Could 24, 2025 (MLN): The Nationwide Electrical Energy Regulatory Authority (NEPRA) has authorised Ok-Electrical’s Multi-Yr Tariff (MYT) for Transmission and Distribution Regime for the interval from FY 2023-24 to FY 2029-30.

This choice adopted in depth evaluations, public hearings, and enter from varied stakeholders.

Whereas the willpower doesn’t have an effect on consumer-end tariffs, which stay below the Federal Authorities’s uniform tariff coverage, it establishes the monetary and operational framework below which Ok-Electrical will perform over the subsequent seven years.

In its petition, Ok-Electrical had requested a seven-year tariff horizon, arguing {that a} longer interval was obligatory to draw international funding and supply stability for infrastructure growth.

NEPRA authorised this request, aligning it with the corporate’s funding plan and making certain regulatory predictability. The authority additionally allowed a debt-to-equity ratio of 70:30, sustaining consistency with earlier tariff determinations.

A return on fairness (RoE) of 14% USD-based was authorised, topic to quarterly trade fee changes.

Moreover, the price of debt was pegged to 3-month KIBOR plus a 2% unfold for native loans and SOFR plus a 4.5% unfold for international financing.

For operational and upkeep bills, NEPRA authorised Rs. 26,016 billion for FY 2023-24. The effectivity issue (X-Issue) was utilized at 30% of the CPI improve beginning in FY 2025-26, compelling Ok-Electrical to optimise its value construction.

Whereas routine infrastructure upkeep was allowed individually, NEPRA rejected Ok-Electrical’s proposal to regulate loss targets primarily based on shifting client gross sales combine.

As a substitute, mounted annual loss discount targets will apply all through the tariff interval. Depreciation will proceed on a historic value foundation, making certain the long-term sustainability of asset financing.

Working capital prices had been assessed with consideration for precise secured debt combine, incorporating receipts from deposit works.

NEPRA additionally decided that amortisation of deferred income can be included in different earnings, offsetting depreciation prices.

The authority allowed company tax, the Staff Welfare Fund, and the Staff’ Revenue Participation Fund to be handled as pass-through prices.

Moreover, wheeling costs had been authorised throughout the broader provide enterprise tariff framework.

To make sure regulatory oversight, Ok-Electrical should submit annual adjustment petitions by February every year to account for fluctuations in trade charges, rates of interest, CPI, and funding prices.

Whereas NEPRA authorised varied parts of Ok-Electrical’s petition, a number of requests had been denied.

The utility had sought the next RoE of 16.67% USD-based, however NEPRA decreased this determine to 14%. A request to regulate distribution loss targets primarily based on shifting client combine was rejected, as NEPRA opted to impose mounted annual discount targets as an alternative.

NEPRA additionally declined Ok-Electrical’s proposal to incorporate Curiosity Throughout Development (IDC) within the funding plan, arguing that it could represent double counting.

The authority dominated in opposition to additional indexation for O&M prices linked to progress in sent-outs, stating that such an adjustment was pointless past the X-Issue deduction.

Ok-Electrical’s request to proceed RoRB and depreciation post-MYT expiry in FY 2029-30 was denied.

NEPRA additionally refused to permit computerized inclusion of unrecovered prices from the MYT 2017-23. As a substitute, any authorised prices can be addressed individually in future determinations.

Moreover, NEPRA dominated that separate premiums, together with insurance coverage and Sino Certain prices, should be managed inside Ok-Electrical’s allowed debt unfold.

With this willpower, regulatory readability has been established, enabling Ok-Electrical to proceed with investments aimed toward bettering service high quality, enhancing grid reliability, and optimising operational effectivity throughout Karachi.

The authorised framework will assist entice international funding and guarantee monetary predictability.

Nonetheless, effectivity targets and value changes will push Ok-Electrical to manage bills extra successfully.

Whereas consumer-end tariffs stay below authorities jurisdiction, NEPRA’s choice ensures that Ok-Electrical operates below a structured, disciplined monetary mannequin that balances investor pursuits with value reductions for shoppers.

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Posted on: 2025-05-24T15:06:39+05:00