Nepra announces probe to determine linkage between deaths in Karachi caused by heat wave with prolonged loadshedding in city.
ISLAMABAD - The stakeholders have opposed the K-Electric demand for dollar indexation during a hearing on the company’s petition for 31.44 percent hike in base tariff, as the National Electric Power Regulatory Authority has announced a probe to determine the linkage between the deaths in Karachi caused by heat wave with prolonged load shedding in the city.
During a public hearing conducted by NEPRA on K-Electric’s distribution, transmission, and supply petitions for the period from FY2023-24 to FY2029-30, a representative of Karachi Chamber of Commerce and Industry, Tanveer Bari has claimed that KE has received a subsidy of Rs700 billion from the federal government during the past six to seven years. It was informed that the utility has sought to increase the base tariff by Rs10.69 per unit which will take it from the existing Rs 34 per unit to Rs 44.69 per unit.
As per the KE’s petitions, covering distribution, transmission, and supply tariffs from fiscal years 2023-24 to 2029-30, the company emphasized continuity with previous tariff provisions, proposing a tariff increase from Rs34 to Rs44.69 per unit, including transmission charges of Rs3.48/unit, distribution charges of Rs3.84/unit, supply charges of Rs5.96/unit, and generation costs totaling Rs31.42/unit. It was informed that KE would invest $2 billion during the next seven years. At present, the power tariff was Rs34 per unit whereas the KE had sought to raise it to Rs 44.69 per unit under sever years investment plan.
In its petition, the KE has sought 15 percent dollarized return on equity and 16.67 percent for transmission and distribution over the next seven years as part of its multi-year tariff (MYT) plan. The utility, citing benchmarks in the Independent Power Producers (IPPs) sector, argued for indexed quarterly adjustments similar to the Lahore-Matiari HVDC transmission project. To meet financial needs, K-Electric plans to finance 75 percent of its requirements through foreign loans due to limited local funding availability exacerbated by recent national credit downgrades. The company also sought tax concessions on interest payments and highlighted ongoing efforts towards operational restructuring. During a public hearing conducted by NEPRA on K-Electric’s distribution, transmission, and supply petitions for the period from FY2023-24 to FY2029-30, CFO KE Aamir Ghaziani emphasized that KE has the lowest operation and maintenance cost among power distribution companies operating in the country, which reflected the company’s operational efficiency.
Imran Shahid, a representative from Jamaat-e-Islami Karachi, voiced criticisms regarding rising electricity tariffs and persistent loadshedding issues saying KE is carrying up to 18 hours loadshedding. A stakeholder asked the regulator, pointing towards the recent deaths occurred due to heat wave in Karachi, saying that who will be responsible if someone dies due to heat wave owing the prolonged load shedding? Chairman NEPRA said that member technical is currently visiting Karachi to probe the matter and investigation is underway, to find the connection between the deaths and loadshedding. Another stakeholder strongly opposed the KE demand for dollar indexation saying in the past it was done but it had negative impact on the economy of the country. The regulator has reserved the judgment on the KE’s petition and it will be announced later after further scrutiny of the data.