Rs189b transmission line project faces 'ROW' challenge
Federal Minister for Energy Sardar Awais Ahmed Khan Leghari on Friday met with World Bank Country Director Najy Benhassine, World Bank Group experts and IFC Country Manager Zeeshan Sheikh and discussed the initial feasibility of the Matiari-Moro-Rahim Yar Khan transmission line project.
The government has planned to construct the 500kV transmission line to link Matiari in Sindh with Rahim Yar Khan in Punjab. According to the Ministry of Planning and Development, the Rs189 billion project had been approved, with Rs17bn allocated in the budget for the fiscal year 2024-25.
The transmission line is necessary to make up for the electricity differential from south to north. The issue, as per a wind power producers (WPPs) representative, is as the power generation in the country's southern region has rapidly increased "[it] outpaced the development of NTDC's grids that can carry electricity from south to north. This has resulted in transmission bottlenecks which, in turn, limit NTDC's ability to evacuate power".
On its part, the NTDC claims the variation in electricity generation from WPPs — due to seasonal changes — makes its grid unstable.
Leghari emphasized that, while the project has numerous benefits, its success depends on the effective resolution of the "right of way" issue. "Until the challenge is addressed, effective implementation of the project will not be possible."
The right of way (ROW) is the legal permission required for the construction, conservation, expansion and protection of a piece of land or a commuting route. In other words, when an organisation, may it be a government or private entity, intends to build or improve the infrastructure of a city, district, or even a country, ROW is needed before any such work is initiated.
The minister clarified that under any procurement model, the National Transmission and Dispatch Company (NTDC) must retain control over the transmission system and operations, while tariffs will be determined according to NEPRA regulations to ensure sustainability of the project.
The project is a key component of Pakistan's energy infrastructure, designed to improve stability and performance of the national transmission network, said a press release issued here.
Its goal is to improve voltage stability, ensure effective electricity transmission from north to south, and facilitate the integration of large-scale renewable energy sources. Additionally, various aspects of the project were discussed during the meeting.
Minister of State Abdul Rehman Kanju also participated in the meeting.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
12 hours ago
- Business Recorder
Nepra's KE MYT decision: Power Div. submits review motion
ISLAMABAD: The Power Division on Monday submitted the much-talked about review motion challenging the National Electric Power Regulatory Authority's recent Multi-Year Tariff (MYT) determinations for K-Electric (KE) for 2024-25 to 2029-30. The government is urging Nepra to revise key assumptions, performance benchmarks and profit margins in line with real-world data and standards applied to other power utilities. According to Power Division, Nepra allowed KE several cost items and profit margins that are more generous than those granted to other utilities across the country. As a result, electricity bills for Karachi consumers are set to rise disproportionately, and public finances will bear an unnecessary burden. Total financial impact is in excess of Rs 300 billion of the intervention identified for review by GoP in KE MYT. Power Minister, Sardar Awais Khan Leghari, in his tweet said that the power sector of Pakistan cannot afford any inefficiencies encouraged through tariff structure of any company, irrespective of whether it is private or public. 'Our review supports a sustainable and healthy environment in the distribution system of Pakistan in a responsible manner. Power Division hopes that the review process is carried out in a transparent and fair manner,' he added. The key concerns in the Review Petition are as follows: Supply (fuel and fuel related costs): Nepra set KE's fuel-cost rate at Rs. 15.99/kWh, whereas other utilities buy power at lower rates from the national grid. This gap shifts about Rs. 28 billion (FY 2024) and Rs. 13 billion (FY 2025) of extra costs onto the federal budget rather than onto KE customers. Recovery Loss Allowance: KE was permitted to include 'recovery losses' in its tariff even though its own records show it recovers more than the level Nepra allowed. No other utility received this special allowance. This adds roughly Rs. 36 billion in FY 2024 and Rs. 35 billion in FY 2025 to KE's revenue that consumers end up paying. Cumulative impact over a 7-year period is more than Rs 200 billion. Working Capital Allowance: NEPRA permitted KE a 24 percent markup on working capital, a much higher percentage than in its previous tariff and higher than any other power distributor. This increased KE's allowable revenue by about Rs. 2.4 billion in FY 2024 and is projected to total around Rs. 15 billion over the control period of 7 years Higher Allowed Distribution Loss: Nepra set KE's allowed loss at 13.90 percent, instead of the 13.46 percent KE had planned. Losses are electricity that is generated but not billed, due to leaks or theft, or kunda. Around 7 percent of all such leakages can be attributed to theft. By permitting a higher loss level, KE passes on an extra Rs. 3.1 billion in FY 2024, rising to about Rs. 21 billion over the control period. 'Law & Order' Margin: KE received a special 2 percent margin to offset security costs in Karachi—a perk not granted to any other utility, even those operating in equally or more volatile regions. Moreover, Law & Order in Karachi has improved considerably over the last few years, and thereby there exists no reason for such a margin. This margin adds approximately Rs. 14 billion in FY 2024 and up to Rs. 99 billion over the multi-year period to KE's revenue requirement. Retention of 'Other Income': KE is allowed to keep money from fines imposed on its contractors, interest on bank deposits, and profits from side businesses. In effect, consumers have already paid for the assets that generate these incomes, so these funds should reduce KE's costs to customers, not pad its revenue. Effectively, it is being proposed that any such gain on assets that has been financed by consumers needs to be shared with consumers. Transmission (Moving Power from Grid to KE): High transmission loss Target & skewed sharing; NEPRA allowed KE a 1.30 percent loss target, even though KE's historical losses are closer to 0.75 percent. KE keeps 75 percent of any savings if it performs better than 1.30 percent, passing only 25 percent of savings to consumers. This encourages inefficiency and keeps bills high. Financial impact is about Rs. 4 billion in FY 2024, rising to roughly Rs. 28 billion over the control period. Excessive Return on Equity (RoE): KE was granted a 12 percent RoE in U.S. dollars (about 24.46 percent in rupee terms). Other national utilities (like NTDC) receive only 15 percent RoE in rupees. This difference costs consumers around Rs. 4 billion in FY 2024 and approximately Rs. 37 billion over the control period. Distribution (delivering power to homes & businesses)- High distribution - RoE disparity: KE's distribution arm was allowed 14 percent RoE in U.S. dollars (about 29.68 percent in rupees). By comparison, other Discos like FESCO get only about 14.47 percent RoE in rupees. This adds roughly Rs. 3.7 billion in FY 2024 and Rs. 35.6 billion over the control period to KE's revenue. Distribution Loss & Special Allowance: KE was granted an extra 2 percent 'law & order' margin on top of its allowed losses, even though Karachi's security situation is similar to or better than other regions. KE also keeps 25 percent of any savings if it performs better. These practices cost consumers about Rs. 14 billion in FY 2024 and up to Rs. 99 billion over the multi-year period. Working Capital Markup: A 23.91 percent markup was approved for KE's distribution working capital—far higher than any other utility. This adds about Rs. 0.8 billion in FY 2024 and roughly Rs. 10 billion over the control period to KE's revenue requirement. Generation (KE's Own Power Plants), Payments to Idle Power Plants (Take-or-Pay): Nepra approved capacity payments to several KE power plants (BQPS-I, KCCP, KGTPS, SGTPS) even though these plants will run at minimal or no output because KE sources cheaper power from the national grid. Consumers and the government pay for capacity that is not used. This costs about Rs. 12.7 billion in FY 2025 and roughly Rs. 82.5 billion over the multi-year period. Favorable indexation &RoE for KE's plants: Under a hybrid 'take-or-pay' model, KE's plants keep full inflation adjustments (indexed to U.S. CPI or USD/PKR), while independent power producers (IPPs) do not receive equally generous terms. RoE for KE's plants was set at 17 percent (using PKR 168/USD), higher than typical IPP terms, costing Rs. 7 billion in FY 2024 and about Rs. 57.3 billion over the control period. This will result in overall higher bills for Karachi customers; KE's allowed costs, profit margins, and extra allowances will cause Karachi consumers' electricity bills to rise significantly compared to other regions. Several KE cost items—especially the inflated fuel benchmark and payments to idle plants—are effectively covered by the government, stretching public finances. The determinations are unfair treatment & efficiency discouraged: Granting KE advantages not given to other utilities creates a 'two-tier' system. This discourages KE from boosting efficiency, and it undermines transparent, consistent tariff-setting nationwide. The Government maintains that all utilities should be treated equally. KE should not receive special cost or profit allowances unavailable to other power companies and tariffs must reflect actual costs and reasonable returns. Extra allowances for inefficiency and high profit rates must be removed to keep bills affordable. For regulatory accountability Nepra should revise assumptions, benchmarks, and profit margins so they align with real performance data and the standards used for other utilities. Copyright Business Recorder, 2025
Business Recorder
14 hours ago
- Business Recorder
Nepra's KE MYT decision: PD submits review motion
ISLAMABAD: The Power Division on Monday submitted the much-talked about review motion challenging the National Electric Power Regulatory Authority's recent Multi-Year Tariff (MYT) determinations for K-Electric (KE) for 2024-25 to 2029-30. The government is urging Nepra to revise key assumptions, performance benchmarks and profit margins in line with real-world data and standards applied to other power utilities. According to Power Division, Nepra allowed KE several cost items and profit margins that are more generous than those granted to other utilities across the country. As a result, electricity bills for Karachi consumers are set to rise disproportionately, and public finances will bear an unnecessary burden. Total financial impact is in excess of Rs 300 billion of the intervention identified for review by GoP in KE MYT. Power Minister, Sardar Awais Khan Leghari, in his tweet said that the power sector of Pakistan cannot afford any inefficiencies encouraged through tariff structure of any company, irrespective of whether it is private or public. 'Our review supports a sustainable and healthy environment in the distribution system of Pakistan in a responsible manner. Power Division hopes that the review process is carried out in a transparent and fair manner,' he added. The key concerns in the Review Petition are as follows: Supply (fuel and fuel related costs): Nepra set KE's fuel-cost rate at Rs. 15.99/kWh, whereas other utilities buy power at lower rates from the national grid. This gap shifts about Rs. 28 billion (FY 2024) and Rs. 13 billion (FY 2025) of extra costs onto the federal budget rather than onto KE customers. Recovery Loss Allowance: KE was permitted to include 'recovery losses' in its tariff even though its own records show it recovers more than the level Nepra allowed. No other utility received this special allowance. This adds roughly Rs. 36 billion in FY 2024 and Rs. 35 billion in FY 2025 to KE's revenue that consumers end up paying. Cumulative impact over a 7-year period is more than Rs 200 billion. Working Capital Allowance: NEPRA permitted KE a 24 percent markup on working capital, a much higher percentage than in its previous tariff and higher than any other power distributor. This increased KE's allowable revenue by about Rs. 2.4 billion in FY 2024 and is projected to total around Rs. 15 billion over the control period of 7 years Higher Allowed Distribution Loss: Nepra set KE's allowed loss at 13.90 percent, instead of the 13.46 percent KE had planned. Losses are electricity that is generated but not billed, due to leaks or theft, or kunda. Around 7 percent of all such leakages can be attributed to theft. By permitting a higher loss level, KE passes on an extra Rs. 3.1 billion in FY 2024, rising to about Rs. 21 billion over the control period. 'Law & Order' Margin: KE received a special 2 percent margin to offset security costs in Karachi—a perk not granted to any other utility, even those operating in equally or more volatile regions. Moreover, Law & Order in Karachi has improved considerably over the last few years, and thereby there exists no reason for such a margin. This margin adds approximately Rs. 14 billion in FY 2024 and up to Rs. 99 billion over the multi-year period to KE's revenue requirement. Retention of 'Other Income': KE is allowed to keep money from fines imposed on its contractors, interest on bank deposits, and profits from side businesses. In effect, consumers have already paid for the assets that generate these incomes, so these funds should reduce KE's costs to customers, not pad its revenue. Effectively, it is being proposed that any such gain on assets that has been financed by consumers needs to be shared with consumers. Transmission (Moving Power from Grid to KE): High transmission loss Target & skewed sharing; NEPRA allowed KE a 1.30 percent loss target, even though KE's historical losses are closer to 0.75 percent. KE keeps 75 percent of any savings if it performs better than 1.30 percent, passing only 25 percent of savings to consumers. This encourages inefficiency and keeps bills high. Financial impact is about Rs. 4 billion in FY 2024, rising to roughly Rs. 28 billion over the control period. Excessive Return on Equity (RoE): KE was granted a 12 percent RoE in U.S. dollars (about 24.46 percent in rupee terms). Other national utilities (like NTDC) receive only 15 percent RoE in rupees. This difference costs consumers around Rs. 4 billion in FY 2024 and approximately Rs. 37 billion over the control period. Distribution (delivering power to homes & businesses)- High distribution - RoE disparity: KE's distribution arm was allowed 14 percent RoE in U.S. dollars (about 29.68 percent in rupees). By comparison, other Discos like FESCO get only about 14.47 percent RoE in rupees. This adds roughly Rs. 3.7 billion in FY 2024 and Rs. 35.6 billion over the control period to KE's revenue. Distribution Loss & Special Allowance: KE was granted an extra 2 percent 'law & order' margin on top of its allowed losses, even though Karachi's security situation is similar to or better than other regions. KE also keeps 25 percent of any savings if it performs better. These practices cost consumers about Rs. 14 billion in FY 2024 and up to Rs. 99 billion over the multi-year period. Working Capital Markup: A 23.91 percent markup was approved for KE's distribution working capital—far higher than any other utility. This adds about Rs. 0.8 billion in FY 2024 and roughly Rs. 10 billion over the control period to KE's revenue requirement. Generation (KE's Own Power Plants), Payments to Idle Power Plants (Take-or-Pay): Nepra approved capacity payments to several KE power plants (BQPS-I, KCCP, KGTPS, SGTPS) even though these plants will run at minimal or no output because KE sources cheaper power from the national grid. Consumers and the government pay for capacity that is not used. This costs about Rs. 12.7 billion in FY 2025 and roughly Rs. 82.5 billion over the multi-year period. Favorable indexation &RoE for KE's plants: Under a hybrid 'take-or-pay' model, KE's plants keep full inflation adjustments (indexed to U.S. CPI or USD/PKR), while independent power producers (IPPs) do not receive equally generous terms. RoE for KE's plants was set at 17 percent (using PKR 168/USD), higher than typical IPP terms, costing Rs. 7 billion in FY 2024 and about Rs. 57.3 billion over the control period. This will result in overall higher bills for Karachi customers; KE's allowed costs, profit margins, and extra allowances will cause Karachi consumers' electricity bills to rise significantly compared to other regions. Several KE cost items—especially the inflated fuel benchmark and payments to idle plants—are effectively covered by the government, stretching public finances. The determinations are unfair treatment & efficiency discouraged: Granting KE advantages not given to other utilities creates a 'two-tier' system. This discourages KE from boosting efficiency, and it undermines transparent, consistent tariff-setting nationwide. The Government maintains that all utilities should be treated equally. KE should not receive special cost or profit allowances unavailable to other power companies and tariffs must reflect actual costs and reasonable returns. Extra allowances for inefficiency and high profit rates must be removed to keep bills affordable. For regulatory accountability Nepra should revise assumptions, benchmarks, and profit margins so they align with real performance data and the standards used for other utilities. Copyright Business Recorder, 2025
Business Recorder
15 hours ago
- Business Recorder
Govt urges World Bank to restructure KWSSIP
ISLAMABAD: The government has requested the World Bank for restructuring of Karachi Water and Sewerage Services Improvement Project (KWSSIP) to complete activities that suffered from the implementation delay due to the Covid-19 pandemic, the 2022 floods and delays in procurement of critical activities. Official documents revealed that this restructuring for KWSSIP involves: (i) change in client name, (ii) closing date extension and subsequent change in disbursement and implementation schedule, (iii) reallocation between expenditure categories, and (iv) change in results framework. The $40 million International Bank for Reconstruction and Development loan for KWSSIP was approved on June 27, 2019. The project is co-financed with a loan of $40 million from the Asian Infrastructure Investment Bank (AIIB). The Project Development Objective (PDO) is to improve access to safe water services in Karachi and to increase the Karachi Water and Sewerage Board (KWSB)'s financial and operational performance. World Bank approves $240m for Karachi's water & sanitation project The current project closing date is June 30, 2025. The project comprises three components: Component 1—Operational and Enabling Environment Reform; Component 2—Infrastructure Investments; and Component 3—Project Management and Studies. This is the first restructuring of the project. The implementation arrangements of the projects will remain the same. Government has requested a twelve-month project closing date extension for both the World Bank and the AIIB's loans until June 30, 2026. This extension is required to complete activities that suffered from the implementation delay due to the COVID-19 Pandemic, the 2022 floods and delays in procurement of critical activities (bulk meters and customer meters). Activities include the establishment of pilot District Metering Areas (DMAs), works to reduce energy consumption, development of an asset management program, completion of the water and sewerage masterplan and commissioning of the chlorination dosing stations will be completed within the 12 months closing date extension and hence, achieving the PDOs. Due to higher-than-expected costs in component 1 for building customer service centers and of the Institutional Reform Studies, some funding is reallocated from components 2 and 3 to component 1. Relative to the original investment plan at preparation, this will result in a reduced scope of energy efficiency investments in component 2 and of studies conducted in component 3. It is proposed to change the target date of all unachieved indicators to match the closing date extension as all indicators are expected to be achieved by then. Progress toward achieving the PDO and Implementation Progress are rated Moderately Satisfactory as of the last Implementation Status and Results Report (ISR) in November 2024. The performance ratings for components, financial management, project management, procurement, monitoring and evaluation (M&E), and safeguards are also moderately satisfactory. As of May 6, 2025, disbursement from the IBRD allocation reached $30.62 million out of the allocated budget of $40 million (76.55 per cent) in addition to $33.248mn (83.12 per cent) from the AIIB co-financing loan. More than 90 percent of the project proceeds are committed in signed contracts and the remaining balance are planned to be fully committed by June 30, 2025, through variation orders to some ongoing works contracts and awarding of the remaining studies envisioned under the project such as the updating of the Geographical Information System (GIS) and the development of asset management system. Implementation progress, financial utilisation, and reforms momentum have improved recently (though the latter is still slow). The Project is expected to utilize around $2.0 million by June 30, 2025. The overall risk rating under SORT was changed in the last ISR from High to Substantial recognising improvements in handling risk mitigation measures. Copyright Business Recorder, 2025
