K-Electric: Rs50bn Write-Off Approved by Regulator
- Pakistan's National Electric Power Regulatory Authority (NEPRA) has granted K-Electric (KE) a significant financial benefit, approving a Rs50 billion write-off of unrecovered past bills.
- In related news, NEPRA has permitted KE to retain Rs2.74 billion in fuel costs overcharged to consumers in March.
- The private power utility is also set to recoup Rs2.03 per unit against past claims related to partial loan, open cycle operations, and degradation for the period spanning...
NEPRA has greenlit a notable Rs50 billion wriet-off for K-Electric (KE), impacting consumers adn the national budget. This key decision allows KE too write off unrecovered bills,which will influence tariffs and overall financial strategies. Alongside the write-off, consumers will see a fuel cost adjustment (FCA) refund in their current bills, offering some relief amid the changes. the private power utility is also set to recoup funds related to past claims. This declaration is juxtaposed with a rise in fuel cost recovery for public sector Discos. The Power Division is challenging the approval, alleging undue favor. Read all about how these decisions will shape Pakistan’s energy landscape. News Directory 3 has the news as it breaks. Discover what’s next for K-Electric and the regulatory landscape.
K-Electric Benefits from Rs50 Billion Write-Off, Fuel Cost Adjustment
Pakistan’s National Electric Power Regulatory Authority (NEPRA) has granted K-Electric (KE) a significant financial benefit, approving a Rs50 billion write-off of unrecovered past bills. This decision will have subsequent effects on consumers and taxpayers through tariff and budgetary adjustments.
In related news, NEPRA has permitted KE to retain Rs2.74 billion in fuel costs overcharged to consumers in March. Though,KE will share some benefits with consumers through a Rs4.05 billion refund from a total monthly fuel cost saving of Rs6.79 billion. This translates to a Rs2.99 per unit negative fuel cost adjustment (FCA) for KE consumers in their current bills.
The private power utility is also set to recoup Rs2.03 per unit against past claims related to partial loan, open cycle operations, and degradation for the period spanning July 2023 to March 2025.
Conversely, NEPRA has notified a 94-paise-per-unit additional fuel cost recovery from consumers of public sector Distribution Companies (Discos), a figure lower than the requested Rs1.27 per unit based on higher electricity consumption in March.
Allows Discos 94 paise hike in tariff for March
Earlier, NEPRA approved a policy shift on May 27, allowing KE to incorporate an average of 5% unrecoverable bills into its consumer tariff.The approved tariff for fiscal year 2024 is Rs40 per unit, indexed to inflation and exchange rate fluctuations for the subsequent six years, concluding in 2029-30.
The Power Division has voiced concerns, labeling this move as undue favor to KE, estimating its value at approximately Rs750 billion over seven years. They have announced plans to challenge the decision on multiple grounds.
Under the previous Multi-Year Tariff (MYT) spanning 2017-23, KE sought a write-off of Rs76 billion, accumulated over seven years since fiscal year 2017. this claim was based on a 2018 tariff determination that allowed for a 1.69% provision for recovery losses.NEPRA has now approved Rs50.013 billion for K-Electric as a full and final settlement of write-offs pertaining to the billing of MYT 2017-23.
The approved Rs50 billion will either be integrated into KE’s tariff or offset against the federal budget through the tariff differential subsidy (TDS),contingent on the government’s decision.NEPRA has stipulated that the Power Division must notify the decision in the Gazette of Pakistan within 30 days; or else, NEPRA will issue its own notification.
Syed Moonis Abdullah Alvi, KE Chief Executive Officer, stated, “With this decision, the majority of items pending the previous control period have come to a close.KE looks forward to the MYT for the control period spanning FY24 to FY30, committed to meeting its serviced territory’s energy needs.”
Separately, NEPRA also notified a negative FCA of Rs5.02 per unit, amounting to Rs6.792 billion for March 2025, as proposed by KE. KE had initially claimed Rs15.2 billion related to partial load, open cycle, and degradation curves, along with startup costs from July 2023 to March 2025, requesting partial adjustments against these claims instead of passing the full negative FCA to consumers.
What’s next
The government will decide whether to incorporate the Rs50 billion write-off into K-Electric’s tariff or cover it through the federal budget. The Power Division has 30 days to notify the decision.