ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has issued pending notifications for K-Electric’s (KE) supply, distribution, and transmission tariffs for the period 2023–24 to 2029–30 under the Multi-Year Tariff (MYT) regime, stating that the federal government’s pending review motion does not legally restrain the regulator from notifying its earlier determinations.
Previously, the federal government was responsible for issuing tariff notifications. However, amid prolonged delays and under pressure from the International Monetary Fund (IMF) and the World Bank, the law was amended in 2021, granting NEPRA the authority to notify tariffs directly.
“It is now the duty of the Authority to issue the requisite notifications of its determinations if the government fails to do so or if any reconsideration request remains pending,” official sources said. Under Rule 31 of the NEPRA Act, the Authority can issue such notifications if the federal government does not act within the specified time.
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Although the government’s review motion is still under consideration, NEPRA clarified that if it revises its previous determinations, the tariffs will be amended accordingly.
In a related development, Deputy Prime Minister and Foreign Minister Ishaq Dar recently chaired a high-level, confidential meeting to discuss KE’s ownership issues involving Al-Jomaih, following a strongly worded letter from Pakistan’s Ambassador to Saudi Arabia.
KE’s average power supply tariff has been fixed Rs 39.97 / kWh which includes power purchase excluding transmission cost of Rs 31.96 per unit, transmission cost of Rs 2.86 per unit, distribution cost Rs 3.31 per unit, supply margin Rs 2.28 per unit and Prior Year Adjustment negative Rs 0.44 per unit.
The power utility company’s total revenue requirement is estimated to be Rs 606.920 billion, for FY 2023-24, of which supply margin will be Rs 34.681 billion, O&M cost Rs 5.91 billion, working capital negative Rs 1.244 billion, recovery loss, Rs 36.253 billion, gross margin Rs 40.921 billion, other income negative Rs 6.240 billion, net margin Rs 34.681 billion and prior year adjustment negative Rs 6.690 billion.
The Authority also considering the fact that FY 2023-24 has already lapsed and FY 2024-25 is almost 11 months gone, also obtained ICE’s actual recovery ratios for the FY 2023-24 and FY 2024-25. As submitted by KE its actual recovery for the FY 2023-24 remained at 91.50%, whereas FY 2024-25 is expected to close at 90.50%.
The financial impact of under recovery of 8.50% for FY 2023-24 and 9.50% for FY 2024-25, as reported by KE, is around Rs.40 billion and Rs.57 billion respectively.
The Authority noted that return allowed to KE for its distribution function is around Rs.21.6 billion, meaning thereby that effectively KE would be incurring losses for the first 02 years of MYT, if no recovery loss is allowed to KE. This may compromise the financial viability of the company, which is neither in the interest of the consumers nor power system as whole.
In another notification NEPRA has approved distribution tariff of Rs 3.31/ kWh and Rs 2.684 / kWh for investment of Rs 43.447 billion during the validity of MYT.
Copyright Business Recorder, 2025
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