Islamabad, October 22, 2024: The National Electric Power Regulatory Authority (NEPRA) has approved K-Electric’s (KE) generation tariff for the period post-June 30, 2023. This decision includes a dissenting opinion from the Member (Finance and Tariff). The approved tariff control period will last for seven years or the remaining useful life of KE’s plants, whichever is shorter, except for BQPS-III, which is set for 11 years.
The ruling will not affect consumer electricity rates, as they are governed by Pakistan’s uniform tariff policy. KE initially submitted its tariff petition in December 2022, meaning the decision has come after a 22-month delay.
NEPRA set different tariffs for KE’s power plants, including Rs 38.08 per unit for BQPS-I and Rs 36.76 per unit for BQPS-II. Notably, the authority allowed KE a 14% dollarized Return on Equity (ROE), rejecting its request for 15%.
KE had also requested a tariff control period equal to the remaining life of its plants, but NEPRA limited this to seven years for most plants. The ruling mandates that dispatches follow the economic merit order, and capacity payments will only be made based on unit availability.
Fuel arrangements remain KE’s responsibility, and the reference price for RLNG was set at Rs 3,717/MMBtu, except for BQPS-III, which has a lower rate of Rs 3,262/MMBtu.
Additionally, operating and maintenance (O&M) components of the tariff will be adjusted quarterly based on local and U.S. inflation indexes, as well as the exchange rate. The reference exchange rate for U.S. dollar parity was set at Rs 287.10/USD, with interest and loan costs subject to quarterly revisions.
This decision lays out a clear regulatory framework for KE’s operations and financing but underscores that future tariffs beyond the control period will require further approval from NEPRA.
