K-Electric seeks Rs47.1 billion subsidy for FY27, flags over Rs100 billion unpaid dues

K-Electric has sought Rs47.1 billion in Tariff Differential Subsidy (TDS) for FY2026-27 and requested immediate release of more than Rs100 billion in pending subsidy claims, Business Recorder reported, citing official sources.

In a communication dated February 19, 2026, the Power Division asked the utility to submit its subsidy requirements for the upcoming financial year under Clause 3 of the TDS agreement. KE subsequently shared its estimates for both the current and next fiscal years.

For FY2026, KE has estimated total TDS claims of Rs80.1 billion. This includes Rs45 billion for July 2025 to January 2026 and an estimated Rs35.1 billion for February to June 2026. 

According to the company, no subsidy has been released so far during FY2026, making the entire amount payable. The federal budget had allocated Rs125 billion for KE for FY2026.

In addition, KE reported an opening balance of Rs101.4 billion in outstanding TDS receivables. Out of Rs174 billion allocated in the FY2025 budget, only Rs3.1 billion was released. The company has requested an additional Rs56.5 billion to clear arrears under the FY2025 allocation, over and above the FY2026 allocation.

For FY2027, KE has projected a subsidy requirement of Rs47.1 billion based on the National Electric Power Regulatory Authority’s decision dated May 27, 2025, notified on July 18, 2025, along with the applicable adjustment mechanism.

The utility has also reiterated its request that TDS payments related to the period after December 31, 2023, be released directly to the company in line with the existing agreement.

KE stated that timely release and full allocation of TDS are necessary to support operations, including payments to fuel suppliers, independent power producers and the Central Power Purchasing Agency-Guaranteed (CPPA-G), as well as planned investments.

The subsidy claims for FY2024 are based on Nepra’s determination of May 27, 2025, while those for FY2025 and FY2026 reflect KE’s annual adjustment and indexation requests. Outstanding claims also include estimated annual adjustments, quarterly variations under the Multi-Year Tariff (MYT) framework for FY2024–FY2030, write-off claims approved by the regulator and end-of-term adjustments under review.

The forecast for FY2027 is based on projected electricity sales, fuel prices and generation mix. The estimates assume no increase in consumer tariffs up to June 2026 compared to rates notified on February 12, 2026, continuation of existing subsidies and adjustments, and a uniform positive Quarterly Tariff Adjustment of Rs0.40 per kWh from March to June 2026. Any change in these assumptions would alter the subsidy requirement.

The estimated mark-up and Fuel Cost Adjustment subsidy have not been included. Under the TDS agreement, unpaid claims may attract mark-up if not processed within the prescribed timeframe.