K-Electric (KE) has requested government approval to increase its power tariff by Rs10.69/unit, targeting Rs44.69/unit for fiscal year 2023-24. This adjustment aims to mitigate losses and improve working capital, necessitating more government subsidies for the privatized entity.
At a briefing, K-Electric’s spokesperson, Ovais Munshi, stated that the requested adjustment pertains only to company costs and will not impact end-consumer tariffs, which remain at Rs35.50/unit across the board. NEPRA will hold a public hearing on June 27, 2024.
Munshi mentioned that the government would subsidize the Rs9.19/unit difference between the new price and the consumer tariff. Previously, NEPRA set tribal area tariffs at Rs52.22/unit and Islamabad’s at Rs30.88/unit, reflecting better payment compliance and fewer losses. The average base tariff is Rs35.50/unit.
Munshi discussed KE’s challenges in Karachi, noting the numerous slums and lower incomes compared to Islamabad. These factors hinder KE’s billing efficiency and contribute to ongoing losses. A World Bank study shows vast differences in slum prevalence and incomes among Karachi, Islamabad, and Lahore, with over 900 slums in Karachi alone.
Munshi broke down the proposed Rs44.69 tariff, detailing allocations for energy and capacity purchase prices, transmission, and distribution charges, as well as funds for operations, maintenance, retail margins, loss recovery, and working capital enhancement.
