Leghari censures NEPRA over Karachi power tariff issue

ISLAMABAD: The Power Division has expressed serious reservations over the multi-year electricity tariff announced for Karachi, terming it detrimental to investment.

According to HUM News, Minister for Power Awais Ahmed Khan Leghari said such decisions could harm investment due to long duration involving a years-long period.    

Moreover, it will also bring long-term effects to the Centre’s uniform system of subsidies, the minister added, as the decision by National Electric Power Regulatory Authority (NEPRA) allows K-Electric to hike power tariff for consumers.

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The move came despite an alarming decrease in the purchasing power of people in Pakistan, with higher cost of living and doing business meaning that neither the domestic nor industrial and commercial consumers can afford higher energy prices.

It is the reason why Leghari said the Power Division would review the multi-year tariff authorised by the regulator.

WHAT DID NEPRA DO?  

The controversy is a result of the NEPRA last week approving a multi-year tariff for K-Electric for the fiscal years 2023 to 2030.

It has allowed the power utility that supplies electricity to Karachi to collect over Rs43 billion under the head of “use of system charges”.

Under this regime, K-Electric consumers will see an average increase of Rs3.31 per unit in electricity prices.

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According to NEPRA, K-Electric’s distribution system has been set a revenue target of Rs50.284 billion for the fiscal year 2024–25, while Rs43.447 billion has been approved in use of system charges revenue.

These charges are expected to have an average impact of around Rs3.30 per unit for consumers.

However, NEPRA clarified that this decision will not impose any additional burden on current electricity bills, as billing will continue under the country’s uniform tariff policy.

NEPRA also reviewed K-Electric’s request for Return on Equity (RoE). The company had sought a 16 per cent RoE for its distribution segment, but the regulator approved a 14 per cent rate.

Similarly, for the transmission segment, a 12 per cent RoE was authorised against the requested 15 per cent.

NEPRA further noted that the financial approvals granted to K-Electric were subject to change if the company failed to obtain formal approval for the execution of its investment plans.

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