Govt challenges K-Electric tariff in NEPRA review

Energy ministry says high K-Electric tariff may cost Rs59b over 2 years, urges NEPRA to review national grid pricing

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The federal government has filed a formal review petition with the National Electric Power Regulatory Authority (NEPRA) challenging the tariff set for K-Electric, expressing strong reservations over what it calls an unfair financial burden on both the national treasury and power consumers.

In its submission, the Ministry of Energy argued that the tariff granted to K-Electric for electricity sourced from the national grid is disproportionately high compared to other power distribution companies.

The ministry warned that this elevated rate could impose an estimated Rs59 billion burden on the federal budget over the next two years.

The petition also objected to the inclusion of recovery losses in K-Electric’s tariff, stating that this would result in an additional Rs200 billion being passed on to consumers over a seven-year period.

The government expressed concerns over what it described as preferential treatment. It pointed out that NEPRA approved a 13.90% loss threshold for K-Electric—exceeding the company’s actual demand—and granted a special law and order margin of 2%, not extended to other companies.

Furthermore, the petition criticised the approval of a 12% return on equity in US dollars, which is expected to add another Rs37 billion burden during the current tariff period.

Additional concerns were raised over capacity payments to K-Electric’s power plants, projected to cost over Rs82 billion.

According to the Ministry of Energy, NEPRA’s decision could lead to a significant rise in electricity bills for Karachi consumers and may set a precedent for a “dual system” that favours one provider over others.

The federal government has requested NEPRA to ensure uniform treatment across all power distribution companies in Pakistan, emphasising fairness and economic sustainability.