Latest news with #UoSC
Business Recorder
24-05-2025
- Business
- Business Recorder
MYT regime: Nepra unveils KE's 7-year D&T tariffs
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has announced K-Electric's distribution and transmission tariffs for a seven-year period (FY 2023-24 to FY 2029-30) under the Multi-Year Tariff (MYT) regime. NEPRA has estimated a revenue requirement of Rs 50.284 billion for the distribution system for FY 2024-25, approving an average tariff increase of Rs 3.31 per unit. The power utility company has also been allowed Use of System Charges (UoSC) revenue of Rs 43.447 billion for the FY 2023-24, its impact will also be around Rs 3.30 per unit and it can be changed when investment plan is approved. These determinations will not affect the electricity rates charged to consumers, as these continue to be governed under the uniform tariff policy applicable across Pakistan. Leghari's remarks on KE's 7-year MYT spark controversy NEPRA held a public hearing on June 27, 2024, on the distribution tariff, attended by several interveners from Karachi and other areas. K-Electric had requested a return on equity of 16 percent for its distribution segment, but NEPRA approved it at 14 percent, significantly lower than requested by K-Electric. Similarly, the return on equity for transmission was approved at 12 percent, down from KE's requested 15 percent. Regarding the seven-year tariff control period, KE explained that as a private entity, it secures financing without government guarantees. Lenders require cash flow projections over the assets' life, which for KE exceeds the 7-year control period. KE's long-term loans usually span 10-12 years, while asset life ranges from 10 to 30 years. KE requested a tariff control period of seven years (FY 2024 to FY 2030), consistent with previous allowances and the approved investment plan for transmission and distribution (T&D). A sustainable long-term tariff is crucial for financing and equity investment, as lenders require clear revenue and profitability forecasts. A shorter control period would hinder KE's ability to secure financing and assess project viability. Copyright Business Recorder, 2025
Express Tribune
24-04-2025
- Business
- Express Tribune
Competitive power market faces delays
Listen to article Despite approvals from the Economic Coordination Committee (ECC) and the National Electric Power Regulatory Authority (Nepra), following a six-month test run by the Central Power Purchasing Agency-Guarantee (CPPA-G), the Competitive Trading Bilateral Contracts Market (CTBCM) has yet to become fully operational. Leading stakeholders from across Pakistan's energy and policy landscape convened a high-level multi-stakeholder dialogue hosted by Renewables First (RF) to discuss financial and technical readiness for the operationalisation of a competitive electricity market, a reform process that has shown accelerated progress in recent years. The event brought together senior government representatives, legislators, regulatory bodies, development partners, and power sector experts to chart a path forward for implementing the long-delayed market reform under the CTBCM. The CTBCM reform has already been approved by the ECC and Nepra, followed by a six-month test run by CPPA-G. However, its commercial operation has not begun to date. During the event, the stakeholders expressed concern that the power sector of Pakistan remains entrenched in a single-buyer model, with CPPA-G as the sole purchaser and distribution companies (DISCOs) holding exclusive distribution licences. This structure has led to escalating capacity payments, underutilised generation assets, and suppressed private-sector participation. Ramsha Panhwar, energy analyst at Renewables First, presented a critical overview of one of the most debated aspects of the CTBCM regime: the Use of System Charge (UoSC). She pointed out that the market has remained uncompetitive primarily because these charges have not been rationalised, making them unaffordable and excessively high for market participants. "The UoSC is a central pillar of the CTBCM regime, determining how market participants pay for access to the transmission and distribution networks. However, more than 80% of the proposed UoSC comprises stranded costs and cross-subsidy, which exacerbates the overall power tariff. It directly affects the economics of open access and competitive supply," said Panhwar. "Rethinking the UoSC with a planned and phased recovery of stranded costs reduces the overall UoSC, making it attractive and affordable for the market participants."
Business Recorder
23-04-2025
- Business
- Business Recorder
Competitive electricity market: Financial, technical readiness aspects discussed
KARACHI: Leading stakeholders from across Pakistan's energy and policy landscape gathered at a high-level 'multi-stakeholder dialogue' to discuss financial and technical readiness for the operationalisation of a competitive electricity market, a reform process that has witnessed accelerated progress in recent years. The event brought together senior government representatives, legislators, regulatory bodies, development partners, and power sector experts to chart a path forward for implementing the long-delayed market reform under the head of the Competitive Trading Bilateral Contracts Market (CTBCM). The CTBCM reform has already been approved by the Economic Coordination Committee (ECC) and NEPRA, followed by six-month test run by CPPA. However, its commercial operation has not been operationalised to date. During the event, stakeholders expressed concern that the power sector of Pakistan remains entrenched in a single-buyer model, with CPPA-G as the sole purchaser and DISCOs holding exclusive distribution licences. This structure has led to escalating capacity payments, underutilized generation assets, and suppressed private sector participation. Ramsha Panhwar, Energy Analyst at Renewables First, presented a critical overview of one of the most debated aspects of the CTBCM regime: the Use of System Charge (UoSC). She pointed out that the market has remained uncompetitive primarily because these charges have not been rationalized, making them unaffordable and excessively high for market participants. 'The UoSC is a central pillar of the CTBCM regime, determining how market participants pay for access to the transmission and distribution networks. However, more than 80 percent of the proposed UoSC comprise of stranded costs and cross-subsidy which exacerbates the overall power tariff. It directly affects the economics of open access and competitive supply,' said Panhwar. 'Rethinking the UoSC with a planned and phased recovery of stranded costs reduces the overall UoSC, making it attractive and affordable for the market participants.' Salman Amin, Member the Competition Commission of Pakistan, highlighted the importance of free and fair competition in any sector and emphasized that Pakistan's electricity sector must transition from a monopoly to a competitive regime. With competition, a level playing field is provided, efficiency improves, and commodities become cheaper. Omar Haroon from CPPA informed the participants that the establishment of an Independent System and Market operator (ISMO) is almost complete, and the launch of wholesale electricity is expected within a few months. He also mentioned that with the launch of this reform, the market size of CTBCM participants is expected to grow. Former Chairman Nepra, Tauseef Farooqi mentioned that the timely launch of a wholesale electricity market is intricately linked with Pakistan's economy and investors are banking on the launch of a wholesale electricity market. Experts from NTDC emphasized the need to increase investments in ancillary services to ensure sustainable grid operations in view of increasing renewable energy penetration. Omer Haroon emphasized the need for alignment of pricing signals for renewable energy, something which is missing from the current net metering policy. However, CTBCM ensures a competitive pricing mechanism. Renewables First also announced the launch of Competitive Electricity Market Alliance (CEMA) as a platform for policy makers, industrialists, and experts to come together in support of a free and fair competitive electricity market. The goal of this alliance is to provide necessary resources to ensure success of a competitive regime and to help shape a competitive and sustainable energy future for Pakistan. Copyright Business Recorder, 2025
