Karachi, June 27, 2024 – K-Electric has submitted a petition to the National Electric Power Regulatory Authority (Nepra) requesting significant tariff adjustments. The utility is seeking a 15 percent dollarized return on equity and 16.67 percent for transmission and distribution over the next seven years under its multi-year tariff (MYT) plan.
Tariff Adjustments Proposal
K-Electric’s proposal, which includes indexed quarterly adjustments similar to those in the Lahore-Matiari HVDC transmission project, drew comparisons to benchmarks in the Independent Power Producers (IPPs) sector. This stance has faced strong criticism from representatives of the Karachi business community.
Nepra Public Hearing
During a public hearing held on Thursday, Nepra reviewed K-Electric’s proposals for distribution, transmission, and supply tariffs for fiscal years 2023-24 to 2029-30. The company emphasized the need for continuity with previous tariff provisions, proposing a tariff increase from Rs34 to Rs44.69 per unit. The breakdown of the proposed tariffs includes:
- Transmission charges: Rs3.48/unit
- Distribution charges: Rs3.84/unit
- Supply charges: Rs5.96/unit
- Generation costs: Rs31.42/unit
Financial Strategy
To meet its financial requirements, K-Electric plans to finance 75 percent of its needs through foreign loans due to limited local funding availability, exacerbated by recent national credit downgrades. The company has also requested tax concessions on interest payments and highlighted ongoing efforts towards operational restructuring.
Public Response
Residents of Karachi have expressed frustration over extended power outages, with prolonged loadshedding affecting several areas. Despite full recoveries in certain zones, the issue of power outages continues to persist, causing significant inconvenience to consumers in the nation’s financial hub.
