KE base tariff raised by Rs6.15 per unit

NEPRA moves ahead despite review motion by Centre

ISLAMABAD:

In a bold assertion of its regulatory autonomy, Pakistan's power watchdog has notified K-Electric's long-delayed multi-year tariffs for supply, distribution, and transmission through 2030 — despite an unresolved review motion by the federal government.

The power regulator has notified Rs6.15 per unit increase in base tariff for KE consumers. The government implements uniform across the country and government provides subsidy for KE consumers to implement uniform tariff.

The National Electric Power Regulatory Authority (Nepra) moved ahead with the notification after determining that no legal bar existed to halt implementation. It invoked its enhanced powers under a 2021 legal amendment, which allows the regulator to issue tariff notifications directly — authority that previously rested with the federal government.

The landmark move reflects pressure from international lenders, notably the IMF and the World Bank, to depoliticize tariff-setting and fast-track power sector reforms.

"This situation could impair KE's financial health and undermine power supply continuity, ultimately affecting consumers and the broader energy market," Nepra warned in its statement.

The newly notified average power supply tariff for KE stands at Rs 39.97 per kilowatt-hour for 2023-24, comprising Rs 31.96/kWh in power purchase cost, Rs 2.86 for transmission, Rs 3.31 for distribution, and Rs 2.28 as the supply margin. A prior year adjustment of minus Rs 0.44/kWh has also been included.

Nepra estimated KE's total revenue requirement for FY 2023-24 at Rs 606.9 billion, with Rs34.7 billion allocated for supply margin and Rs 36.2 billion set aside to cover recovery losses.

Despite the formal tariff approval, KE's finances remain under severe pressure. With bill recovery slipping to 91.5pc in FY 2023-24 and projected to fall to 90.5pc next year, the utility could face cumulative under-recoveries nearing Rs97 billion over two fiscal years. Nepra cautioned that KE's permitted Rs21.6 billion return on distribution operations might be wiped out without government support or adjustments.

Nepra simultaneously approved a distribution tariff of Rs 3.31/kWh and Rs 2.684/kWh specifically to support a Rs 43.4 billion investment plan over the seven-year Multi-Year Tariff period.

The government had challenged K-Electric's multi-year tariff (2024-30) approved by the power regulator last week, alleging the utility got an undue favour of Rs750 billion over the seven-year period at the cost of the national exchequer, power consumers across the country and taxpayers at large.

In a statement, the power division had announced that the six tariff interventions allowed by Nepra to KE entailed a financial impact of Rs453bn spread over seven years.

On top of that, the division added, a fuel cost impact higher than the national average for 2024-25 alone meant an additional cost of Rs41bn, which even if it remains flat would translate into Rs287bn in seven years.

The division said the government position was to seek review of the Nepra determination to ensure fairness and uniformity, tariff must reflect actual costs and reasonable returns to protect consumers and there should be no extra allowance for inefficiency.