ISLAMABAD: The federal government has raised strong objections to recent decisions by the National Electric Power Regulatory Authority (Nepra) that allegedly favour K-Electric, vowing to challenge these rulings for being detrimental to public interest, consumer affordability, and taxpayer burden.
Power Minister Awais Leghari, in a rare public rebuke of the regulator, voiced concerns over a series of determinations involving K-Electric’s generation, transmission, distribution, and supply licences, as well as its upcoming multi-year investment and tariff plans.
“These rulings have far-reaching implications for consumer tariffs and federal subsidies under the uniform tariff policy,” Leghari stated on X (formerly Twitter). He confirmed the ministry is reviewing multiple determinations and preparing to file formal reconsideration requests with Nepra.
The Power Division is particularly alarmed by the inclusion of recovery loss allowances in K-Electric’s base tariff and relaxed criteria for write-off of unrecoverable arrears—measures seen as escalating the burden of the Tariff Differential Subsidy (TDS), which has ballooned to Rs260 billion for FY2024.
Officials also criticized inflated assumptions for depreciation, return on equity, and loan servicing in K-Electric’s tariff model, asserting that profits projected for the utility are unjustifiably high and unsustainable on the public purse.
Nepra’s recent approval of a base tariff of Rs40 per unit for K-Electric—about 40% higher than the national average of Rs28 per unit—has intensified the government’s concerns. The difference is absorbed by taxpayers via TDS payments.
“The regulatory framework must incentivize performance, not inefficiency,” Leghari warned, adding that such decisions risk undermining efforts to attract private investment in the power distribution sector.
Story by Khaleeq Kiani
