- NEPRA grants KE 12% USD ROE for the transmission segment
- The Ministry of Energy rejects the yields linked abroad as unjustified.
- Critics warn high dollar yields for electricity consumers in difficulty.
In a decision that sparked a counterpoup to the government and business sectors, the National Electric Power Regulatory Authority (NEPRA) sanctioned a return to equity labeled 14% for the K-Electric distribution segment.
This is equivalent to a substantial efficiency of 29.68% in local currency for financial year 2023-24, The news reported.
Similarly, the authority also granted KE a ROE based on USD of 12% for its transmission segment, which operates 24.46% in terms of PKR, for the financial year2023-24.
The Ministry of Energy (Energy Division) firmly opposed the performance linked to currencies, arguing that it was “unjustified” and poorly aligned with the yields offered to the public services managed by the State. “ROE for transmission and distribution companies should be aligned with authorized yields at the NTDC and the public sector distribution companies (DISCO),” the ministry said in written comments at NEPRA.
Despite these objections, the NEPRA granted K-electrical an average distribution rate of RS3.31 per unit, less than the company’s RS3.84, and a transmission system (UOSC) of RS1,348.66 / kW / month for FY2023-24 under its multi-year rate plan over seven years for 2024–30.
In addition to the ROA of 14% based on the dollar for distribution, the NEPRA has also approved a yield linked to 12% USD for KE transmission operations. Critics, including Amreli Steels and other industrial stakeholders, have warned that such high yields indexed on foreign currencies would impose excessive charges for consumers already in difficulty.
The NEPRA defended its decision by citing the private property of K-Electric, substantial investment needs and the lack of sovereign guarantees. However, he referred to a future examination: “The authority can revise the ROE based on the USD or convert it to PKR once other discos will be privatized,” noted the Nepra in his decision.
Meanwhile, K-Electric in a statement concerning the decisions said: “Although the determinations are complete and currently being examined in Ke, an initial assessment stresses that the NEPRA has allowed a lower equity (ROE) return than what K-electrical had requested according to the already authorized level. 12%. »»
He also indicated that another notable aspect of the decision is the treatment of loss allowances. As a starting point, NEPRA has approved a percentage of loss significantly lower than the distribution compared to the real loss suffered by K-Electric. This departs from the best established practices of the industry, where the real loss of the previous year is generally accepted as a starting reference, with targets and then reduced over time in accordance with authorized investments.