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Express Tribune
3 days ago
- Business
- Express Tribune
Regressive power tariffs
Listen to article In a decision that epitomises regulatory capture and abdication of public interest, the National Electric Power Regulatory Authority (Nepra) has sanctioned a financial travesty by allowing K-Electric (KE) to embed its operational failures directly into consumer tariffs. This week's approval of a Rs40 per unit base tariff — almost 40% higher than the national average — institutionalises "recovery losses" of up to 6.75%, rewards inefficiency and penalises law-abiding citizens for KE's inability to combat theft and billing failures. The move sets a dangerous precedent for Pakistan's power sector, entrenching corporate welfare at taxpayer expense. It is KE's responsibility to address power theft and non-payment of bills. The government may facilitate it by helping it liaise with law enforcement, but granting it such a huge benefit — effectively a subsidy — gives it an unfair advantage over government-owned distribution companies, which are required to either make 100% recovery or absorb the losses. The regulator cannot be allowed to give preferential treatment to one distribution company, whether private or public. Nepra's rationale of "market realities" is also comical. Every company in the world faces market realities. KE is welcome to stop supplying power to bill defaulters and pursue legal action against defaulters and pilferers, but forcing honest consumers to cover for dishonest ones is flat-out wrong. Rewarding failure demoralises performers. If Nepra will not defend consumers, the government must intervene — not just in court, but by reforming a regulator prioritising corporate viability over public good. The power division has already taken a welcome step by "planning to review" the new terms, but it should also straight-up ask the parliamentary standing committee on energy to force the Nepra chief to stand in parliament and defend the sweetheart deal, and explain to Karachi why the regulator is actively trying to punish citizens.
Business Recorder
25-05-2025
- Business
- Business Recorder
Multi-year tariff: NEPRA ensures investment in Karachi's power infrastructure
In a significant move for Pakistan's power sector, the National Electric Power Regulatory Authority (NEPRA) approved K-Electric's (KE) Distribution Network and Transmission's Multi-Year Tariff (MYT) for the period FY 2023-24 to FY 2029-30. This long-awaited determination provides a vital foundation for KE's ongoing unbundling and investment programme and is expected to restore investor confidence amid a challenging macroeconomic environment. It is important, however, to highlight that this cost-side component will not currently impact the consumer tariff, which is uniform across Pakistan and determined by the federal power regulator. But what it does achieve is KE's ability to plan and prepare for Karachi's burgeoning energy needs. The seven-year tariff control period aligns with KE's transmission and distribution investment plan worth $2 billion. This longer-term certainty is critical for KE's financing strategy as the company raises capital without government guarantees—a distinguishing factor compared to public DISCOs. In KE's case, investors who have backed the company after its privatisation need to be fully satisfied with the utility's performance. Hence, the MYT becomes all the more critical for the company serving Pakistan's biggest and most populated city. NEPRA's decision also aligns with the previously approved T&D investment plan and allows KE to maintain momentum on its $2 billion capital expenditure program through 2030. This decision comes on the heels of last year's approval of KE's generation tariff, marking continued regulatory momentum in Pakistan's evolving power sector where reforms have been promised to the International Monetary Fund (IMF) as well. NEPRA's decisions create a stable, performance-linked environment for long-term growth. They have allowed KE to mobilize capital, implement reforms, and scale its infrastructure responsibly, while holding, like always, the company accountable to efficiency and consumer service benchmarks. KE now benefits from a mechanism to adjust tariffs based on actual electricity sold (sent-out), helping the company mitigate demand-side risks and external economic shocks. NEPRA also identified that this forms the basis of strict load-shedding monitoring. While KE gains flexibility, it will now face more transparent, segment-wise scrutiny, and third-party audits of its investment execution, reinforcing corporate governance. With NEPRA's endorsement of a multi-year investment plan, customers can expect progressive improvements in service quality. These include upgraded transmission and distribution infrastructure, and expansion of load-shedding-free zones. The regulatory backing enables KE to finance and implement much-needed upgrades across its grid, translating into greater supply reliability and long-term network resilience. For consumers in Karachi, this translates into a path toward better electricity supply, ability to handle disruptions, and greater transparency from their utility provider. This also strengthens KE's ability to execute its capex plan and meet Karachi's fast-growing demand. Since its privatization, KE has invested over $4 billion in Karachi's power ecosystem—doubling its customer base and halving its losses. The distribution and transmission tariff approval may mark a milestone toward a more reliable and financially sustainable urban energy model, provided there is intent. Together with the previously approved generation tariff, this tariff decision builds a regulatory framework that can unlock long-term capital, enable infrastructure expansion, and assure private investors of Pakistan's commitment to power sector reforms.
Express Tribune
24-05-2025
- Automotive
- Express Tribune
Rs23.57/kWh tariff for EV charging stations approved
Listen to article The National Electric Power Regulatory Authority (Nepra) has allowed electric vehicle charging stations (EVCS) to charge Rs23.57 per kilowatt-hour (kWh) plus a market-determined margin from electric vehicle (EV) owners. The power regulator issued a decision under NEPRA (Review Procedure) Regulations regarding the motion and policy guidelines filed by the federal government for rationalisation of the tariff for EVCS. Earlier, the power regulator had decided that the EVCS would provide "charging service" to electric vehicles as per the applicable tariff for EVCS. The EVCS was to be billed by distribution companies (DISCOs) under the A-2(d) tariff, with monthly fuel cost adjustments (FCAs), whether positive or negative, not applicable on EVCS. Now, in its fresh decision, the regulator has reiterated that EVCS shall provide charging services to electric vehicles at Rs23.57/kWh, plus a margin to be determined by market forces. The EVCS will continue to be billed by DISCOs under the A-2(d) tariff, and monthly FCAs, whether positive or negative, shall remain inapplicable to EVCS. Earlier, Nepra had reduced the base tariff for EV charging stations by 45% to Rs23.57/kWh. The regulator approved this reduction from the previous Rs45.55/kWh. After accounting for taxes and adjustments, the effective rate is expected to drop to Rs39.70/kWha significant decrease from the existing post-tax cost of Rs71.10/kWh. The power regulator has communicated the decision to the federal government for notification in the official Gazette pursuant to Section 31(7) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997. This must be done within 30 days from the intimation of the decision. In the event that the federal government fails to notify the tariff decision within the specified period, the authority itself will notify it in the official Gazette under the same provision. The authority observed that its decision dated April 15, 2025issued via No NEPRA/RJADG (Tariff)TRF-100/EV/5469-72 in the matter of the motion and policy guidelines filed by the federal government for rationalisation of tariff for EVCS — required review. Accordingly, the authority revised the decision, replacing paragraph 28(19) of the original order with the new determination. However, Member (Technical) Rafique Ahmed Shaikh has recorded a dissenting note regarding the majority decision. He acknowledged the importance of promoting EV adoption in Pakistan as part of the country's broader sustainable energy goals, but expressed disagreement with the financial approach taken. "I must respectfully dissent from the majority decision to impose the financial burden of subsidising EV charging stations on the general consumer base," he stated. He argued that it is inequitable to shift the cost of incentivising one sector onto all consumers, especially when a large segment of the population lacks access to or the ability to use EV technology. He maintained that subsidies should be funded through mechanisms that do not impose undue burdens on existing consumers, such as government grants or external funding sources. "I firmly support a Cost of Service Tariff structure, and any subsidy provisions should be limited to assisting low-income residential consumers, rather than being broadly allocated to incentivise specific businesses or consumer categories," he said, adding, "For these reasons, I respectfully dissent from the majority decision as a matter of principle."
Business Recorder
24-05-2025
- Business
- Business Recorder
Less hydel output: Generation mix changes may affect rebased tariff: Nepra
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday said that impact of change in generation mix due to less hydel generation is expected to effect the proposed rebasing tariff for the fiscal year 2025-26. Testifying before Senate Standing Committee on Power, presided over Senator Mohsin Aziz, Nepra Chairman Waseem Mukhtar said since there is substantial decrease in rains in the country, it will alter the projected generation mix for next fiscal year, which implies that whatever relief was expected for next year, will not be available. The standing committee was apprised that current relief of Rs 7.41 per unit is available to consumers from April 2025, of which the impact of revision or termination of agreements is around Rs 1.81 per unit, QTA Rs 2.37 per unit, FCA Rs 1.12 per unit and Rs 2.12 per unit due to raising the Petroleum Levy will continue but relief under QTAs and FTAs is subject to economic conditions of the country and the price of fuel in the international market. Hydel reduction forecast: Nepra seeks generation plan from PD Minister for Power, Awais Leghari informed the committee that he has held a meeting with the Finance Minister on deduction of provinces reconciled amounts. Currently an amount of Rs 161.472 billion is outstanding against provinces but no province is ready for reconciliation except Punjab. Of total receivables of Rs 161.472 billion, share of Punjab is Rs 41.832 billion, Sindh, Rs 67.960 billion, Balochistan, Rs 41.600 billion and KP, Rs 10.080 billion. The minister expressed anger at the absence of senior officials from PPMC and CPPA-G to respond to queries of Standing Committee members as junior officials were unable to provide the explanations requested by the Committee members. On the issue of ToU meters, the minister stated that an exercise has been done in coordination with Aptma, which proves that if the mechanism of ToU meters is done away with it will have additional impact of Rs 35 billion on industry. Copyright Business Recorder, 2025
Express Tribune
22-05-2025
- Business
- Express Tribune
Power generation hits 4-year high in April
Listen to article Pakistan's power generation in April 2025 surged to 10,513 gigawatt-hours (GWh), reflecting a robust 22% year-on-year (YoY) and 25% month-on-month (MoM) increase — the highest monthly generation recorded in the past 48 months, according to data published by the National Electric Power Regulatory Authority (NEPRA). "Power generation in April'25 surged by 22% YoY, highest in 48 months, to 10,513 GWh," wrote Arif Habib Limited (AHL). Despite this sharp rise, generation remained broadly aligned with the regulatory reference level, helping produce a positive Fuel Cost Adjustment (FCA) for the month, the first since June 2024. "Shift to expensive fuel mix resulted in the first positive FCA after June 2024," said Research Head of Optimus Capital, Maaz Azam. The uptick in generation is largely attributed to soaring electricity demand, spurred by rising temperatures and reduced reliance by industries on captive power generation. Analysts believe the shift was also influenced by lower grid tariffs, which made national grid electricity more attractive compared to captive sources. "The rise in generation is attributed to increased demand, driven by a reduction in tariffs," said Research Head of AHL, Sana Tawfiq. Cumulative power generation during the first 10 months of the fiscal year 2025 (10MFY25) reached 100,661 GWh, showing a marginal decline of 0.4% YoY from the same period last year. In terms of source-wise contribution, hydropower (hydel) led the mix with 2,306 GWh (22% share), up 11% YoY, followed by re-gasified liquefied natural gas (RLNG) at 2,157 GWh (21%) and nuclear at 1,882 GWh (18%). A notable highlight was the 59% YoY growth in local coal-based generation, which rose to 1,540 GWh, supported by increased utilisation and favourable fuel costs. Conversely, generation from imported coal and natural gas declined by 32% and 26% YoY, respectively, reflecting deliberate cost-cutting and fuel optimisation strategies. Wind and solar energy maintained a combined share of 9.2%, consistent with seasonal patterns, while residual fuel oil (RFO) re-entered the generation mix with 83 GWh at a steep cost of Rs28.77/kWh. From a policy perspective, a significant development in March 2025 was the imposition of a Rs791/mmbtu levy on gas-based captive power plants (CPPs), raising their effective gas tariff to Rs4,291/mmbtu. According to estimates by AKD Securities, this translates into a staggering generation cost of around Rs42/kWh for off-grid captive units operating at 35% thermal efficiency. This steep cost differential prompted many industrial users to switch to relatively cheaper grid electricity, which averaged around Rs28/kWh (excluding taxes and duties). While the fuel cost of power generation rose by 8% YoY to Rs9.92/kWh in April 2025, driven by a heavier reliance on expensive fuels like RLNG and RFO, the average cost of generation actually fell on a MoM and YoY basis. It dropped to Rs8.95/kWh, down 5% YoY and 8% MoM, compared to Rs9.75/kWh in April 2024reflecting improved fuel mix efficiency and lower reliance on imported fuels. According to Optimus Capital Management, the total generation of 10,513 GWh in April was slightly below the reference level of 10,550 GWh, a shortfall of just 0.4%. However, changes in the fuel mix were stark. Hydel power dropped by 28.6% versus its reference (3,228 GWh), while coal-fired generation soared by 48.6%, with imported coal usage jumping 115.1% and local coal rising 22.5%. Meanwhile, RLNG generation grew by 42.1%, and nuclear generation fell by 22.3%. The cost impact of this fuel mix shift was significant. RLNG's contribution to fuel cost jumped to Rs4.98/kWh, up from a reference of Rs3.31/kWh. Local and imported coal together contributed Rs3.30/kWh, while nuclear (Rs0.38/kWh) and hydel (zero marginal cost) remained low-cost contributors. The net result was a positive FCA of Rs1.27/kWh, calculated against a reference fuel cost of Rs7.68/kWh. This marked change in fuel mix, particularly the increased reliance on RLNG and coal, alongside stable generation levels, led to the country's first positive FCA adjustment in 10 months, a noteworthy development for both consumers and the broader energy sector.
