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PD uncertain on power tariff changes from July 1
ISLAMABAD: The Power Division stated on Friday that it currently has no definitive estimate of whether electricity tariffs for distribution companies (Discos) will increase or decrease from July 1, 2025, as this depends on the approval of cost components already submitted to the regulator.
These remarks were made by Additional Secretary (Power Finance) Mehfooz Bhatti during a public hearing on the interim distribution and supply tariffs of eight Discos for FY 2025-26 under the Multi-Year Tariff (MYT) regime. The statement came in response to a query raised by textile sector representative Aamir Sheikh.
Eight Discos—GEPCO, QESCO, MEPCO, SEPCO, HESCO, PESCO, TESCO, and HAZECO—have submitted tariff petitions under the MYT framework for the five-year period from FY 2025-26 to FY 2029-30, seeking National Electric Power Regulatory Authority (NEPRA)'s approval of a combined revenue requirement exceeding Rs 455.6 billion for the upcoming fiscal year.
'I have no indication at all of what the industry tariff will be from July 1, 2025,' said Aamir Sheikh. 'Our tariff for B3 has dropped to Rs 31/32 (about 11 cents) per unit currently, and the government has committed to reducing it further. We have already booked export orders for the next quarter based on these rates. It's imperative for NEPRA, the Power Division, and the Government of Pakistan to ensure tariffs do not increase beyond May/June levels.'
The hearing was briefly suspended by NEPRA Chairman Waseem Mukhtar, who demanded representation from a senior Power Division official. Mehfooz Bhatti eventually joined the session, replacing the Joint Secretary, whose presence NEPRA deemed insufficient.
Bhatti, who liaises directly with the Finance Division on power sector subsidies, appeared uncertain regarding the projected tariff changes. 'There is an indication of Rs 250 billion in the budget for Targeted Distribution Subsidy (TDS) for 2025-26. We've already presented seven scenarios to the Regulator. Once the distribution margins are determined under MYT, we'll be in a better position to outline consumer tariffs after incorporating the government's subsidy. At this point, I can't provide figures, but rebasing will take effect from July 1, 2025,' he said.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) strongly opposed any additional financial burden on consumers for the losses incurred by Discos under the MYT, until comprehensive reforms are implemented. The FPCCI argued that the burden of inefficiencies—including high technical and commercial losses, pension liabilities, and poor governance—is being unfairly transferred to consumers.
Rehan Jawed from Karachi raised concerns about the poor performance of Hyderabad Electric Supply Company (HESCO), prompting NEPRA to announce that a verification team will visit HESCO upcoming Monday to investigate consumer complaints.
Tanveer Barry of the Karachi Chamber of Commerce and Industry (KCCI) criticized Discos for rising losses due to operational inefficiencies, stating that consumers across Pakistan are unfairly burdened with the DSS surcharge on Power Holding Limited (PHL) loans.
'Discos' technical and commercial losses are worsening, and their recoveries fall short of NEPRA's targets. They haven't submitted investment and distribution plans, and the MYT submissions are incomplete,' Barry said. He emphasized that with power generation capacity projected to increase to 46,605 MW, resulting in higher capacity payments, the Time of Use (ToU) mechanism for industrial consumers should be abolished. He also called for third-party audits of Disco losses to present an accurate picture to NEPRA.
CEOs and CFOs of the eight Discos presented details of their proposed distribution margins and expenditures.
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.
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, travelling 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's total revenue requirement for FY 2025-26 is Rs 81.449 billion which includes O&M expense Rs 37 billion, DM/ SM- Rs 52 billion and PYA Rs 29.344 billion.
Hazara Electric Supply Company (HAZECO) which has been bifurcated from PESCO also presented its one-year revenue requirement.
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
