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Business Recorder
3 days ago
- Business
- Business Recorder
Fatemi upset over missed Nepra chief-Korean team meeting
ISLAMABAD: Special Assistant to the Prime Minister on Foreign Affairs, Syed Tariq Fatemi, has expressed serious displeasure to the concerned authorities including Power Division for failing to arrange a scheduled meeting between the Chairman of NEPRA and a visiting Korean energy delegation despite ongoing efforts by Korea South-East Power Co. Ltd. (KOEN) to secure inclusion of its hydropower projects in the Indicative Generation Capacity Expansion Plan (IGCEP) 2025–35. Well-placed sources told Business Recorder that Fatemi, who also oversees foreign investment facilitation, formally conveyed his concerns after the delegation's high-level engagements with various federal institutions, including the Power Division, the Ministry of Foreign Affairs, and the Special Investment Facilitation Council (SIFC), ended without a crucial interaction with NEPRA's top official. The KOEN delegation emphasized its long-standing commitment to Pakistan's power sector and flagged continued regulatory delays as a key impediment to foreign direct investment. Its two major hydropower projects—229.4 MW Asrit-Kedam and 238 MW Kalam-Asrit—have been in limbo for over three years despite completing all policy and regulatory milestones under the Power Generation Policy 2015. Projects 'ineligible' under IGCEP: PD not ready to lend a helping hand to Korean firms Sources said the delegation raised particular concern about the prolonged non-determination of tariffs, even though NEPRA had admitted the petitions in 2022 and the projects were optimized in the IGCEP 2022–31. The uncertainty, they noted, makes it increasingly difficult to maintain a $1 billion investment commitment in the absence of regulatory clarity. As a show of flexibility, KOEN offered to adjust the commercial operation timelines for both projects in view of the country's current power overcapacity—on the condition that NEPRA fulfills its legal obligation to determine tariffs without further delay, in compliance with orders from the NEPRA Appellate Tribunal. In a letter to Deputy Prime Minister and Foreign Minister Ishaq Dar, KOEN's Branch Manager Park Changhark reaffirmed the company's desire to invest in Pakistan's clean energy future. He reiterated KOEN's focus on delivering 'reliable, cost-effective, and environmentally responsible' energy solutions aligned with the Government of Pakistan's development vision. KOEN, a state-owned entity, first entered the Pakistani market with the 102 MW Gulpur Hydropower Project, commissioned in 2015 at a cost of $350 million. The project remains a model of successful public-private energy collaboration. Inspired by Gulpur's success, KOEN launched the two larger hydropower initiatives in 2017–18, with a combined estimated investment of $1 billion. According to the company, nearly $20 million has already been spent on detailed feasibility studies, obtaining all required No Objection Certificates (NOCs), and securing generation licenses. Despite this, the projects have remained stalled since June 2022 due to inaction on tariff petitions. 'Our relentless efforts have not yet translated into progress, and we are seeking clarity on the regulatory delays,' said Park. Sources added that Fatemi, in his official capacity advising on foreign investment-related issues, has written to all relevant ministries and agencies involved in the delegation's visit to flag the lack of coordination and missed opportunity. The incident has raised broader concerns about the treatment of credible foreign investors and the consistency of Pakistan's investment facilitation mechanisms. Copyright Business Recorder, 2025
Express Tribune
5 days ago
- Business
- Express Tribune
NEPRA likely to cut power tariff by Rs0.65/unit for June
Listen to article Consumers are likely to receive relief in their electricity bills through a fuel charges adjustment for June 2025. This is due to a drop in energy prices used for power generation. NEPRA may reduce the power tariff by Rs0.6541 per kWh under the monthly FCA. It has scheduled a public hearing on July 30, 2025, regarding the proposed FCA for XWDISCOs. According to the CPPA-G, NEPRA has been requested to approve a reduction of Rs0.6541/kWh in fuel charges. The reference fuel cost was Rs8.3341/kWh, but actual costs came in lower due to cheaper fuel inputs. In June 2025, 13,744 GWh of electricity was generated. Hydropower led the mix with a 39.36% share, followed by RLNG (16.12%), local coal (10.99%), imported coal (10.16%), and nuclear (10.06%). The highest-cost power source remained imports from Iran at Rs22.5155/kWh. After transmission losses of 2.97% and adjustments, 13,310 GWh were delivered to DISCOs at an average cost of Rs7.6800/kWh.
Business Recorder
5 days ago
- Business
- Business Recorder
Nepra issues pending notifications for KE tariffs
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has issued pending notifications for K-Electric's (KE) supply, distribution, and transmission tariffs for the period 2023–24 to 2029–30 under the Multi-Year Tariff (MYT) regime, stating that the federal government's pending review motion does not legally restrain the regulator from notifying its earlier determinations. Previously, the federal government was responsible for issuing tariff notifications. However, amid prolonged delays and under pressure from the International Monetary Fund (IMF) and the World Bank, the law was amended in 2021, granting NEPRA the authority to notify tariffs directly. 'It is now the duty of the Authority to issue the requisite notifications of its determinations if the government fails to do so or if any reconsideration request remains pending,' official sources said. Under Rule 31 of the NEPRA Act, the Authority can issue such notifications if the federal government does not act within the specified time. DISCOs and KE: Nepra approves revised average uniform SoT Although the government's review motion is still under consideration, NEPRA clarified that if it revises its previous determinations, the tariffs will be amended accordingly. In a related development, Deputy Prime Minister and Foreign Minister Ishaq Dar recently chaired a high-level, confidential meeting to discuss KE's ownership issues involving Al-Jomaih, following a strongly worded letter from Pakistan's Ambassador to Saudi Arabia. KE's average power supply tariff has been fixed Rs 39.97 / kWh which 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. 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. In another notification NEPRA has approved distribution tariff of Rs 3.31/ kWh and Rs 2.684 / kWh for investment of Rs 43.447 billion during the validity of MYT. Copyright Business Recorder, 2025
Business Recorder
16-07-2025
- Business
- Business Recorder
KE's two-decade journey: a privatisation that delivered—II
When discussing KE's generation portfolio, it's important to recognize that both private and public sector utilities operate within a regulated environment. Any investment in generation requires NEPRA's approval and must align with the Government of Pakistan's energy policies. In recent years, KE has been advised to off-take power from the national grid due to surplus available in the national grid —leading to the abandonment of KE's several planned power plants including the 700MW coal project. Ironically, the same critics who urge KE to tap into central capacity often also call for greater self-generation by individual consumers, without acknowledging the inherent contradiction in these demands. KE's two-decade journey: a privatisation that delivered—I Misunderstandings further persist and KE's write-offs for unrecoverable bills often draw headlines about 'double benefits.' Yet the mechanism is neither novel nor opaque: regulated utilities the world over recognise prudent costs after exhaustive audits. Any recoveries that later materialise are netted off in future filings. Similarly, in the case of alleged claw-back amounts that are currently before the court, KE disputes only the interpretation, not the formula nor the principle, and will comply with whatever the honorable court decides. On matters of safety, it is important to clear facts. For FY2023, Nepra investigated 33 electrocution-related incidents in KE's jurisdiction. What critics easily ignore is the fact that in 32 of these, the authority found no negligence on KE's part. Many of these incidents occurred within consumer premises or involved third-party encroachments, underscoring the shared nature of safety responsibility in dense, urban environments, most of which is outside KE's purview. Talking about captive plants and RLNG imports, one must ask: where were these critics when the entire country had to rely on costlier fuel because of captive preference? Every power plant must be backed by a secure fuel supply, and in the absence of local gas, KE did what was necessary to keep the city running. Now when the ministry has instructed captive to move back on the grid, concerns have been raised about KE charging a 'hefty fee' to convert captive plants to grid supply. It's important to understand that these costs are not arbitrary charges but are aligned with NEPRA-approved regulations and technical requirements. When a captive generation facility transitions to grid supply, it often requires dedicated infrastructure; new metering, protection systems, reinforcement of the nearest grid point and in fact a new grid to be set up in some cases; all of which involve material costs. These investments are necessary to ensure grid stability, safety, and quality of supply for both the industry and surrounding consumers. Moreover, KE does not profit from these charges. They are calculated based on actual technical scope and verified through internal and third-party checks. Where complaints have been raised, KE has reviewed them and wherever required, streamlined the process, reduced costs through engineering alternatives, or offered installment-based facilitation. It's also worth noting that as fuel prices for captive plants have increased, many industries are now returning to grid power voluntarily, recognizing that stable, merit-order-based electricity is both more economical and less administratively burdensome in the long run. What often gets overlooked in these debates is that privatization alone is not reform. The government may have privatized one utility, but it has not yet deregulated the power sector. True transformation will only come when the entire ecosystem — generation, transmission, and distribution — is opened up to competition under a non-exclusive licensing regime. Until then, companies like KE are expected to deliver world-class service while operating in a regulated environment. The push for CTBCM and market liberalization is the right direction, but it needs acceleration. The real innovation lies not in hardware-heavy prescriptions from the 1980s, but in building service-driven utilities that operate like customer-centric platforms, capable of adapting to how people live and consume electricity today. That shift is already underway. From renewables and smart meters to apps like KE Live, the modern utility is no longer just a wire-and-pole provider—it's a digital service partner. Customers today need electricity that adapts to their lifestyle—whether it's battery backup during unconventional hours, or real-time usage insights delivered through mobile platforms. KE has already laid the groundwork with its digitized network, underground infrastructure, and 24/7 digital engagement channels. Globally, utilities are diversifying — delivering internet through fiber over power lines, offering flexible, time-based supply models, and using AI to manage load and service reliability. KE's model reflects that evolution. Encouragingly, the Power Division and the Special Investment Facilitation Council (SIFC), are actively driving reforms in this direction, and a future built around deregulation, customer choice, and smarter service is no longer a distant concept—it is within reach. And when it comes, K-Electric is ready—with the infrastructure, digital capability, and vision to thrive in a truly competitive, service-oriented power sector.—Concluded Copyright Business Recorder, 2025
Business Recorder
16-07-2025
- Business
- Business Recorder
Pakistan's power sector held captive, now there are signs of breaking loose
In Pakistan's complicated energy sector maze, a quiet battle has had the government and industries engaged, one that pits the struggling national grid against captive power plants (CPP). The arrangement came under scrutiny by the International Monetary Fund (IMF), and some progress has been made. Captive power plants, set up by industries that took advantage of natural gas at cheaper rates, have now been penalized, so to speak, with a levy that make them more expensive than the grid in some cases. Industries operating on CPPs have resisted integration with the national grid – already operating in surplus capacity – and this results in soaring fixed costs per unit, tightening the noose on an already strained system. These off-grid power generation units have long operated under the radar of national power planning. But as Pakistan's grid struggles with underutilization, subsequently rising capacity payments, and decreasing demand – falling by over 5% in FY-2024 – CPPs have rightfully drawn increased scrutiny from policymakers. The struggle between captive power and the national grid isn't just technical – it's rooted in distrust, economics, and survival. In the past, where power outages could shut down entire production lines, industries did what they had to: they took matters into their own hands. Out of Pakistan's 1,180 captive plants, majority are dedicated with very few serving as co-generation plants which export surplus energy to the grid. This grid, which is capable of supplying over 45,000 MW, faces a demand shortfall of over 3,000 MW because of these CPPs alone, an estimate by NEPRA, making these plants one of the largest informal sources of electricity in the country. While CPPs serve industrial needs, their unregulated growth creates problems for the broader power sector. The government and NEPRA have grown increasingly critical of captive generation, particularly in the context of excess capacity and rising capacity payments – payments to independent power producers (IPPs) for unused electricity. Moreover, inefficiency and high gas consumption stagnate the power sector. By supplying gas to these inefficient plants, more efficient grid plants are deprived of their fair share – thereby relying on expensive RLNG – which further impacts the tariff. Most CPPs in Pakistan operate at around 30% efficiency, much lower than modern grid-connected power plants, which can exceed 50% efficiency. This means CPPs consume more gas per unit of electricity generated, resulting in wasteful use of a scarce resource. Two-fold issues let this situation run amok. Initially, the policymakers turned a blind eye on captive power as they lowered industrial complaints and kept industries energized to maintain Pakistan's sluggish economic growth. On the other hand, policymakers kept growing capacity – assuming demand would grow, but a large chunk of industrial demand never showed up because those users were still running their own power plants. This has resulted in a vicious cycle hampering the grid – exacerbated by the policymakers repeating their mistakes with net-metering and solarization. Recognizing this cycle, the government has begun taking steps to discourage captive generation and incentivize industries to return to the grid. The biggest step was the withdrawal of gas for captives. Starting in 2021, only those with efficiency above 50% were allowed to continue operations with subsidized gas. By March this year, the government sharply increased gas prices for CPPs – by up to 23% – and imposed a new grid levy, raising costs to bring their generation costs on par with grid generation costs. The government also mandated industries to maintain dual connectivity with the grid and demonstrate they can switch to grid supply during peak hours with proposals to impose surcharges or wheeling charges on self-generation, especially if they are connected to the grid only as backup. Pakistan's total installed capacity stands at over 45,000 MW, but peak demand rarely crossed 30,000 MW in 2024. That is almost 15,000 MW of excess capacity being charged to consumers – a monstrous Rs2 trillion being excessively charged to consumers in 2024, over 60% of total electricity sector costs. Additionally, these industries – those that had the clout to install big CPPs – rendered other local players uncompetitive, inserting a layer of incentives to dump goods in the local market rather than exporting them. Still, captives are wary of switching to the grid. Their consumption patterns require dedicated sub-stations – as per NEPRA's regulations – which incur a significant cost to develop. Concerns on voltage fluctuations remain while inconsistent policies also hinder CPPs from folding into the grid. Moreover, most firms have already invested millions in CPPs. For them, switching to the grid offers only additional financial outflows – the cost of developing the necessary grid connections requiring a substantial investment of Rs 2-4 billion. But it seems like Pakistan is getting ready to shift industries to the national grid. Coordination and collaboration will be key. Assurances of grid stability, uninterrupted power supply, and facilitation during the transition are going to be key.
