DISCOs seek recovery of billions

Submit tariff hike requests under MYT regime to meet annual revenue needs

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ISLAMABAD:

Electricity consumers are expected to face a tariff hike in financial year 2025-26 under the multiyear tariff regime.

A majority of power distribution companies (DISCOs) have submitted petitions to the power-sector regulator, seeking the recovery of billions of rupees from consumers to meet their annual revenue requirements.

The National Electric Power Regulatory Authority (Nepra) will conduct a public hearing on June 13 in response to the petitions.

All eight government-owned DISCOs have approached Nepra with requests for an interim tariff increase for fiscal year 2025-26. The petitions, under the multiyear tariff (MYT) regime covering the period from FY 2025-26 to FY 2029-30, have been filed by Gujranwala Electric Power Company (Gepco), Multan Electric Power Company (Mepco), Quetta Electric Supply Company (Qesco), Sukkur Electric Power Company (Sepco), Hyderabad Electric Supply Company (Hesco), Peshawar Electric Supply Company (Pesco), Tribal Areas Electric Supply Company (Tesco) and Hazara Electric Supply Company (Hazeco).

The revenue requirements of these DISCOs show a significant financial burden for the upcoming fiscal year, which may be passed on to consumers.

Mepco has sought the highest interim revenue requirement of Rs139.1 billion, followed by Pesco at Rs81.4 billion, Gepco at Rs67.8 billion, Sepco at Rs58 billion, Qesco at Rs50.1 billion, Hesco at Rs39.4 billion, Hazeco at Rs12.3 billion and Tesco at Rs7.3 billion.

Mepco has also made a higher demand on account of operations and maintenance (O&M) cost at Rs63.1 billion, largely driven by staff pay and allowances of Rs22.3 billion, post-retirement benefits of Rs29 billion, and repair and maintenance expenses of Rs7.8 billion.

Gepco reported O&M cost of Rs35.3 billion, including Rs16.6 billion for pay and allowances and Rs13.8 billion for retirement benefits. Pesco's O&M cost was estimated at Rs37 billion, with Rs32.7 billion alone allocated to salaries.

Other companies also cited sizeable O&M allocations. Hesco claimed Rs25.1 billion, Sepco Rs22.2 billion, Qesco Rs17 billion, Tesco Rs3.8 billion and Hazeco Rs7.8 billion.

Depreciation and the return on rate base (RORB) formed another significant part of the cost buildup. Mepco again topped the list with Rs8.9 billion in depreciation and Rs16.3 billion in RORB. Gepco followed with Rs4.8 billion in depreciation and Rs8.8 billion in RORB.

Pesco sought Rs5.6 billion and Rs12.3 billion under the same heads, while Hesco demanded Rs3.2 billion in depreciation and Rs6.8 billion in RORB. Qesco's RORB was estimated at Rs15.7 billion alongside Rs297 billion for depreciation.

Some power distribution companies have sought adjustments for prior years as well, which resulted in an increase in revenue requirements.

Mepco claimed Rs59.5 billion, Pesco claimed Rs29.3 billion, Gepco sought Rs24.4 billion and Sepco requested Rs25.6 billion.

Qesco and Hesco requested Rs16.3 billion and Rs5.8 billion, respectively, while Tesco and Hazeco did not include prior year adjustments.

Tesco and Sepco also factored in bad debt provisions, with Rs1.6 billion and Rs5.6 billion respectively. Sepco also reported Rs1.6 billion in finance costs.

To consider these petitions, Nepra has scheduled a public hearing on June 13 and invited all parties to submit their views and comments in response to the revenue requirements made by the distribution companies.