KARACHI: K-Electric (KE) has requested government approval to increase its electricity tariff by Rs10.69 per unit, bringing it to Rs44.69 per unit for the fiscal year 2023-24. This proposed adjustment aims to offset financial losses and improve working capital, which would require additional government subsidies for the private entity.
During a media briefing, KE spokesperson Ovais Munshi clarified that this proposed tariff adjustment applies to the company and will not affect the end-consumer tariff, which will remain consistent at Rs35.50 per unit nationwide, including for KE customers. The National Electric Power Regulatory Authority (NEPRA) will hold a public hearing on the petition on June 27, 2024.
Munshi explained that the government would subsidize the gap of approximately Rs9.19 per unit between the proposed tariff and the end-consumer price. He noted that NEPRA previously approved a power supply tariff of Rs52.22 per unit for the power distribution company serving tribal areas, while the Islamabad distribution company has a lower tariff of Rs30.88 per unit due to better bill payment rates and reduced line losses. The average base tariff for power utilities is Rs35.50 per unit, with most distribution companies’ tariffs below Rs40 per unit.
Addressing the challenges faced by KE in Karachi, Munshi highlighted the presence of many slum areas and lower average household incomes compared to Islamabad. These factors hinder KE’s efforts to improve monthly billing recovery, resulting in ongoing losses. Citing a World Bank study, Munshi pointed out the significant disparity in the number of slums and household incomes between Karachi, Islamabad, and Lahore. Karachi has over 900 slums compared to just 42 in Islamabad, and the average household income in Karachi is $184 per month, compared to $266 in Islamabad and $220 in Lahore.
Breaking down the proposed tariff of Rs44.69 per unit, Munshi detailed the allocations: Rs18.88 per unit for the energy purchase price, Rs12.54 per unit for the capacity purchase price, Rs3.84 per unit each for transmission and distribution charges, Rs0.42 per unit for operation and maintenance, Rs0.59 for retail margin, Rs2.88 per unit for recovery loss allowance, and Rs2.07 per unit to enhance working capital.
