ISLAMABAD: Power Minister Sardar Awais Leghari’s remarks on KE’s recent tariff determination have drawn responses, though it remains unclear who authored the replies to his tweets, which sparked discussions across various social media platforms.
NEPRA which is about to hold a public hearing on Discos FCA for April 2025 today( Thursday) , is also likely answer ” unfounded ” accusations hurled by some of the commentators on social media platforms as the Authority is furious on accusations.
According to the replies of Minister’s tweets, the Ministry submitted detailed comments to NEPRA in December 2024, following six months of comprehensive consultations. NEPRA has extensively addressed the Ministry’s comments and provided rationale for its decisions within the determination, based on merit.
Investments made in KE and the resulting efficiency improvements have contributed to a reduction in KE’s tariff. KE’s AT&C (Aggregate Technical & Commercial) losses have declined from 43.2% in 2009 to 20.3% in 2024, as recognized by NEPRA—resulting in an annual benefit of PKR 167 billion to the Government of Pakistan (GoP). The target for 2030 is 15.6%, which would yield an additional annual benefit of PKR 65 billion.
Unlike other distribution companies (DISCOs), KE bears the cost of not meeting regulator-set targets. In contrast, for Discos, these costs are passed on to consumers through surcharges—surcharges that are also applied to KE consumers, as directed by the GoP. Therefore, NEPRA’s determination supports sustainable reduction in subsidies and serves as a model for other loss-making DISCOs.
NEPRA has issued a detailed tariff determination for KE, taking into account inputs from the Power Division, which was involved throughout the consultation process.
It is also important to note that the returns allowed to KE are significantly lower than those granted to other foreign investors in the power sector, despite KE operating in a riskier business environment.
Timely and sustainable decision-making by all stakeholders is essential for the long-term viability of the power sector. Delays adversely affect a utility’s sustainability and its ability to invest in infrastructure.
Despite operational improvements and tariff reductions, KE shareholders have yet to receive returns. Continued treatment of this kind may discourage future investment. A sustainable, cost-reflective tariff that ensures reasonable investor returns is vital for the success of any future privatization of state-owned DISCOs.
NEPRA’s tariff decision for KE reflects detailed stakeholder engagement, with the Power Division actively participating, as explicitly outlined in NEPRA’s determination.
Some claims made on social media either demonstrate a fundamental misunderstanding or appear to be deliberate attempts to mislead the public and decision-makers.
One such misconception is that the inclusion of recovery loss in tariffs means KE has already collected those amounts. In reality, like all tariff components, recovery losses are collected gradually through monthly billing over the period during which these costs are incurred.
Excluding recovery loss would render operations unsustainable, as under-recoveries are legitimate business expenses. KE has improved its AT&C losses from 43% in 2009 to 21% in FY23, with NEPRA setting a further improvement target of 15.6% by FY30—illustrating the path toward sustainable reform.
By contrast, no such improvements have been seen in GoP-owned XWDISCOs, whose inefficiencies are funded by all consumers, including those in Karachi, through surcharges such as the PHL surcharge.
NEPRA incorporated an improvement trajectory over a 7-year horizon, backed by due diligence and ground realities. The quoted figures that exaggerate KE’s recovery losses fail to account for this. Under the allowed trajectory, recovery losses of PKR 36 billion in FY24 are projected to fall to PKR 22 billion by FY30, even accounting for sales growth.
Meanwhile, Karachi consumers are burdened with a PKR 3.23 per unit PHL surcharge—meant to cover losses of other DISCOs—resulting in PKR 38 billion annually collected from Karachi consumers due to the underperformance of state-owned utilities.
It is therefore incorrect to claim that NEPRA’s determination lacks rigor. KE has been assigned performance targets with a clear trajectory, and any failure to meet these will directly affect the company’s financial viability.
Comparing legitimate, regulator-allowed costs with general development project costs is misleading. KE was a loss-making entity before privatization, with extremely high AT&C losses. Today, it no longer relies on government support. In contrast, state-owned DISCOs like HESCO, SEPCO, QESCO, and PESCO remain heavily loss-making. If they had achieved similar improvements, the national benefit would have been approximately Rs 300 billion, and the uniform consumer tariff could have been reduced by Rs 3 per unit.
