NEPRA Revises K-Electric Tariff Framework Amidst Key Adjustments

Karachi: The National Electric Power Regulatory Authority (NEPRA) has announced significant revisions to K-Electric’s (KEL) multi-year tariff (MYT) framework for fiscal years 2024 to 2030, introducing critical changes to the company’s operational and financial parameters.

NEPRA has maintained K-Electric’s 14 percent return on equity (ROE), which is linked to the US dollar, citing the company’s foreign equity base and alignment with independent power producers. However, the regulatory authority introduced a minimum guaranteed ROE of 35 percent dispatch, to be applied on a Hybrid Take and Pay basis for the Bin Qasim Power Stations II and III, effective from November 2025.

The regulator has also made a decisive move by denying K-Electric’s proposal to extend tariff tenures to the full 30-year lifespan of their plants. In a bid to enhance system reliability and protect consumers, NEPRA has decided to discontinue tariffs for four older gas-based plants, as new grid connectivity makes them redundant. Tariffs for Bin Qasim Power Stations II and III, however, will be retained under the existing control periods.

NEPRA further rejected K-Electric’s request to recover costs from fuel take-or-pay contracts for RLNG supply. Once K-Electric’s current gas supply agreement expires in December 2025, the company will not be permitted to enter into new take-or-pay contracts, marking a significant shift in its operational framework.

These adjustments are expected to have a substantial impact on K-Electric’s future operations, shaping the company’s strategic decisions as it navigates the evolving energy sector landscape.