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Monday July 14, 2025

NEPRA may allow KE to charge additional Re0.51/unit in three months

By Israr Khan
November 09, 2022

ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) on Tuesday hinted that it might allow K-Electric to collect an additional Re0.51/unit from consumers on account of quarterly adjustments to maintain cross-country uniform tariff.

This would be collected from K-Electric consumers in the billing months of November to January 2023.

It is to be noted that in July 2022, NEPRA allowed K-Electric to hike the power tariff by Rs3.55/unit on account of quarterly adjustments for January-March 2021-22. However, KE had sought an increase of Rs3.892/unit.

The authority had communicated its decision to the federal government for notification.

Usually, the impact of quarterly adjustments is not passed on to consumers and the federal government subsidises it to neutralise the increase to keep the uniform tariff policy applicable across the country. But this time, the federal government filed a review petition with NEPRA that Re0.51/unit be passed on to the consumers whereas the remaining impact of the tariff increase would be borne by the federal government through subsidy.

Such adjustment would be applicable on the consumption of September, October, and November of 2022 to be recovered from consumers in November, December, and January 2023. The total per unit quarterly adjustment has been assessed at Rs3.55, while Re0.51/unit is to be passed on to consumers, with the remaining Rs3.04 subsidy to be paid from the state exchequer.

On Tuesday, NEPRA held a public hearing presided over by the Authority’s chairman Tauseef H Farooqi. It considered the review motion of the federal government where the interveners opposed an increase in electricity rates and objected to the expensive power generated by KE’s own power plants.

Farooqi said that the power regulator had introduced the electricity model of a competitive market to facilitate the consumers. He said that it was an ideal model that would shift the electricity market towards competition, resulting in cheaper electricity for consumers. Even investors could set up their own power plants to produce cheaper electricity for their own use and could take benefit from the model of a competitive market.

Interveners pinpointed that KE had been generating expensive electricity and that the company’s administration should take steps to produce cheaper electricity. They also demanded that the government should nationalise the company, but the NEPRA chairman challenged it saying, the world had been shifting towards privatisation as it was not the task of the government to run a business.

Governments are advocating privatising all Discos to cut losses and improve recovery of electricity bills by bringing efficiency to the distribution system. Currently, the inefficiencies of the Discos have been piling up losses worth billions of rupees that result in the ballooning of the power sector’s circular debt.

It was also suggested that the government should take over the transmission system to improve efficiency. The matter of K-Electric’s expensive power generation from its own generators was also discussed. It was noted that power generation cost from KE plants stood at Rs37.7/unit which was very high last month. They also demanded that KE should replace the inefficient and expensive power plants with the most efficient power plants. NEPRA was working on a plan to replace KE’s inefficient power plants with efficient power plants. The hearing was informed that efficient plants would begin operations in December this year.

K-Electric after the hearing issued a statement saying, this hike was requested by the federal government to ensure that consumers across Pakistan were charged similar rates according to their slab-wise electricity consumption. This process was underpinned by the National Power Tariff and Subsidy Policy Guidelines 2014 which have been developed by the government and apply to all electricity consumers in the country. NEPRA is yet to determine the date from which this change will apply to consumer bills, which will be followed by a notification by the government. The process of setting the electricity rates, and their application on consumer bills, rests with the regulatory authority and government. Individual distribution companies cannot influence the process or modify the tariff unilaterally.