NEPRA stands firm, calls K-Electric tariff slash ‘collective wisdom’

The National Electric Power Regulatory Authority (NEPRA) on Wednesday strongly defended its recent decision to slash K-Electric’s multi-year tariff by Rs7.60 per unit, describing it as an outcome of “collective wisdom” and an independent judgment aimed at protecting consumers.

During a public hearing on monthly fuel charge adjustments, NEPRA Member (Law) Amina Ahmad reaffirmed the regulator’s stance amid questions from conveners and stakeholders. “Yes, this is the collective wisdom of NEPRA, as all members have signed the decision,” she said, adding that the authority’s verdict was unanimous and had “nothing to do with subsidies being given by the federal government.”

The regulator’s robust defense came days after the Power Division publicly endorsed NEPRA’s revised tariff for K-Electric, rejecting claims that it penalizes Karachi consumers. The ministry said the decision shields consumers from inefficiency-driven costs, ends dollar-based profit indexation, pegs profits to the rupee, and prevents taxpayers’ money from turning into private profit. It added that KE has lagged behind public utilities in recoveries, loss reduction, and service quality and must now justify unrecovered dues before passing costs on to consumers.

Reportedly, the cut in tariff will cost K-Electric losses of over Rs700 billion over seven years, approximately Rs100 billion a year. 

Fuel adjustment scrutiny

The hearing also examined a petition from the Central Power Purchasing Agency-Guarantee (CPPA-G) seeking a reduction of Rs0.3681 per kilowatt-hour (kWh) in September’s fuel cost adjustment. CPPA-G data showed total power generation at 12,592 gigawatt-hours (GWh), with hydropower contributing the largest share at 37.99 percent, followed by nuclear at 17.69 percent, RLNG at 14.41 percent, and local coal at 9.56 percent.

The reference fuel price was Rs7.6554 per kWh, while the actual cost came in lower at Rs7.28, prompting the proposed reduction.

Furnace oil questioned amid LNG disruption

Officials also faced tough questions over increased reliance on costly furnace oil. They attributed the shift to a blast in the Sui Northern Gas Pipelines Limited (SNGPL) network that slashed LNG supplies from 700 million cubic feet per day (mmcfd) to 400 mmcfd.

“The shortage forced the use of furnace oil to maintain grid stability,” one official said, noting demand peaked at 22,000 megawatts.

Hydropower remained the cheapest source at Rs0.1563 per kWh, while imported coal and RLNG cost Rs13.7379 and Rs21.1927 per kWh, respectively. Imported electricity from Iran, though limited, was the most expensive at Rs23.8903 per kWh.