province whereas in fact it belonged to the federal government.

Advocate Shumail Butt, the petitioners’ counsel, informed the court that the cost of hydel generation in the province was Rs1.30 per unit but consumers were paying Rs14.75. It was unjustified to change tariff every month on the pretext of fuel adjustment surcharge. He said the mechanism for FPA was introduced first time in section 31 (4) of the Nepra Act by adding a provision to it through the Finance Act 2008.

The counsel contended that the amendment had been made through a money bill which was unconstitutional because the mechanism for FPA did not fall in the criterion of a money bill as envisaged in the constitution. He said that even the Council of Common Interests had not been taken into confidence in this regard.

Advocate Naeem Bukhari, representing the federal government, argued that the petitioners had misinterpreted Article 157 (2) (D) of the Constitution which stated that a provincial government might determine tariff for distribution of electricity within the province. But, he added, the sub-clause of the constitution should be read with other clauses of Article 157. A province could determine tariff only if it generated electricity and laid its own transmission lines, he said.