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Express Tribune
8 hours ago
- Business
- Express Tribune
MYT impact estimated at over Rs300b
The Power Division has urged Nepra to align KE's tariff structure with national standards to ensure fairness, transparency and affordability. photo: file The Power Division has challenged the regulator's decision on granting a multiyear tariff (MYT) to K-Electric (KE), alleging that it will allow the company to collect over Rs300 billion from consumers. "The total financial impact is in excess of Rs300 billion of the interventions identified for review by the government of Pakistan in the KE MYT," the division said in a review petition submitted to the National Electric Power Regulatory Authority (Nepra). It has asked Nepra to revisit its recent approval of electricity rates for KE, Karachi's main power supplier. KE's new tariffs come into effect from financial year 2024-25 and will run through FY30. The government believes that Nepra has allowed several cost items and profit margins to KE that are higher or more favourable than for any other utility in Pakistan, resulting in unnecessarily high bills for consumers and extra pressure on public finances. The Power Division has raised serious concerns over the preferential treatment granted to KE. Nepra set KE's fuel cost benchmark at Rs15.99 per kilowatt-hour (kWh), significantly higher than the rates paid by other utilities purchasing power from the national grid. This discrepancy adds Rs28 billion in FY24 and Rs13 billion in FY25 to the federal budget, shielding KE customers from these costs. KE also received a "recovery loss allowance," despite its actual recoveries exceeding the threshold set by Nepra. No other utility enjoys this privilege, which has generated Rs36 billion in FY24 and Rs35 billion in FY25 for KE, amounting to over Rs200 billion in seven years. Furthermore, Nepra allowed KE a 24% markup on working capital – higher than any other utility – boosting revenue by Rs2.4 billion in FY24 and Rs15 billion over seven years. Additionally, a higher distribution loss target of 13.90% (vs KE's own 13.46%) was set, passing Rs3.1 billion in FY24 and Rs21 billion over the seven-year period on to consumers. A unique 2% "law and order" margin was granted to KE, despite an improved security situation. This adds Rs14 billion in FY24 and Rs99 billion over seven years. KE was also allowed to retain "other income" from fines and investments, which should have offset customer costs. Transmission losses were overestimated at 1.30% (vs actual around 0.75%), and KE keeps 75% of savings, creating inefficiency and costing Rs4 billion in FY24 and Rs28 billion over the seven-year period. Excessive returns were also permitted. KE enjoys a 12% return on equity (RoE) in US dollar (around 24.46% in Pakistani rupee) on generation, compared to National Transmission and Despatch Company's (NTDC) 15% in rupees, and 14% RoE in US dollar (around 29.68% in PKR) on distribution, far exceeding the 14.47% RoE in rupees for others like the Faisalabad Electric Supply Company (Fesco). Idle KE power plants still receive capacity payments, costing Rs12.7 billion in FY25 and Rs82.5 billion overall. Generous inflation indexation and a 17% RoE for these plants further strain finances. The Power Division urged Nepra to align KE's tariff structure with national standards to ensure fairness, transparency and affordability, stressing the need to eliminate unjustified allowances and ensure equal treatment for all utilities. KE eyes DISCO acquisitions K-Electric held a corporate analyst briefing on Monday to provide insights into its recently approved tariffs and operational updates. The company expressed openness to acquiring other DISCOs (distribution companies), should the privatisation process move forward, according to Arif Habib Limited. Its management highlighted that KE's total generation capacity currently stands at 2,397 megawatts (MW) from internal sources, while it procures over 1,600 MW externally. With the anticipated completion of NTDC interconnection projects, an additional 400 MW is expected to be integrated into its grid. The utility's robust transmission network now comprises 7,095 MVAs capacity, 74 grid stations and 1,394 km of lines, while its distribution infrastructure includes 8,964 MVAs capacity, 2,112 feeders and over 31,000 pole-mounted transformers (PMTs). Since its privatisation in 2005, KE has added 1,957 MW to its generation capacity, improved efficiency from 30% to nearly 46%, doubled transmission capacity and cut transmission and distribution (T&D) losses from 34.2% to 16%. The utility estimates a cumulative saving of Rs900 billion for the government and consumers, alongside annual fiscal savings of Rs164 billion due to lower aggregate technical and commercial (AT&C) losses. Nepra has approved a multi-year tariff (MYT) structure of Rs39.98/kWh for KE, lower than the utility's request for Rs44/kWh. Return on equity (RoE) has been set at 14% for generation/distribution and 12% for transmission, with a 70:30 D/E ratio. The cost of local and foreign debt has been capped at Karachi Interbank Offered Rate (Kibor) + 2% and Secured Overnight Financing Rate (SOFR) + 4.5%, respectively.
Express Tribune
3 days ago
- Business
- Express Tribune
KCCI urges PM to release Rs23b power subsidy
Listen to article President of the Karachi Chamber of Commerce & Industry (KCCI), Muhammad Jawed Bilwani, has urged Prime Minister Shehbaz Sharif to ensure the release of the long-overdue Rs23 billion relief in electricity bills on incremental consumption. In a statement released on Friday, he called for the inclusion of this relief in the upcoming federal budget for FY2025-26, lamenting that although it was allocated in earlier budgets, it has yet to be disbursed — affecting only Karachi's industrial sector, while the rest of the country has received the benefit. As per the statement, Bilwani wrote a letter to the prime minister, acknowledging the government's steps to support the business community but expressed deep concern over the continued delay in providing the subsidy for the period from July 1, 2021, to October 21, 2023. He noted that Karachi's industries remain under immense financial pressure due to administrative and legal complications. He stated that the total subsidy for the period stands at Rs33 billion, of which Rs23 billion is undisputed and should have already been disbursed. Funds were earmarked in previous budgets — Rs22 billion in FY2021-22, Rs13 billion in FY2022-23, and Rs7 billion in FY2023-24 — but the subsidy has not reached recipients due to procedural delays involving K-Electric. "K-Electric (KE) operated without a stay order for nearly nine months yet failed to pass on the subsidy to consumers," said Bilwani, adding that NEPRA did not enforce compliance, and legal obstacles have dragged the issue. He pointed out that KE's appeals were dismissed by a tribunal in July 2024, but the matter remains stalled due to a stay order from the Islamabad High Court. KCCI has urged immediate verification of the figures by the Power Division and NEPRA, stressing that the verified subsidy should be reflected in the upcoming budget. Crucially, KCCI proposed that the undisputed Rs23 billion be paid directly to industrial consumers instead of routing it through KE to avoid further delays. "This is not just a legal obligation; it is a matter of economic justice and national interest," Bilwani said.
Business Recorder
3 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
Express Tribune
3 days ago
- Business
- Express Tribune
Railways posts Rs83b revenue
Listen to article Pakistan Railways has announced earning a record-breaking Rs83 billion in revenue during the first eleven months of the current financial year FY25, showing a growth of 7.8% over the corresponding period. According to the Railways spokesperson, this is the highest revenue collected by the organisation in any similar eleven-month period in its history. Federal Railways Minister Muhammad Hanif Abbasi hailed the achievement as historic, stating that "through hard work and dedication, we will put Railways back on its feet." The revenue breakdown shows passenger trains contributed Rs42 billion, while freight services generated Rs29 billion. Other income sources, including property leases and commercial activities, added Rs12 billion. Regional performance varied significantly, with Karachi Division emerging as the top performer — earning Rs13 billion from passengers and a substantial Rs25 billion from freight. Lahore Division reported Rs10 billion from passengers but less than Rs1 billion from freight. Both Rawalpindi and Multan Divisions earned Rs4 billion each from passengers, totalling Rs8 billion combined. This performance represents a notable improvement over the same period last year, when revenue stood at Rs77 billion. The current figures suggest Pakistan Railways might surpass its full-year target of Rs88 billion with one month remaining. This financial milestone comes against a backdrop of persistent challenges. For years, Pakistan Railways has struggled with aging infrastructure, frequent service disruptions, and safety concerns that have eroded public confidence. Many mainline tracks and bridges date back to the British colonial era, causing speed restrictions and delays. The organisation still operates at a significant operational loss when accounting for full infrastructure maintenance costs, despite this revenue increase. While the Rs83 billion revenue demonstrates progress in financial management and operational efficiency, industry analysts said this represents recovery rather than transformation. Sustained investment in infrastructure modernisation, consistent service quality, and resolution of long-standing debt issues are still needed before Pakistan Railways can be considered fully revitalised. "The revenue achievement offers hope, but the organisation's journey to becoming a truly modern, reliable, and profitable national transport service has just begun," they added.
Express Tribune
24-05-2025
- Business
- Express Tribune
Ghee millers demand payment of Rs13b dues
Listen to article Ghee millers have asked the government to clear the outstanding dues of Rs13 billion against the Utility Stores Corporation (USC). Ghee millers and other industries had supplied their products to USC but they were denied payments. The matter was taken up at a meeting between Prime Minister's Special Assistant Haroon Akhtar Khan and the Pakistan Vanaspati Manufacturers Association (PVMA) on Friday. PVMA Chairman Sheikh Umar Rehan, Ministry of Industries and Production Secretary Saif Anjum and representatives of the ghee industry were present in the meeting. The discussion focused on the challenges being faced by the ghee manufacturing sector. Haroon Akhtar acknowledged the concerns raised by the industry and assured them of the government's support. "We fully recognise the issues being encountered by the ghee sector and are committed to not putting the industry under any additional pressure," the PM aide said. He declared that all outstanding dues would be paid promptly. While acknowledging that cash disbursements take time, he emphasised that efforts would be made to expedite the process. He also highlighted the government's recent efforts to support the low-income families, stating, "PM Shehbaz Sharif has successfully delivered the Ramazan package directly to the deserving households."
