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The National Electric Power Regulatory Authority (NEPRA) has revised down the previously approved multi-year tariff (MYT) for K-Electric (KEL), Pakistan’s only privatized and listed power utility, significantly impacting its future profitability.
The revision followed a review motion filed by the Ministry of Energy (MoE) and other stakeholders, citing recent negotiations with independent power producers and comparable business models within Pakistan. The move reverses gains made after NEPRA’s earlier approval of K-Electric’s generation, transmission, and distribution tariffs.
Analysts now expect K-Electric to report losses of Rs2.6–2.7 per share in FY24 and Rs2.0–2.2 per share in FY25, reflecting major hits across its business segments.
For the distribution business, the regulator replaced the 14% USD-based return on equity (ROE) with a fixed 14.47% rupee-based ROE for FY24–30, removing dollar adjustments. This change could slash profits by Rs3–4 billion annually. Similarly, the transmission business will face the same hit after its ROE was cut from 21.4% to 15% in rupee terms.
Meanwhile, the generation business retains a 14% USD ROE, but its tariff structure has shifted to a hybrid “take-and-pay” model—guaranteeing capacity payments for only 35% of total generation.
NEPRA also tightened recovery and loss benchmarks. The allowable recovery loss has been reduced from 6.7% to 3.5%, potentially costing the company Rs15–16 billion annually. Additionally, the benchmark for transmission and distribution losses has been lowered from 14.58% to 9.55%, posing another Rs25 billion impact for FY24.
K-Electric is reportedly reviewing the decision and may explore legal or regulatory remedies.
