KE Base Tariff
ISLAMABAD: In a landmark move underscoring its regulatory independence, Pakistan’s National Electric Power Regulatory Authority (NEPRA) has officially notified K-Electric’s long-pending multi-year tariffs for power supply, distribution, and transmission through 2030. The decision comes despite an unresolved review petition by the federal government, which had sought a reconsideration of the tariff structure.
NEPRA’s notification includes a substantial Rs6.15 per unit increase in K-Electric’s base tariff, aligning it with the national uniform tariff. Although the federal government maintains a uniform electricity tariff across all distribution companies, it traditionally subsidizes KE consumers to bridge the gap. The new base tariff for KE has now been set at Rs39.97 per kilowatt-hour (kWh) for the fiscal year 2023-24.
The tariff is composed of Rs31.96/kWh in power purchase costs, Rs2.86/kWh for transmission, Rs3.31/kWh for distribution, and Rs2.28/kWh as a supply margin. Additionally, a prior year adjustment of minus Rs0.44/kWh has been factored in. NEPRA has estimated KE’s total revenue requirement for FY 2023-24 at Rs606.9 billion, with Rs34.7 billion allocated for supply margin and Rs36.2 billion earmarked to cover recovery losses.
Invoking its enhanced powers granted under a 2021 legal amendment, NEPRA issued the tariff notification independently — a role previously held by the federal government.
The authority asserted that no legal constraint existed to delay the implementation. This assertive stance reflects growing pressure from international lenders, particularly the International Monetary Fund (IMF) and the World Bank, to depoliticize energy pricing and accelerate reforms in the country’s power sector.
In its statement, NEPRA warned that continued financial strain on KE could jeopardize the company’s ability to maintain power supply, with knock-on effects for consumers and the broader energy ecosystem.
KE is currently facing severe financial stress, with its bill recovery rate dropping to 91.5% in FY 2023-24 and projected to decline further to 90.5% in the coming year. Cumulatively, this could lead to under-recoveries of nearly Rs97 billion over two years, potentially wiping out KE’s permitted Rs21.6 billion return on its distribution operations unless the government intervenes with financial support or tariff adjustments.
To support KE’s seven-year investment plan worth Rs43.4 billion, NEPRA also approved a separate distribution tariff of Rs3.31/kWh and Rs2.684/kWh.
However, the government has strongly opposed NEPRA’s determination. The Power Division has accused NEPRA of granting undue financial favor to KE, estimating that the new tariff structure would cost the national exchequer, consumers, and taxpayers an additional Rs750 billion over the seven-year period. The division claims that NEPRA’s approval of six major tariff interventions for KE will carry a direct financial impact of Rs453 billion.
Moreover, the government argued that KE’s projected fuel cost for 2024-25 alone exceeds the national average, which could result in an added burden of Rs41 billion in just one year. If sustained, this differential could translate into an additional Rs287 billion over the full seven-year tariff period.
Calling for a review, the Power Division emphasized that tariffs must be based on actual costs and justified returns, with no room for inefficiencies or preferential treatment. The government insists on maintaining fairness and consistency in tariff-setting across all distribution companies to protect national and consumer interests.
