K-Electric Limited on Monday announced that the National Electric Power Regulatory Authority (NEPRA) has approved a Multi-Year Tariff (MYT) for its Transmission and Distribution Network segments for the fiscal years 2024 to 2030.
According to a statement submitted to the Pakistan Stock Exchange, the KE said it had applied for the MYT approval on December 27, 2023, under NEPRA’s 1998 Tariff Standards and Procedure Rules. The company is in the process of evaluating and reviewing NEPRA’s decision in detail and will exercise available remedies, if required, in accordance with the statutory provisions.
K-Electric further stated that the MYT for its Supply segment, along with a motion to review the approved investment plan, remains under NEPRA’s consideration. The outcome is considered crucial for the preparation of its financial statements for the period after June 30, 2023.
Following the announcement, K-Electric’s share price surged by 21.19% to Rs 5.72 as of 11:04 AM on Monday. The company has a market capitalization of approximately Rs 158 billion, with a total of 27.6 billion outstanding shares. Of these, 10%—or 2.76 billion shares—are part of the free float available to the public.
According to a note by Arif Habib Limited (AHL), NEPRA has approved a seven-year tariff control period to enable long-term investment planning. For FY2024, the average distribution tariff has been set at Rs 3.31/kWh, while the Use of System Charge (UoSC) has been determined at Rs 1,348.66/kW/month. The return on equity for the distribution segment has been set at 14% in USD terms, translating to 29.68% in PKR.
NEPRA has maintained a 70:30 debt-to-equity structure and allowed KE to pass through the cost of local debt at 3M KIBOR + 2% and foreign debt at 3M LIBOR or SOFR + 4.5% spread. KE’s regulatory asset base (RAB) for FY2024 has been approved at Rs 83.1 billion, comprising Rs 58.1 billion in debt and Rs 24.9 billion in equity.
The total revenue requirement for FY2024 has been calculated at Rs 50.28 billion. NEPRA has allowed KE to share O&M savings equally with consumers and to adjust distribution losses based on actual performance, provided these do not exceed 13.8%. However, the authority declined to adjust the distribution loss target due to changes in voltage-wise sales.
AHL notes that the average cost of debt for FY2024 has been set at 24.46%, and NEPRA will apply this while calculating the total return on rate base cost, which amounts to Rs 14.2 billion for the year. The final profitability of KE will depend on how effectively it manages technical losses, recoveries, and operational controls within this framework.
According to the NEPRA decision, most KE plants will follow a 7-year tariff control period, except for BQPS-III, which will operate under an 11-year control period.
The tariff will follow a “Take or Pay” model, allowing K-Electric to recover fuel handling costs even when plant dispatch is low. A savings-sharing model has been introduced, though only partial savings from BQPS-I will be shared with consumers. NEPRA also approved K-Electric’s request to treat foreign loan interest as a pass-through cost.
