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Business Recorder
2 days ago
- Business
- Business Recorder
PM urged to expedite Rs23bn power bill relief
KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Jawed Bilwani has appealed the Prime Minister Shehbaz Sharif to ensure that the long-pending relief of Rs23 billion in the electricity bills on incremental consumption is released without further delay by duly incorporating provision in the forthcoming federal budget for FY 2025–26. Despite being allocated in previous budgets, the relief has yet to be disbursed, causing severe financial stress to the Karachi's industrial sector only as this relief has been provided to the rest of the country. In a formal letter addressed to the Prime Minister, President KCCI acknowledged the government's efforts to address challenges faced by the business community and improve Pakistan's economic landscape. However, he expressed grave concern over the delay in releasing the subsidy for incremental electricity consumption from July 1, 2021, to October 21, 2023, stressing that Karachi's industries continue to bear the brunt of administrative and legal setbacks. He pointed out that the total subsidy amount for the period is Rs33 billion, of which Rs23 billion is undisputed and should have been disbursed. Budgetary allocations were already made in FY 2021-22 (Rs22 billion), FY 2022-23 (Rs13 billion), and FY 2023-24 (Rs7 billion), but the funds have not reached the intended recipients due to procedural and legal delays involving K-Electric. 'K-Electric operated without a stay order for nearly nine months yet failed to pass on the subsidy to consumers,' said Bilwani, pointing to the lack of enforcement by NEPRA and subsequent legal hurdles that have prolonged the crisis. He added that despite the dismissal of KE's appeals by a Tribunal in July 2024, the matter stands stalled due to a stay order granted by the Islamabad High Court. KCCI emphasized the need for immediate verification of the subsidy figures by the Power Division and NEPRA, urging the government to ensure that the verified amount is reflected in the upcoming federal budget. More importantly, KCCI proposed that the undisputed Rs23 billion be released directly to industrial consumers rather than through KE, in order to prevent further delays. 'This is not just a matter of legal obligation; it is a question of economic justice and national interest,' Bilwani stated. 'Ensuring that Karachi's industries receive this long-overdue relief is essential for sustaining industrial operations and maintaining economic stability across Pakistan', he added. Jawed Bilwani hoped that the Prime Minister will intervene swiftly to resolve the issue, restore confidence in government policy, and deliver the much-needed support to Karachi's industrial backbone. Copyright Business Recorder, 2025
Business Recorder
3 days ago
- Business
- Business Recorder
JI accuses Nepra of displaying anti-Karachi bias
KARACHI: Jamaat-e-Islami (JI) Karachi chief Monem Zafar Khan has accused the National Electric Power Regulatory Authority (Nepra) of discriminatory practices against Karachiites, criticizing the decision to burden consumers with recovery losses and imposing a higher basic tariff of Rs40 per unit in the metropolis as compared to Rs35 in other cities. In a letter to NEPRA's chairman, he condemned the authority for failing to uphold its constitutional duties, alleging clear bias against Karachi's residents. He argued that while other cities' electric supply companies are barred from passing recovery losses onto consumers, Karachi Electric (KE) has been allowed to do so, placing an unfair financial strain on the city's residents. 'Such biased decisions undermine NEPRA's claims of equality and lay the foundation for injustice,' he stated. Highlighting NEPRA's approval of a multi-year tariff, the JI leader noted that KE is set to collect an additional Rs97 billion from consumers until 2030. He also raised concerns over NEPRA's ongoing hearings regarding KE's Rs76 billion write-off claims, alleging the authority may once again favour the controversial private utility. Monem criticized KE's dismal performance, pointing out that it provides the most expensive electricity in the country while failing to address inefficiencies and alleged misdeeds. He demanded that Nepra take strict notice of KE's poor service, frequent load-shedding and questionable transactions. Additionally, he called for the revocation of KE's operating license and a forensic audit of the company's accounts to ensure transparency. The JI Karachi Chief urged the Nepra to reconsider its policies and prioritize the interests of Karachi's consumers, warning that continued discrimination would deepen public resentment. Copyright Business Recorder, 2025
Express Tribune
4 days ago
- Business
- Express Tribune
NEPRA decision on KE tariff alarms Power Division
The Power Division has expressed serious concerns over the seven-year Multi-Year Tariff (MYT) decision recently issued by the National Electric Power Regulatory Authority (NEPRA) for K-Electric, warning it could have far-reaching financial and policy implications. Federal Minister for Power Awais Leghari has warned that such determinations could negatively impact investment confidence in future MYT periods. In a statement issued on the social media platform 'X' on Wednesday, the minister said the ministry has observed some serious concerns regarding NEPRA's multiple decisions about K-Electric's licenses for generation, transmission, distribution and supply, adding that these decisions also touch upon the investment plan for the upcoming multi-year tariff period. "These rulings have significant long-term effects on consumer tariffs and the federal government's subsidies within a uniform tariff regime." He revealed that the ministry was planning to review the recently issued determinations related to transmission, distribution, and supply. Meanwhile, a reconsideration of the earlier generation tariff decision was awaiting NEPRA's attention, despite being submitted back in December 2024. "This delay poses serious financial implications for the power sector and its subsidies." Additionally, he cautioned that if certain areas were not addressed, they could negatively impact consumers and the regulatory environment, potentially hindering Pakistan's efforts to encourage private participation in the distribution sector.
Business Recorder
5 days ago
- Business
- Business Recorder
MYT regime from 2023-24 to FY 2029-30: Nepra approves KE's average power supply tariff at Rs39.97
ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has approved KE's average power supply tariff of Rs 39.97 per unit for FY 2023-24 under Multi Year Tariff (MYT) regime from 2023-24 to FY 2029-30. This includes power purchase excluding transmission cost of Rs 31.96 per unit, transmission cost of Rs 2.86 per unit, distribution cost Rs 3.31 per unit, supply margin Rs 2.28 per unit and Prior Year Adjustment negative Rs 0.44 per unit. According to NEPRA, since the impact of any such determination is to be made part of the consumer end tariff, therefore, the Authority, conducted a public hearing on June 27, 2024. MYT regime: Nepra unveils KE's 7-year D&T tariffs The power utility company's total revenue requirement is estimated to be Rs 606.920 billion, for FY 2023-24, of which supply margin will be Rs 34.681 billion, O&M cost Rs 5.91 billion, working capital negative Rs 1.244 billion, recovery loss, Rs 36.253 billion, gross margin Rs 40.921 billion, other income negative Rs 6.240 billion, net margin Rs 34.681 billion and prior year adjustment negative Rs 6.690 billion. The Authority also considering the fact that FY 2023-24 has already lapsed and FY 2024-25 is almost 11 months gone, also obtained ICE's actual recovery ratios for the FY 2023-24 and FY 2024-25. As submitted by KE its actual recovery for the FY 2023-24 remained at 91.50%, whereas FY 2024-25 is expected to close at 90.50%. The financial impact of under recovery of 8.50% for FY 2023-24 and 9.50% for FY 2024-25, as reported by KE, is around Rs.40 billion and Rs.57 billion respectively. The Authority noted that return allowed to KE for its distribution function is around Rs.21.6 billion, meaning thereby that effectively KE would be incurring losses for the first 02 years of MYT, if no recovery loss is allowed to KE. This may compromise the financial viability of the company, which is neither in the interest of the consumers nor power system as whole. According to NEPRA, international precedents also suggest that 100% billing recovery is generally not mandated. Instead, regulators allow for reasonable bad debt provisions and encourage utilities to improve collection efficiency through performance targets and incentives. While high recovery rates are desirable, regulators balance this with the realities of consumer behaviour, economic conditions, and operational challenges, allowing for flexibility in recovery targets. Since KE is not financially supported by the GoP, unlike XWDISCOs, and non-provision of recovery gap allowance will significantly impact KE's ability to achieve future targets and execute its investments plans, therefore, keeping in view the ground realities and socioeconomic environment in which KE operates, KE has requested the Authority that the tariff should be based on the allowed recovery loss trajectory and KE should be compensated for legitimate costs related to recovery loss. In view of the environment in which KE operates and the challenges that it faces, KE requested NEPRA to have a realistic assessment of the benchmarks. In view thereof, KE, for the purpose of calculation of base tariff, requested that Recovery loss component be included based on amounts actually billed to consumers (including taxes paid on billing basis) and year on year recovery loss as a percentage for the next control period of FY 2024 to FY 2030. The Authority also noted that in case of XWDISCOs, although no recovery loss has been allowed, however, it is also a fact that the Federal Government under Section 31(8) of NIEPRA Act has the power to levy surcharges, to offset the inefficiencies of XWDISCOs arising from high losses and under-recoveries. However, no such option is available to K-Electric as it can only charge the regulated tariff. KE further submitted that recovery loss percentage being requested notionally assumes 100% recovery from Public Sector Consumers. Although there are delays in recovery from PSC consumers coupled with delays in release of Tariff Differential Subsidy (TDS) by the Government, the same is not being requested as it is separately being taken up with Government entities and departments. In case, the agreements with Government to streamline payment modalities do not materialize, KE reserves the right to request NEPRA for adequate compensation due to non-payment/delay in payments by Government entities In view of the case discussion, and to ensure sufficient liquidity in the power market, and to align the collection targets with current market realities, the Authority has decided to allow recovery loss to K-Electric as per the following targets for the Y1 control period from FY 2023- 24 to FY 2029-30; (i) 93.25 per cent in 2023-24, 93.60 per cent in 2024-25, 94.40 per cent in 2025-26, 95.19 per cent in 2026-27, 95.70 per cent in 2027-28, 90.10 per cent in 2028-29 and 96.50 per cent in 2029-30. Regarding mechanism to allow recovery of bad debts, the Authority observed that the relevant provisions of the NE Policy and NE Plan regarding the targets for collections and recovery of bad debts are as follows: NE Policy clause 5.3.2 stipulates that to 'ensure and put in place efficient tariff structures for sufficient liquidity in the power market, the target for losses and collections shall be revisited by the Regulator, in order to align the same with the current market realities. These targets shall be reflected in the determinations of the Regulator. Moreover, timely recovery of bad debt that is prudent shall be allowed by the Regulator with the incorporation of facilitative provisions in the regulatory framework as per industry practices and procedures.' Copyright Business Recorder, 2025
Express Tribune
5 days ago
- Business
- Express Tribune
7-year tariff plan for KE okayed
Listen to article The National Electric Power Regulatory Authority (NEPRA) has approved the seven-year Multi-Year Tariff (MYT) for K-Electric's supply business, covering the period from FY2023-24 to FY2029-30. The decision provides long-term tariff stability and enables K-Electric (KE) to pursue its $2 billion investment plan aimed at improving service quality, reducing losses, and enhancing grid reliability. As part of the plan, NEPRA has approved KE's average power supply tariff at Rs39.97 per unit under the Multi-Year Tariff for the specified period. Previously, the interim tariff was based on the last MYT and remained effective until March 2023 at a rate of Rs33.82/kWh. The new MYT aligns KE's supply tariff timeline with those of its generation, transmission, and distribution segments, thereby streamlining regulatory oversight and boosting investor confidence. NEPRA's decision allows KE to recover prudent costs related to fuel, power purchases, transmission and distribution, operations and maintenance (O&M), and working capital, with clearly defined mechanisms for monthly and quarterly adjustments. KE had initially requested a tariff of Rs44.69/kWh, but NEPRA approved Rs39.97/kWh. A key feature of the decision is NEPRA's acceptance of KE's proposal to recover efficiency losses, using a realistic trajectory for recovery improvements — from 92.76% in FY2024 to 95.48% by FY2030. The authority has also approved the actualisation of sent-out and billed units, to be adjusted annually to reflect economic and operational realities, consistent with the treatment given to other distribution companies (DISCOs). This change is intended to bring KE's supply tariff model in line with the industry's revenue-cap framework. For its supply business, KE had sought approval for a working capital cost of Rs2.071/kWh, amounting to Rs33.1 billion, based on a total working capital requirement of Rs132.95 billion. KE noted that a large portion of this amount is currently tied up in receivables from government entities, including Tariff Differential Subsidy (TDS) claims, unpaid electricity bills from public sector consumers, and tax refunds. However, these receivables were not included in the current request, as KE is pursuing their resolution separately with the government. NEPRA approved the calculation of working capital costs using a 3-month KIBOR rate plus a capped spread of 1%, which will be reduced if the actual spread is lower. The approved working capital requirement for FY2023-24 is based on the revised and allowed costs for power purchases, transmission, distribution, and supply margins. KE stated that it expects sent-out electricity to grow annually at a compound growth rate of 2.6%. This growth will be adjusted based on actual data starting from FY2023, allowing the company to account for any over- or under-recovery of costs. Sent-out units are projected to reach 21,617 GWh by FY2030, up from 18,660 GWh in FY2024. Distribution charges are estimated at Rs61,385 million, based on a base tariff of Rs3.84/kWh as requested in KE's distribution petition for FY2024 to FY2030. However, NEPRA approved a lower rate of Rs3.31/kWh. KE had also requested transmission charges at Rs2.99/kWh, which have now been linked to the Monthly Demand Index (MDI) as notified by NEPRA. For Operations & Maintenance (O&M), KE had requested Rs6,758 millionequivalent to Rs0.42/kWhbased on projected billed units for FY2024. After excluding discretionary or non-essential costs, NEPRA approved a total O&M cost of Rs31,963 million for FY2023-24. This includes Rs26,052 million for distribution and Rs5,911 million for supply. NEPRA also noted that KE's actual supply O&M cost of Rs5,911 million was lower than the projected Rs5,926 million based on indexed data from FY2022-23. NEPRA has instructed KE to ensure an uninterrupted electricity supply and to use recovery-related adjustments responsibly. The regulator will enforce strict performance monitoring, including service quality benchmarks such as the System Average Interruption Frequency Index (SAIFI) and the System Average Interruption Duration Index (SAIDI). This move marks a significant step toward ensuring a predictable and stable power regime for Karachi and its adjoining areas. It is expected to enhance consumer trust while enabling critical infrastructure upgrades by Pakistan's only vertically integrated private utility.
