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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
02-07-2025
- Business
- Business Recorder
Nepra rejects govt plea to apply revised SoT to KE
ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has turned down the federal government's plea to apply a revised uniform Schedule of Tariff (SoT) to K-Electric (KE), based on the previously determined tariff for the January–March 2023 quarter— a move likely to frustrate the Power Division. Nepra's decision was revealed in a determination issued on Tuesday, which outlines a revised average uniform SoT of Rs 31.59/kWh for both power Distribution Companies (Discos) and K-Electric for the fiscal year 2025–26. This rate marks a reduction from the earlier Rs 32.73/kWh (excluding duties and taxes), reflecting an average decrease of Rs 1.14/kWh after factoring in a budgeted Tariff Differential Subsidy (TDS) of Rs 250 billion for FY 2025–26. In its formal request (Motion for Leave), the Power Division argued that under government policy, a uniform consumer-end tariff should be maintained across K-Electric and state-owned Discos— even post-privatisation— through a mix of direct and indirect subsidies. To achieve this, the KE tariff should be modified to align with Nepra's approved national uniform tariff structure, incorporating the proposed targeted and cross subsidies. DISCOs and KE: Nepra approves revised average uniform SoT The Power Division also referenced legal provisions— Section 7, 31(4), and 31(7) of the NEPRA Act and Rule 17 of the relevant rules— supporting its appeal for revised consumer-end tariff recommendations for K-Electric, to be effective from July 1, 2025. The motion included a request to update the SoT via an amendment to SRO No. 575(1)/ 2019. During the hearing, K-Electric's Director of Finance Ayaz Jaffer urged Nepra to use KE's most recent tariff (determined on May 27, 2025) instead of the older Jan–Mar 2023 rates to establish the uniform tariff. However, Naveed Qaiser of the Power Planning and Monitoring Company (PPMC) opposed the suggestion, pointing out that the federal government has already filed a review petition against the newer KE tariff determination. Therefore, he argued, the Jan–Mar 2023 tariff should be treated as the valid benchmark. The Authority said it understands that it determines revenue requirement/ tariff for Discos for each year. Ultimately, Nepra decided not to accommodate the Power Division's request. In its official determination, the regulator stated that despite the federal government's plea to use the Jan–Mar 2023 KE tariff as the basis for a uniform SoT, it opted to apply the rates from KE's latest approved tariff for FY 2023–24, as issued on May 27, 2025. Nepra announced a reduction in the uniform average tariff from Rs 35.50/kWh to Rs 34/kWh, indicating an overall decrease of Rs 1.50 per unit. The revised SoT for consumers will be as follows: (i) up to 50 units– lifeline (Rs 3.95/kWh;(ii) 51-100 units- lifeline Rs 7.74/kWh;(iii) 0-100 (protected) Rs 10.51/kWh;(iv) 101-200 (protected)Rs 13.01 /kWh; (v) 01-100(non-protected) Rs 22.44/kWh; (vi) 101-200(non-protected) Rs 28.91/kWh;(vii) 201-300(non-protected Rs 33.10/ kWh; and (viii) 300 & ToU (non-protected) Rs 41.78/kWh. Average uniform domestic tariff will be Rs 27.20/kWh with reduction of Rs 1.13/Kwh from 28.33/kWh. New commercial tariff has been fixed at Rs 45.43 per unit with a reduction of Rs 1.15/Kwh, general services, Rs 43.17/kWh, industrial Rs 33.48/kWh, Bulk Rs 41.76/kWh, agricultural Rs 30.75/kWh, others Rs 32.68/kWh. According to Nepra, total number of electricity consumers is 37,994,210 who are projected to consume 103,558/MkWh. The average tariff has been reduced to Rs 31.59/kWh for FY 2025-26 from Rs 32.73/kWh through re-basing. Power Division explained that capacity charges have been reduced by Rs.186 billion, despite additional impact of Rs.50 billion capacity charges of Jamshoro Coal Plant, as compared to the reference capacity charges for the FY 2024-25. This reduction is mainly on account of termination/ re-negotiations of IPP contracts and change in exchange rate assumption. The Authority also observed that the petitioner in its Motion and also during the hearing submitted that inter-disco tariff rationalisation is not aimed at raising any revenues for the federal government as it is within the determined consolidated revenue requirement of all the Discos for the FY 2025-26; rather the federal government would be providing a subsidy of Rs.249 billion to different consumer categories during the period. The Uniform Tariff so determined by the Authority includes impact of PYA of Rs.58.68 billion, to be passed on in a period of twelve months from the date of notification of the decision. It was further stated that there is no anomaly in the current industrial tariff structure as the total cost of B4— inclusive of both fixed and variable charges—is actually lower than B3, which is again lower than B2. This reflects the benefit of losses for consumers connected at high tension (HT) lines, as opposed to industrial consumers on low tension (LT) lines. It was explained that ToU (Time-of-Use) pricing plays a critical role in maintaining power system stability and economic efficiency. Peak hours are strategically designated to curb demand during periods of high system stress when marginal generation costs are at their highest. However, lowering the peak rate would necessitate an upward adjustment of the off-peak rate to meet the system's annual revenue requirement. This could disproportionately burden smaller industrial consumers and potentially reduce overall electricity sales, thereby exacerbating the revenue shortfall and contributing to further upward pressure on tariffs. Copyright Business Recorder, 2025
Business Recorder
30-06-2025
- Business
- Business Recorder
Uniform tariff: govt formally moves Nepra
ISLAMABAD: The Federal Government has formally approached the National Electric Power Regulatory Authority (Nepra) to implement a uniform electricity tariff across the country, including Karachi, effective from July 1, 2025. This move incorporates subsidies earmarked for the fiscal year 2025-26. The federal government has reduced subsidy for power sector by 13 per cent to Rs 1.036 trillion for FY 2025-26 from Rs 1.190 trillion for FY 2024-25. In its motion, the Power Division referred to NEPRA's determination of tariffs for distribution companies (Discos), announced on June 23, 2025. Under this determination, the national average tariff has been reduced to Rs 34 per kWh for FY 2025-26, down from Rs 35.50 per kWh in FY 2024-25. Nepra's decisions on KE tariffs: Power Div. flags potential consumers harm, urges revision The Federal Government's motion references the National Electricity Policy 2021, approved by the Council of Common Interests (CCI). Clause 5.6.1 of the policy emphasizes that the financial sustainability of the power sector depends on recovering the full cost of service—where feasible—through an efficient tariff structure that ensures liquidity. Clause 5.6.4 adds that financial self-sustainability should ultimately eliminate the need for government subsidies, except for targeted support to lifeline, industrial, or agricultural consumers. The Power Division further stated that, based on socio-economic objectives, budgetary targets, and NEPRA's consumer-end tariff recommendations for state-owned Discos, the government intends to continue pursuing a uniform tariff structure across all consumers and regions. Accordingly, NEPRA is requested to determine a uniform tariff—including quarterly adjustments—for all state-owned Discos in the interest of consumers. Section 31(4) of the NEPRA Act empowers the Authority to determine a uniform tariff for public sector licensees based on their consolidated accounts, ensuring consumer interest. As per this provision, NEPRA has historically included the impact of targeted subsidies and cross-subsidies in uniform tariffs. The most recent such tariff for Discos was determined on July 13, 2024, and notified on July 14, 2024. After reviewing the tariff schedules recommended by NEPRA on June 23, 2025, for all consumer categories, the Federal Government has decided that a uniform tariff should be applied per Section 31(4) of the NEPRA Act. The proposed uniform tariff reflects the government's economic and social policy, and is based on the consolidated revenue requirements approved for Discos owned and controlled by the Federal Government. This proposal was submitted for Cabinet approval on June 28, 2025, and is being forwarded to NEPRA in anticipation of that approval. The Power Division emphasized that tariff rationalization among Discos is not intended to generate additional federal revenue, but to align with constitutional and policy requirements within the revenue requirements determined for Discos. Once approved, the revised structure will enable NEPRA to determine the final uniform tariff under Section 31(7) of the Act, replacing the existing rates notified on July 14, 2024. The government also aims to maintain a uniform end-user tariff for K-Electric alongside state-owned Discos, even after any future privatization. This will be achieved through direct and indirect subsidies. Consequently, the variable charge applicable to KE will be modified to align with KE's revenue requirements as determined by NEPRA, factoring in proposed targeted and cross-subsidies. This proposal, too, has been submitted for Cabinet approval and is being forwarded to NEPRA in anticipation. In conclusion, the Power Division clarified that this motion has been filed under Sections 7 and 31 of the NEPRA Act, along with Rule 17 of the NEPRA Rules, to seek reconsideration and issuance of a uniform Schedule of Tariffs for Discos, incorporating subsidies and tariff rationalization. A separate motion has also been filed for KE under Sections 7, 31(4), and 31(7), to issue a modified variable charge and maintain national uniformity in consumer-end tariffs. NEPRA is scheduled to hold a public hearing on July 1, 2025 to put a stamp of approval on the Federal Government's motion for uniform tariffs across all regions, including K-Electric's service territory. Copyright Business Recorder, 2025
Express Tribune
29-06-2025
- Business
- Express Tribune
Karachi slams attempt to block FCA relief
Listen to article Karachi-based industrialists and consumers have voiced serious concerns over the Power Division's interference in blocking relief and rescheduling K-Electric's (KE) hearing. Various stakeholders have approached the national power regulator, National Electric Power Regulatory Authority (NEPRA), urging it to reject the Power Division's request to deny Rs7.173 billion (Rs4.69/kWh) in Fuel Charges Adjustment (FCA) relief for April 2025 to KE consumers. They have also expressed serious concerns over the rescheduling of KE's hearing. Prominent Karachi-based energy expert and intervener Arif Balwani has written a letter to the power regulator opposing the Power Division's last-minute request to defer the FCA hearing for K-Electric. The hearing, originally scheduled for June 19, 2025, was rescheduled to June 23, 2025. NEPRA has now fixed June 30, 2025, for the next hearing. "It must be stated unequivocally that the FCA mechanism is a statutory and formula-based process under the NEPRA Tariff (Standards and Procedure) Rules, 1998. It is not a petition, nor does it entail discretionary regulatory indulgence warranting intervention," Balwani stated, adding that the authority's notice — consistent with past practice and law — rightly invited "interested/affected parties to submit written/oral comments as permissible under the law." He said that the notice did not — and could not — invite any intervention, which is governed by specific provisions and procedures applicable to tariff petitions or licensing matters under the NEPRA Act and relevant regulations. "The belated oral objection raised by the Power Division (PD) — during the hearing itself and without prior written noticeis procedurally improper, contrary to principles of natural justice, and has no basis in the NEPRA Act (XL of 1997), the NEPRA Tariff Rules, or any codified regulation," he said, adding that there is no statutory provision empowering the authority to suspend or defer a lawfully convened FCA hearing at the unilateral behest of an executive division lacking any regulatory jurisdiction. He further added that the PD's contention regarding the reference fuel price of Rs15.9947/kWh — derived from the previous Multi-Year Tariff (MYT) 2016-2023 — has been repeatedly used for interim FCA determinations without objection. The Power Division has acquiesced to the continued application of this reference benchmark for several months post-MYT expiry. It cannot now be permitted to challenge its validity retroactively without citing any contrary provision of law or proposing an alternative interim methodology. More critically, the Additional Secretary of the Power Division admitted on record that the request for deferral was not backed by any formal decision of the federal government, cabinet, or Economic Coordination Committee (ECC). Balwani said this renders the request ultra vires, lacking both authority and democratic legitimacy. The absence of any Cabinet directive further underscores that this initiative is an unauthorised executive overreach attempting to influence the statutory functions of an independent regulatorcontrary to the separation of powers enshrined in the Constitution. He said the Power Division's further assertionthat the negative FCA should not be passed on to KE consumers due to International Monetary Fund (IMF) programme constraintsis not only irrelevant in the context of regulatory law but also unsupported by any statutory or contractual obligation.
Business Recorder
26-06-2025
- Business
- Business Recorder
No Apr FCA for Karachiites: Trade bodies demand Nepra reject PD plea
ISLAMABAD: In protest against the Power Division's intervention to block the application of negative Fuel Cost Adjustment (FCA) for April 2025 for Karachiites, several trade associations have written to the National Electric Power Regulatory Authority (Nepra), demanding that any such request be rejected outright. Letters of protest have been submitted by the Bin Qasim Association of Trade & Industry, the Pakistan Association of Large Steel Producers (PALSP), the Pakistan Tanners Association, and industrialist Rehan Jawed. During a public hearing on June 23, 2025, regarding K-Electric's FCA for April 2025, the Power Division presented a letter to Nepra, requesting a deferral of the hearing on the grounds that the government is preparing to implement a uniform FCA across the country. 'New electricity provider in Karachi': NA panel underscores need for exploring possibility The business community has raised a series of detailed legal and procedural objections, urging Nepra to consider them immediately. The Associations argue that the Ministry of Energy, as part of the executive branch, has no lawful authority to interfere in NEPRA's quasi-judicial proceedings or to delay statutory processes. Citing Sections 3 and 7 of the NEPRA Act, they emphasized that Nepra is mandated to function independently and is not subject to executive directives once a determination has been made. They maintain that the FCA is a formula-based, mechanical adjustment and that any interference is both unwarranted and illegal. The business community points to Nepra's own determination dated May 27, 2025, in the K-Electric Multi-Year Tariff (MYT) case, which clearly stated:'To maintain consistency and avoid revisions to already determined FCAs, and to ensure no additional burden is placed on consumers, the Authority has decided to allow the reference FCC of Rs. 15.9947/kWh on a units-served basis for each month of FY 2023-24.' They argue that this constitutes a binding precedent and cannot be overturned without following due legal process. The Ministry's unilateral request, they claim, has no legal merit and contradicts this established order. The Associations further state that no cabinet approval has been granted for a revised uniform tariff structure. Therefore, unless and until such approval is formally issued and notified under the relevant legal framework, NEPRA's existing FCA mechanism—based on the approved reference fuel cost—must continue. They also cited a Supreme Court judgment in Anoud Power Generation vs. WAPDA (PLD 2001 SC 340), which ruled that even if the cabinet later approves a tariff mechanism, it cannot be applied retrospectively unless specifically authorized by law. According to the associations, the Power Division's letter is no more than a recommendation and lacks any statutory authority to override Nepra's determinations or delay implementation. They emphasized that FCA adjustments are governed strictly by Nepra's Standard Procedures and the Tariff Rules, and any delay violates the requirement for timely adjustments, which are also commitments under the IMF's Memorandum of Economic and Financial Policies (MEFP). 'The Power Division's argument about subsidy management is without merit,' stated the Bin Qasim Association of Trade & Industry. 'K-Electric has already underutilized the allocated subsidy in the 2024–25 federal budget due to better recovery rates and cheaper electricity imports from the NTDC. The fiscal impact argument, therefore, lacks substance, and consumers should not be penalized for executive-level fiscal concerns.' The associations are calling on Nepra to hold an open hearing on the Power Division's letter and its proposed deferral, allowing all relevant stakeholders—especially industrial consumers in Karachi—to be heard. They argue that the principle of audi alteram partem (the right to a fair hearing) must be upheld. 'Until a new Cabinet-approved benchmark or uniform tariff is formally notified, the existing FCA reference cost of Rs. 15.9947/kWh remains legally binding. There is no justification for any executive override or temporary deferral—particularly when it would delay relief to consumers,' the associations stated. They further expressed frustration over what they perceive as selective intervention by the Power Division. 'When consumers in Karachi were burdened with higher FCAs and demanded a uniform rate, the Ministry ignored our concerns. Now, when the FCA is lower for Karachi and offers relief, the Ministry is actively trying to block it. This double standard is unacceptable and deeply troubling,' they added. The associations stressed that implementing a uniform FCA at this stage requires formal cabinet approval and a corresponding direction to NEPRA. In the absence of such legal backing, neither the Ministry of Energy nor the Central Power Purchasing Agency (CPPA) has the authority to interfere. 'We urge Nepra to reject the Ministry's request and proceed with the timely implementation of the negative FCA for K-Electric consumers in accordance with the law,' said PALSP. 'Any deviation would not only undermine the sanctity of the regulatory process but also violate consumer rights and established judicial precedent.' They also called for a requirement that any future Ministry communications affecting tariff mechanisms be subject to public and stakeholder hearings before implementation. Copyright Business Recorder, 2025
