Nepra Grants K-Electric 14% Dollar-Indexed ROE in Majority Vote

The National Electric Power Regulatory Authority (Nepra) has approved a 14% dollar-indexed return on equity (ROE) for all of K-Electric’s generation plants in a multi-year tariff extending until 2030. Despite facing opposition from some members, Nepra’s decision allows for a ‘take-or-pay’ basis for KE power plants operating on various fuels, including high-speed diesel and RLNG.

Nepra’s determination also includes a fuel cost component for different types of power plants, ranging from Rs6.8385 to Rs50.7461 per unit. The majority vote approved a 14% dollar-based ROE for KE, with a debt-to-equity ratio of 70:30 for all plants. However, one member tariff, Mathar Niaz Rana, opposed the decision, citing concerns about excessive returns for aging power plants and high O&M costs.

Despite the opposition, K-Electric welcomed the decision, emphasizing that electricity rates for consumers will remain unaffected. The company sees Nepra’s approval as a step towards achieving their investment plan for 2030, focusing on reducing losses, increasing customer base, and enhancing infrastructure.

Overall, Nepra’s decision on K-Electric’s tariff structure has sparked debate but sets a precedent for future IPP negotiations in the power sector.

Source: Dawn (October 23th, 2024)

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