NEPRA cuts K-Electric tariff to 32, tightens performance targets

KARACHI: The National Electric Power Regulatory Authority (NEPRA) has reduced K-Electric’s base tariff from Rs 39.97 per unit to Rs 32.

The decision comes after Nepra reviewed a government petition challenging the earlier tariff hike. While the tariff cut severely hurt K-Electric’s revenue, Nepra remained adamant on approving the company’s Rs 50 billion rights of claims, rejecting their demands to withdraw them. “The petitioners have failed to provide convincing grounds for review; therefore, the motions are dismissed,” the regulator said.

The reduction in electricity rates reverses a major 18 percent tariff hike approved a few months ago, leaving K-Electric facing a dire financial straits. Bill collection rate fell to 91.5% last year and could fall to 90.5% next year, threatening shortfalls of around Rs97 billion over two years. Nepra warned that the utility’s Rs21.6 billion distribution refund allowance could expire without government support.

Performance targets were tightened as transmission losses were capped at 0.75%, distribution losses were targeted at 9%, and the 75:25 benefit sharing formula remains in place, giving consumers a bigger share of any improvements. Fuel prices will now follow Pakistan’s national CPI, with tariff adjustments taking into account local inflation

K-Electric now faces a significant challenge in balancing operations while safeguarding its financial viability amid regulatory pressures.