Latest news with #Discos
Business Recorder
a day ago
- Business
- Business Recorder
Nepra hearing on 13th: Interim tariffs for 8 Discos to take centre stage
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is all set to hold a public hearing on June 13, 2025 for distribution and supply interim tariffs of eight power Distribution Companies (Discos) for FY 2025-26 under Multi-Year Tariff (MYT) regime in which the companies have sought revenue requirement of over Rs 455.6 billion. The eight Discos, GEPCO, QESCO, MEPCO, SEPCO, HESCO, PESCO, TESCO and HAZECO have filed their distribution and supply tariff petitions under MYT regime for five years' period from FY 20225-26 to FY 2029-30. According to the tariff petition, GEPCO has sought approval of revenue requirement of Rs 67.821 billion of which Rs 16.598 billion is on account of pay & and allowances, Rs 13.815 billion post-retirement benefits, other expenses Rs 4.909 billion (total O&M cost Rs 43.446 billion) , depreciation Rs 4.792 billion, RORB Rs 8.750 billion and other income negative Rs 5.418 billion other income and Prior Year Adjustment (PYA) Rs 24.375 billion. QTA & MTA: Nepra cuts tariffs for Discos and KE MEPCO has sought NEPRA's approval for revenue requirement of Rs 139.106 billion of which, pay and allowances are Rs 22.302 billion, post-retirement benefits Rs 29.384 billion, repair and maintenance, Rs 7.869 billion, travelling allowance Rs 1.936 billion, vehicles maintenance, Rs 1.161 billion, other expenses Rs 507 million (total O&M cost Rs 79.653 billion), depreciation Rs 4.792 billion, RORB Rs 8.750 billion, other income negative Rs 8.731 billion and Prior Year Adjustment Rs 79.453 billion. QESCO's total proposed revenue requirement for FY 2025-26 is Rs 50.120 billion which includes, pay and allowances Rs 9.947 billion, post-retirement benefits, Rs 3.044 billion, repair and maintenance, Rs1.496 billion, traveling allowance, Rs 1.936 billion, vehicles maintenance, Rs 797 billion, other expenses Rs 1.356 billion, (total) O&M cost Rs 17.100 billion), depreciation, Rs 2.944 billion, RORB Rs 15.696 billion, other income negative Rs 1.950 billion and PYA Rs 16.298 billion. SEPCO has sought total revenue requirement of Rs 58.053 billion, of which O&M cost is Rs 22.226 billion, Distribution Margin/Supply Margin, Rs 25.3032 billion, PYA Rs 25.522 billion. TESCO's revenue requirement for FY 2025-26 is estimated to be Rs 7.303 billion of which Rs O& M expense is Rs3.883 billion and DM/SM Rs 5.629 billion. PESCO: - Total revenue requirement for FY 2025-26 Rs 81.449 billion which includes O&M expense Rs 37 billion, DM/ SM- Rs 52 billion and PYA Rs 29.344 billion. HESCO's total revenue requirement for FY 2205-26 is Rs 39.448 billion of which O& M expense is Rs 25.130 billion, DM/SM Rs 33.693 billion and PYA Rs 5.755 billion. HESCO's total revenue requirement is Rs 12.320 billion for the FY 2025-26, which includes O&M Rs 7.883 billion, depreciation, Rs 831 million, RORB Rs 3.028 billion, advance tax Rs 1.129 billion and other income negative Rs 550 million. Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business
- Business Recorder
March 2025: Nepra allows Rs3 negative adjustment for KE consumers
ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has allowed negative adjustment of Rs 3 per unit for KE consumers for March 2025 and Rs 0.93 per unit positive adjustment for Discos consumers for April 2025 under monthly Fuel Charges Adjustment (FCA) mechanism. In this regard, NEPRA has issued separate notifications, according to which KE's negative adjustment and Discos positive adjustment will be effective in bills of June 2025. For Discos, NEPRA conducted a public hearing on May 29, 2025 for Discos and on on May 22, 2025 for K-Electric which was attended by representatives of industry and media. March FCA: KE seeks Rs5.02 interim negative adjustment According to determinations of Discos, Amir Sheikh, a commentator, submitted that this positive FCA has lowered the previously announced benefit of around Rs.7.7/kWh adversely impacting cost projections for many industrial consumers. He also questioned the dispatch of RLNG-based power plants despite the purported availability of local natural gas and pointed out that alternative suppliers, such as Mari Petroleum, may offer more cost-effective solutions. KE during the hearing also claimed an amount ofRs.15.2 billion, on account of partial load, open cycle and degradation curves along with startup cost for the period from July 2023 to March 2025. KE also submitted that BQPS-III and KCCP heat rate adjustment for previous MYT amounting to Rs.0.6 billion and Rs.0.2 billion are also pending. KE had sought negative adjustment of Rs 5.02 per unit for April 2025 to refund Rs 6.792 billion to its consumers. However, regarding the amount of Rs.15.2 billion on account of partial load, open cycle and degradation curves along with startup cost for the period from July 2023 to March 2025, the Authority has already provisionally retained an amount of Rs. 12.45 billion, from monthly FCAs from Nov. 2024 to Feb. 2025, in order not to over burden the consumers at a later stage for such pending costs. Thus, as of March 2025, an amount of Rs.2.74 billion is pending on account of partial load, open cycle and degradation curves along with startup cost, as per the claims of K-Electric. On the same analogy of not to over burden the consumers at a later stage and also to ensure timely recovery of prudent costs, the Authority has decided to provisionally withhold an amount of Rs. 2.74 billion from the worked out negative FCA of Rs. 5.0200/kWh (negative Rs. 6.79 billion) for the month of March 2025. NEPRA has allowed negative adjustment of Rs 2.99 per unit which will provide a relief of Rs 4 billion to the consumers of Karachi. Member (Tech) Rafique Ahmad Shaikh, has written additional notes on both the determinations in which he raised different issues. In his note on Discos FCA determination he said that the prolonged forced outage of Guddu's 747 MW Steam Turbine (Unit 16) has necessitated continued operation in open-cycle mode, resulting in additional costs of approximately Rs. 670 million (USD 2.38 million) for the month of April 2025 alone. Cumulatively, the financial losses attributed to this outage have reached approximately Rs. 113 billion (USD 402.14 million) since its outage from July 2022. Given the significance of the issue, the CEO of GENCO-II should be required to present a detailed update on the rehabilitation plan and the progress made on restoring Steam Turbine Unit 16 during each Monthly Fuel Cost Adjustment meeting. Copyright Business Recorder, 2025
Business Recorder
5 days ago
- Business
- Business Recorder
Nepra's MYT decision: a step in the right direction
EDITORIAL: After a prolonged delay, the regulator — National Electric Power Regulatory Authority (Nepra) — has finally approved the Multi-Year Tariff (MYT) for the only private entity operating in the power utility sector. There has been a considerable outcry in the media following the Power Minister's criticism of Nepra's decision to allow KE (Karachi Electric) to incorporate recovery losses. But before delving into the controversy, it must be emphasised that this is a step in the right direction, as it will unlock KE's valuation for its shareholders. It will help resolve disputes among existing shareholders and incentivize much-needed investment in the fully integrated energy-utility company. This, in turn, will bode well for the sustainability of the power supply to Karachi, the country's economic hub and a city of teeming millions. Moreover, the move sets the stage for the privatisation of other distribution companies (Discos) — a long-awaited reform in the power sector's transmission and distribution segments. Until now, reform efforts have largely focused on the generation side. Unfortunately, the debate primarily concerns KE receiving compensation for recovery losses. On paper, KE's recovery losses appear higher than those of a few other Discos. Ironically, in the so-called 'better-performing' Discos, recovery during 8MFY25 exceeds 100 percent for consumers using 0–200 units but drops to the 80s for higher-slab consumers. The pattern for KE is similar. However, its overall recovery rates are lower — mid-80s for the 0 — 200-unit slab and mid-70s for higher slabs. These figures point to overbilling by other Discos and lower collection efficiency by KE. Nepra has allowed KE to pass on these costs to different consumers. However, shifting the burden to others is unfair to honest consumers. Yet, other Discos have been doing the same — without any transparency. The PHL surcharge (Rs3.23/unit), paid by all electricity consumers nationwide, including KE's, represents a legacy cost linked to historical losses by state-owned Discos. These public entities are not held financially accountable for their losses; the costs are absorbed into the infamous circular debt. In contrast, KE's shareholders bear the losses and are justified in seeking cost coverage. The way forward should focus on reducing KE's losses and ending overbilling by others. Media scrutiny should push KE to improve its recovery rates. Nonetheless, KE's AT&C (Aggregate Technical and Commercial) losses, as allowed by Nepra, have declined from 43.2 percent in 2009 to 20.3 percent today, with a target of 15.3 percent by 2030. The power division's criticism is a grievance against KE's current management. Nepra's determination came after consultations with all stakeholders, including the power division. If there were objections, they should have been raised during that process. It is important to note that Karachi is a complex city, and the private operator has halved its losses over the past 15 years. Had other Discos achieved similar results, the savings would have been substantial. Nepra's allowance for losses is set to decline over the next seven years — and the same standard should be applied to other Discos as well. Achieving this, however, requires investment and competent management. Such outcomes are unlikely without corporatisation and privatisation. To move forward, Discos must be held accountable for their losses and rewarded for improved performance. They need their MYTs and access to private investment — both of which would benefit Pakistan's broader, evolving power sector. KE's MYT approval is a step in this direction. Copyright Business Recorder, 2025
Business Recorder
6 days ago
- Business
- Business Recorder
PMO asks PD for recovery-based loadshedding update
ISLAMABAD: The Prime Minister's Office (PMO) has sought an update from the Power Division on its proposed policy to legalize recovery-based loadshedding, amid continued penalties imposed by the National Electric Power Regulatory Authority (Nepra) on Distribution Companies (Discos) and K-Electric for implementing such load management practices in violation of regulatory laws. This initiative is part of a broader reform agenda assigned to the Power Division by the Prime Minister, aimed at removing legal barriers to unscheduled power load shedding across the country. However, the Ministry of Finance (MoF) has expressed reservations about the plan. It argues that while load shedding may help avoid high electricity costs in low-recovery areas, the government remains liable for capacity payments on unutilized electricity—making the overall economic rationale questionable. HCSTSI condemns HESCO over increased load-shedding At a public hearing on Fuel Cost Adjustment (FCA) last year, Nepra Chairman Chaudhry Waseem Mukhtar confirmed that revenue-based load shedding is currently illegal, which is why the regulator is penalizing utilities for enforcing it. He suggested that the government must legalize the practice if it intends to continue its implementation. Following the Chairman's remarks, the Power Division began drafting a proposal titled 'Amendments in Legal Framework to Implement Economic Load Management in the Country.' The proposal aims to embed recovery-based and Aggregate Technical and Commercial (AT&C) loss-based load shedding into the legal and regulatory structure. According to the Power Division, Prime Minister Shehbaz Sharif chaired a series of meetings on April 15, 18, and 25, 2024, during which he directed the division to review and suggest necessary amendments to existing laws and policies. A committee comprising representatives from the Private Power and Infrastructure Board (PPIB), Central Power Purchasing Agency (CPPA), Law Division, Nepra, and independent legal experts was formed to carry the initiative forward. The Power Division circulated a draft summary to relevant ministries for feedback before submitting it to the Economic Coordination Committee (ECC), Cabinet Committee on Energy (CCoE), or the federal cabinet for approval. In its feedback, the Finance Ministry noted the summary lacked empirical data to substantiate the claimed benefits. It stressed that while load shedding in high-loss areas may be justifiable to an extent, the fiscal impact of paying for idle generation capacity remains a major concern. The Power Division, however, maintains that Discos are compelled to implement load shedding in high-loss areas due to economic constraints. With rising electricity costs from the central power pool, continuing to supply expensive power to areas with poor recoveries is financially unsustainable. Therefore, it argues, a structured and legally sanctioned load shedding mechanism is essential for the sector's financial viability. Nevertheless, sources suggest that Nepra remains opposed to the proposed amendments and has raised serious objections. The Finance Division reiterated its stance, emphasizing the need for the Power Division to present a detailed comparative analysis of the economic trade-offs involved. The Cabinet has asked the Power Division to clearly explain the advantages of such a policy, particularly in terms of cost avoidance and system sustainability. Copyright Business Recorder, 2025
Business Recorder
27-05-2025
- Business
- Business Recorder
Discos' sell-off/provincialisation: PMO directs Power Div. to expedite consultations
ISLAMABAD: The Prime Minister Office (PMO) has directed the Power Division to expedite the consultative process on Discos privatisation/ provincialisation and develop proposals through Task Force on Power Sector Reforms, well informed sources told Business Recorder. The finalized proposals shall be submitted to the Steering Committee on Privatisation of Discos. The Cabinet approved the outright privatisation of three DISCOs—Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO), and Gujranwala Electric Power Company (GEPCO)—in its meeting held on August 13, 2024, marking the first phase of the privatisation initiative. ECC grills PD: Discos' T&D losses total Rs143bn till March The second phase will include Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), and Hazara Electric Supply Company (HAZECO). Meanwhile, Hyderabad Electric Supply Company (HESCO), Sukkur Electric Power Company (SEPCO), and Peshawar Electric Supply Company (PESCO) will be offered under a Concession Model through long-term agreements. Tribal Electric Supply Company (TESCO) and Quetta Electric Supply Company (QESCO) will be retained by the government. The Power Division, with support from the World Bank under Non-Lending Technical Assistance (NLTA), has completed a consolidated report detailing key deliverables, which has been submitted to the Privatisation Commission. The Power Division has met the Conditions Precedent (CPs) set by the Cabinet Committee on Privatisation (CCoP) and the Government of Pakistan, along with additional requirements identified by the World Bank as of January 31, 2025. The Financial Advisor for Phase-I DISCOs was appointed by the Privatisation Commission, with the Financial Advisory Services Agreement signed on February 11, 2025. The process is structured into four phases: (i) phase I: Sector-level due diligence, inception report, market sounding, and global experience review – completed by March 18, 2025; Phase II: Company-level due diligence (legal, technical, financial, environmental, and HR) – reports submitted May 8, 2025, currently under review; Phase III: Transaction preparation, including restructuring plans and preliminary financial modeling – due June 20, 2025; and Phase IV: Transaction implementation, including investor roadshows, information memoranda, bidder pre-qualification, bidding documents, contract awards, and financial closure – targeted for completion by January 15, 2026. On January 1, 2025, Prime Minister had directed Power Division to thoroughly examine the Provincialisation of DISCOs (ie transferring the ownership and control of Discos from the federal government to the provincial governments) in consultation with provinces and prepare a roadmap with the timelines for the review/approval of the Prime Minister. The Prime Minister Office had further directed that Power Division work simultaneously on the privatisation of Discos identified for privatisation in the first phase i.e. IESCO, FESCO and GEPCO. Power Division shall follow the agreed schedule and complete all the prior actions (conditions precedents) before January 31, 2205. The Committee! constituted by the Prime Minister on Tariff Reduction chaired by the Deputy Prime Minister/Foreign Minister Senator Ishaq Dar has been tasked to thoroughly review the proposal prepared by the Power Division while taking Provincial Governments on board. The firm up proposal shall be submitted for approval of the Prime Minister. Copyright Business Recorder, 2025
