ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has issued its decision on K-Electric’s (KE) write-off petition, allowing partial claims of PKR 50 billion against the company’s claims worth PKR 76 billion pertaining to the Multi-Year Tariff (MYT) control period spanning FY17 – FY23.
According to K-Electric CEO Moonis Alvi, “With this decision, majority of items pending to the previous control period have come to a close. KE looks forward to the MYT for the control period spanning FY 24 to FY 30, committed to meeting its serviced territory’s energy needs.”
The decision was released after public hearings and extensive deliberations that allowed all stakeholders to voice their concerns that were addressed by KE management. The submissions to NEPRA underwent strict internal scrutiny as well as external verification by well-accredited and renowned audit firms as required by the NEPRA in line with KE MYT 2017-2023.
“These costs were part of the Multi-Year Tariff awarded to the utility for the period 2017-2023, and have been approved after stringent benchmarks, audits and fulfillment of conditions laid down by NEPRA in its tariff determination,” said Muhammad Aamir Ghaziani, Chief Financial Officer at KE.
The power utility company had revised claims of unrecoverable amount of Rs 76.034 billion in receivables spanning seven years (2017–23) from Rs 67.902 billion pertains to the period prior to 2022 by including Rs 8.131 billion additional write-off claims for 2023.
KE claimed Rs. 15.211 billion including GST for metered connections on account of settlement schemes out of the current MYT billing. According to KE, initially these connections were disconnected but reconnected after settlement schemes/consumer agreeing to convert to metered connections as per the categories of write off claims verified by the Auditors. This includes consumers in Payment Loyalty Reward (PLR) Schemes, overdue debts on account of consumption through single bulk connection and settlement schemes and consumers agreeing to convert hook connections to metered connections.
According to K-Electric CEO Moonis Alvi, “With this decision, majority of items pending to the previous control period have come to a close. KE looks forward to the MYT for the control period spanning FY 24 to FY 30, committed to meeting its serviced territory’s energy needs.”
The decision was released after public hearings and extensive deliberations that allowed all stakeholders to voice their concerns that were addressed by KE management. The submissions to NEPRA underwent strict internal scrutiny as well as external verification by well-accredited and renowned audit firms as required by the NEPRA in line with KE MYT 2017-2023.
“These costs were part of the Multi-Year Tariff awarded to the utility for the period 2017-2023, and have been approved after stringent benchmarks, audits and fulfillment of conditions laid down by NEPRA in its tariff determination,” said Muhammad Aamir Ghaziani, Chief Financial Officer at KE.
Arif Bilwani, Munim Zafar, Ameer Jamat-e-Islami , Rehan Javed and some other consumers had challenged the write-off claims of KE.
Majority of the stakeholders objected the additional and pending write off claims. The representative of JI raised the issue of bogus bills which are subsequently claimed as write off and referred his letters of May 27, 2024 and January 3, 2025. Arif Bilwani also raised similar concerns regarding bogus billing.
Bilwani also highlighted that there is a substantial increase in the write off claims in later years of the MYT as compared to the initial years. KE clarified that the reason for such increase is the increase in sales revenue. For example, sales revenues of private consumers increase from Rs. 169 billion in FY 2017 to Rs. 411 billion in FY 2023, thereby more write offs in FY 2023 as compared to FY 2017.
On the other hand Shahid Khaqan Abbassi, ex-Prime Minister and former head of Task Force on KE issues, Omar, Junaid Ameen, Areeba Shahid and Bilal Asghar supported the claim of KE.
NERPA also said that it is “conscious of the fact that all possible efforts have already been made by K-Electric, as confirmed by the auditors”. However, it also directed KE to continue to actively pursue the recovery of the maximum possible amount and in case, a written off amount is subsequently recovered by KE, the benefit of such amount shall be passed onto consumers in the immediate quarterly adjustments and KE shall be required to separately disclose this amount. NEPRA also stated that KE would be required to submit a certificate from its auditors each year, mentioning the recovery of written off amounts, if any, pertaining to MYT FY17-23.
The development comes after lengthy public hearings and extensive deliberations that allowed all stakeholders to voice their concerns that were addressed by KE management, stated a press release issued by KE after NEPRA’s order.
“The submissions to NEPRA underwent strict internal scrutiny as well as external verification by well-accredited and renowned audit firms as required by the NEPRA in line with KE MYT 2017-2023,” KE added in its press release.
KE’s write-off requests had centered around long-standing unrecoverable bills from a range of customers, categorized broadly into inactive consumers, active defaulters, and consumers registered under various settlement schemes. The total claim – filed with NEPRA in multiple tranches – spanned dues from 2017 through 2023.
In terms of guidelines, the utility had to meet five specific conditions before a bad debt could have been acknowledged: complete disconnection of the defaulter’s connection, Board-level certification of exhaustive recovery efforts, auditor verification of non-recoverability, full documentation of the write-off terms, and tariff adjustments in case of any future recoveries, according to NEPRA.
While acknowledging the legitimacy of write-offs in principle, NEPRA appeared unwilling to sign off on the full PKR 76 billion.
The partial approval also raises some questions as NEPRA has not approved the entire amount despite KE meeting airtight guidelines including extensive recovery efforts made by the company, which include disconnection drives, third-party collection agencies, legal pursuits, and even community engagement programs such as mobile billing and recovery camps in underbanked areas.
The burden of unpaid dues – accumulated largely in high-loss and high-theft zones – continues to weigh heavily on KE’s balance sheet.
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