ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday reprimanded representatives of the Power Division for their disorderly conduct during a hearing of a review petition concerning the write-off claims granted to K-Electric (KE).
“You are here to explain your case, despite admitting you lack authorization from the Federal Government. We will listen to you, but this is absolutely not the way to behave,” remarked Nepra Member (Law), Amina Ahmed, addressing the Power Division team’s disruptive arguments.
The Power Division was represented by Additional Secretary (Power Finance) Mehfooz Bhatti and Naveed Qaiser from PPMC. KE’s team was led by Chief Financial Officer (CFO) Aamir Ghaziani and a legal representative. Interveners, including Arif Bilwani, Rehan Jawed, and Tanveer Barry, also presented arguments in line with their written submissions.
KE’s Rs50bn write-off claims: Nepra unlikely to reverse its decision
During the proceedings, Member (Technical) Rafique Ahmad Shaikh pointed out that the Power Division failed to pay the mandatory fee required to file a review petition — a legal prerequisite.
The Nepra had initially approved KE’s seven-year Multi-Year Tariff (MYT) for 2017–2023 in March 2017, which allowed for a 1.78 percent write-off provision. A final determination issued on July 5, 2018, revised the write-off criteria, requiring board approval, auditor verification, and more detailed conditions.
Over time, KE submitted write-off claims alongside quarterly adjustment petitions. Nepra delayed decisions to allow for further review, ultimately issuing a determination in June 2025 that allowed Rs 50.013 billion in write-offs.
The Power Division has challenged this determination, raising concerns over a GST component of Rs 6.619 billion and other components. According to the Division, the write-off, including GST, is not recoverable under the NEPRA Act and tariff rules, and such claims should instead be directed to the Federal Board of Revenue (FBR).
Nepra Chairman Waseem Mukhtar rejected the Power Division’s arguments regarding GST and referenced Strategic Directive 31(a) of the National Electricity Plan 2023–27. He questioned the Power Division about the Rs 50 billion in write-off claims.
However, Additional Secretary Bhatti declined to directly answer, stating, “We understand we are sitting in a responsible forum and expect Nepra to give its determination on merit and protect consumer interests.”
The chairman reiterated his question, pointing out the Power Division’s silence on the Rs 50 billion figure. Bhatti replied, “Power Division has filed a review as per Nepra rules. Thank you very much.” Later, Naveed Qaiser of PPMC, also representing the Power Division, conceded that whatever portion of the write-off claims is deemed prudent should be allowed in accordance with the Consumer Service Manual (CSM).
The hearing was marred by disorder, prompting Nepra Member (Technical) Rafique Ahmad Shaikh—who was chairing the session—to express serious concern.
“I cannot conduct the hearing under such disorder. Everyone is speaking without the Authority’s permission. Only Nepra Members are allowed to intervene,” he stated firmly.
Shaikh further commented on the dire state of the power sector, which consumes 40% of the national budget, asking rhetorically, “Who are we fooling?”
The KE’s CFO addressed misconceptions regarding tax laws and explained that under the Sales Tax Act, 1990 (up to March 2023), all power distribution companies were required to deposit sales tax to the Federal Board of Revenue (FBR) on a billed basis, even if unrecovered from consumers. KE CFO argued that this made sales tax as part of its recovery losses. Other charges, such as income tax and duties payable only upon actual recovery, were not part of its claims.
KE’s Legal Counsel Ayan Memon, responded to the Power Division’s concerns regarding issues about Write-off, stating that all points had been addressed previously and that no further review was required. CFO K-Electric also reiterated that all the conditions regarding the write-offs were strictly followed and verified by an independent auditor.
Among the interveners, Arif Bilwani opposed the approval of the write-off claims in the current form. Rehan Jawed criticized the continuation of the Debt Service Surcharge (DSS) at Rs 3.23/kWh for the coming years, which would fund Rs 1.225 trillion, arguing that KE consumers have no connection to the circular debt problem.
He highlighted the inefficiencies of other DISCOs, pointing out that consumers, including KE’s, are unfairly bearing the brunt of circular debt. He criticized the double standards in Pakistan’s power sector, stressing that KE customers are paying for inefficiencies of other DISCOs through surcharges while being unjustly targeted. Javed also pointed out that KE’s losses and recovery efforts are not contributing to the circular debt, unlike the inefficiencies in other DISCOs, which are being passed on to consumers in KE’s territory.
Tanveer Barry supported Nepra’s decision to fix the control period of seven years—and eleven years for BQPS-III—saying it was a positive move that should not be reversed. On the matter of plant availability and full-capacity disallowance, Barry emphasized that it is KE’s responsibility to ensure fuel supply. Now that gas is available, he urged KE to finalize a gas supply agreement with SSGC.
Copyright Business Recorder, 2025
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