ISLAMABAD —
The National Electric Power Regulatory Authority (NEPRA) has approved a seven-year Multi-Year Tariff (MYT) plan for K-Electric’s (KE) supply operations, covering the period from FY2023-24 to FY2029-30. This decision ensures long-term tariff stability and enables KE to implement a $2 billion investment plan focused on enhancing service quality, reducing system losses, and boosting grid reliability.
Under this new MYT framework, NEPRA has set KE’s average power supply tariff at Rs39.97/kWh for the specified period. This is an increase from the previous interim tariff of Rs33.82/kWh, which was in place until March 2023 based on the earlier MYT.
The newly approved MYT synchronizes KE’s supply tariff with its generation, transmission, and distribution operations, facilitating consistent regulatory oversight and strengthening investor confidence. NEPRA’s decision allows KE to recover prudent costs related to fuel, power purchases, transmission and distribution, operations and maintenance (O&M), and working capital, with established monthly and quarterly adjustment mechanisms. KE had initially sought a higher tariff of Rs44.69/kWh, but NEPRA approved a lower rate of Rs39.97/kWh.
A significant aspect of the decision is NEPRA’s endorsement of KE’s plan to gradually reduce efficiency losses, targeting an improvement from 92.76% in FY2024 to 95.48% by FY2030. The regulator also approved adjustments based on actual sent-out and billed units, aligning KE’s tariff model with the revenue-cap framework used by other distribution companies (DISCOs).
For its supply business, KE had requested a working capital cost of Rs2.071/kWh — amounting to Rs33.1 billion — based on a total working capital requirement of Rs132.95 billion. KE clarified that much of this amount is tied up in receivables from government entities, including Tariff Differential Subsidy (TDS) claims, unpaid public sector electricity bills, and tax refunds. These receivables were excluded from the current request, as KE is addressing them separately with the government.
NEPRA approved the calculation of working capital costs using a 3-month KIBOR rate plus a maximum spread of 1%, with reductions if the actual spread is lower. The approved working capital requirement for FY2023-24 is based on the revised costs for power purchases, transmission, distribution, and supply margins.
KE anticipates annual growth in sent-out electricity at a compound rate of 2.6%, with adjustments made based on actual data starting from FY2023. Sent-out units are expected to reach 21,617 GWh by FY2030, up from 18,660 GWh in FY2024.
For distribution charges, KE requested Rs61,385 million, or Rs3.84/kWh, in its distribution petition for the tariff period. However, NEPRA approved a reduced rate of Rs3.31/kWh. KE had also requested transmission charges of Rs2.99/kWh, which will now be linked to the Monthly Demand Index (MDI) as notified by NEPRA.
In terms of Operations & Maintenance (O&M), KE sought Rs6,758 million — equivalent to Rs0.42/kWh — based on projected billed units for FY2024. NEPRA, after removing discretionary or non-essential costs, approved a total O&M cost of Rs31,963 million for FY2023-24. This includes Rs26,052 million for distribution and Rs5,911 million for supply. Notably, KE’s actual supply O&M cost was Rs5,911 million, slightly lower than the projected Rs5,926 million for FY2022-23.
NEPRA has directed KE to maintain an uninterrupted electricity supply and use recovery-related adjustments judiciously. The regulator will conduct rigorous performance monitoring, tracking service quality through benchmarks like the System Average Interruption Frequency Index (SAIFI) and the System Average Interruption Duration Index (SAIDI).
This approval represents a major step towards providing Karachi and its surrounding areas with a more predictable and stable power regime. It is expected to strengthen consumer trust while supporting critical infrastructure improvements by Pakistan’s only vertically integrated private utility.
