Islamabad:
In a bold affirmation of its regulatory autonomy, the Pakistan Energy Control Agency has notified several years of K-Electric for supply, distribution and transmission until 2030, despite a non-resolved review motion of the federal government.
The power regulator has notified RS6.15 per unit of increase in the base rate for KE consumers. The government implements uniform throughout the country and the government provides a subsidy to KE consumers to implement a uniform rate.
The National Electric Power Regulatory Authority (NEPRA) continued with the notification after determining that there was no legal bar to stop the implementation. He invoked his improved powers under a legal amendment of 2021, which allows the regulator to issue direct tariff notifications, authority that previously rested with the federal government.
The historical movement reflects the pressure of international lenders, in particular the IMF and the World Bank, to depolitize the reforms of the energy sector and establishment of rates and fast track.
“This situation could affect the financial health of KE and undermine the continuity of the energy supply, ultimately affects consumers and the broader energy market,” Neprior warned in his statement.
The average feeding source rate freshly notified for KE is located at RS 39.97 per kilowatt-hora for 2023-24, which includes RS 31.96/kWh in energy purchase cost, RS 2.86 for transmission, RS 3.31 for distribution and RS 2.2 as supply margin. An adjustment of the previous year of less RS 0.44/kWh has also been included.
Nepra estimated the total income requirement of KE for fiscal year 2023-24 to 606.9 billion rupees, with RS34.7 billion assigned for the supply margin and RS 36.2 billion reserved to cover the recovery losses.
Despite the formal approval of the rate, Ke’s finances remain under severe pressure. With the recovery of Bill falling to 91.5pc in fiscal year 2023-24 and it is projected to fall to 90.5PC next year, the public services company could face cumulative subcoverillas near RS97 billion for two fiscal years. Nepra warned that the return of RS21.6 billion allowed KE of RS21.6 billion distribution operations could be eliminated without support or government adjustments.
Nepra simultaneously approved a RS 3.31/KWh and RS 2,684/kWh distribution rate specifically to support an investment plan of 43.4 billion rupees during the seven -year multiple rates period.
The Government had challenged the K-Electric (2024-30) approved rate approved by the Energy Regulator last week, claiming that the public services company obtained an improper favor of RS750 billion during the seven-year period at the expense of the national treasure, energy consumers throughout the country and taxpayers in the big.
In a statement, Power’s division had announced that the six tariff interventions allowed by Nepra to Ke implied a financial impact of RS453BN distributed in seven years.
In addition to that, the division added, an impact on the highest fuel cost than the national average by 2024-25 only meant an additional cost of RS41bn, which even if it remains stable would translate into RS287BN in seven years.
The division said that the government’s position was to seek a review of the determination of nepring to guarantee equity and uniformity, the rate must reflect real costs and reasonable yields to protect consumers and there should not be an additional assignment for inefficiency.
