ISLAMABAD: K-Electric, the primary electricity provider in Karachi, has requested a substantial increase in the basic electricity tariff, potentially leading to higher electricity bills for consumers.
The company has formally demanded an increase of Rs 10.69 per unit in the basic electricity tariff.
Currently, the average basic tariff for K-Electric stands at Rs 34 per unit. However, K-Electric has proposed raising this rate to Rs 44.69 per unit. This proposed increase is part of a broader request to adjust the base tariff under a seven-year multi-year tariff (MYT) plan.
In addition to the base tariff hike, K-Electric (KE) has outlined specific charges that it seeks to implement. The company (KE) has requested to set the transmission charges at Rs 3.48 per unit, distribution charges at Rs 3.84 per unit, operation and maintenance charges at Rs 0.42 per unit, and a retail margin at Rs 0.59 per unit. Furthermore, K-Electric has proposed fixing the working capital component at Rs 2.70 per unit in the electricity tariff.
The request for this increase is driven by the rising costs of electricity generation, distribution, and maintenance.
K-Electric argues that the current tariff structure does not adequately cover the escalating costs associated with providing reliable electricity to Karachi’s growing population and industrial base. The proposed tariff adjustments are aimed at ensuring the sustainability and efficiency of the electricity supply chain.
In response to K-Electric’s proposal, the National Electric Power Regulatory Authority (NEPRA) has invited comments from stakeholders within seven days.
NEPRA’s call for feedback indicates a transparent review process, allowing various stakeholders, including consumers, industry representatives, and energy experts, to voice their opinions and concerns regarding the proposed tariff hike.
K-Electric, in a statement, reiterated that the company’s Supply Tariff petition to NEPRA will not impact customer bills. The request has been submitted under KE’s Multi-Year Tariff for the period from FY 2023-24 to FY 2029-30. This petition outlines the various cost components necessary to ensure the reliable and efficient supply of electricity to a growing number of customers.
The price of electricity charged to customers in their monthly bills remains governed by the uniform tariff policy set by the government, which ensures the same charges for each customer category across the country.
As a vertically integrated utility responsible for managing generation, transmission, and distribution of electricity, these costs comprise almost 90 percent of KE’s request. These are crucial to ensure a steady and reliable supply of electricity to homes and businesses, with minimal disruption and efficient service. The remaining components have been requested to further enhance the utility’s ability to maintain cashflows and account for operational risks due to changes in the macroeconomic situation, such as increases in KIBOR rates, while also fostering a culture of regular bill payments.
Distribution companies across Pakistan undergo a similar process under their Multi-Year Tariffs. The last determinations announced by NEPRA in this regard were in March 2024.
K-Electric’s Multi-Year Tariff petition is currently under deliberation by NEPRA. The company remains committed to driving efficiency and improvement in its business through a combination of innovative technologies and targeted investments.
