Nepra notifies KE’s multi-year tariffs despite govt review plea

ISLAMABAD: In a bold assertion of its regulatory autonomy, Pakistan’s power watchdog has notified K-Electric’s long-delayed multi-year tariffs for supply, distribution, and transmission through 2030 — despite an unresolved review motion by the federal government.

The National Electric Power Regulatory Authority (Nepra) moved ahead with the notification after determining that no legal bar existed to halt implementation. It invoked its enhanced powers under a 2021 legal amendment, which allows the regulator to issue tariff notifications directly — authority that previously rested with the federal government.

The landmark move reflects pressure from international lenders, notably the IMF and the World Bank, to depoliticise tariff-setting and fast-track power sector reforms.

This situation could impair KE’s financial health and undermine power supply continuity, ultimately affecting consumers and the broader energy market, Nepra warned in its statement.

It is to be noted that the power regulator on 27 May 2025 had issued its decision raising the average base tariff for K-Electric by Rs6.15 per unit — an 18.18 percent increase — setting it at Rs39.97/unit for fiscal year 2023-24 under a newly approved Multi-Year Tariff regime stretching to FY2030. The hike backs Rs400 billion ($1.42 billion) investment plan over next seven years already approved by Nepra while cushioning against under-recovery risks to maintain power supply across Karachi.

The newly notified average power supply tariff issued by the Nepra again on Friday for KE stands at Rs39.97 per kilowatt-hour for 2023–24, comprising Rs31.96/kWh in power purchase cost, Rs2.86 for transmission, Rs3.31 for distribution, and Rs2.28 as the supply margin. A prior year adjustment of minus Rs0.44/kWh has also been included.

Nepra estimated KE’s total revenue requirement for FY 2023–24 at Rs606.9 billion, with Rs34.7 billion allocated for supply margin and Rs36.2 billion set aside to cover recovery losses.

Despite the formal tariff approval, KE’s finances remain under severe pressure. With bill recovery slipping to 91.5 percent in FY 2023–24 and projected to fall to 90.5 percent next year, the utility could face cumulative under-recoveries nearing Rs97 billion over two fiscal years. Nepra cautioned that KE’s permitted Rs21.6 billion return on distribution operations might be wiped out without government support or adjustments.

Nepra simultaneously approved a distribution tariff of Rs3.31/kWh and Rs2.684/kWh specifically to support a Rs43.4 billion investment plan over the seven-year Multi-Year Tariff period.