ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday reserved its decision on K-Electric’s request to write off claims of total unrecoverable amount of Rs 76.034 billion in receivables spanning seven years (2017–23). Of this amount, Rs 67.902 billion pertains to the period prior to 2022, while Rs 8.131 billion constitutes additional write-off claims for 2023.
The Nepra panel conducting the hearing included Chairman Waseem Mukhtar, Member (Technical) Rafique Ahmad Shaikh, Member (Law) Amina Ahmed, and Member (KP) Maqsood Anwar Khan. Member (Tariff) Mathar Niaz Rana did not attend the hearing and according to one intervener, he has resigned.
K-Electric (KE) was represented by its CEO Syed Moonis Abdullah Alvi (via Zoom), CFO Aamir Ghaziani, Chief Distribution Officer Sadia Dada, and company auditors.
KE board set to approve additional write-off claims
During the proceedings, former Prime Minister Shahid Khaqan Abbasi and several other commentators spoke in favor of KE’s write-off claims, terming them legitimate. However, the claims were opposed by others, including Arif Bilwani, Kamran Shahid of Jamaat-e-Islami, Tanveer Barry of KCCI, Rehan Jawed from KATI and Wajid Chattha.
“Some people are downright obnoxious. The choice of words is terrible. They go on and on about irrelevant things and when stopped, they express anger. There should be a separate KE bashing day because there’s clearly public frustration. A dedicated session would allow people to express their anger while keeping these discussions relevant,” Amina Ahmed remarked.
Addressing concerns over inflated electricity bills presented by some interveners, Member (Technical) Rafique Ahmad Shaikh directed Nepra officials to investigate these claims within two weeks, so they can be addressed in KE’s next Fuel Charges Adjustment (FCA) hearing.
In response to a question, KE’s CFO Aamir Ghaziani clarified that the company has no share in the country’s Rs 2.5 trillion circular debt. He added that recovery of write-off claims was accounted for in the previous tariff period, and a new recovery mechanism will be outlined in the upcoming tariff, which is yet to be notified by Nepra. Chairman Nepra instructed KE to submit an action plan regarding recovery of defaulted amounts.
Wajid Chattha, in his comments asked Nepra to phase out uniform tariff gradually as there are islands of every kind due to which good customers are exploited. Another commentator said that legitimate claims of the power utility company be allowed so that privatisation of Discos is encouraged.
KE’s team stated that since privatization, the utility has reduced losses from 38% to 15.3% through substantial investments and reforms. KE’s recovery rate also improved to 97% in 2023. “Whether performance is good or bad, it is absorbed by the company and not passed on to consumers. We have achieved Nepra’s targets,” said CFO Ghaziani.
Muhammad Yousaf, Nepra’s Case Officer, explained that Rs 24 billion of the write-off claims relate to 2017, while Rs 51 billion are for the post-2017 period. He added that Nepra will assess how much of the total Rs 76 billion can be approved.
According to KE, additional claims between FY17 and FY23 are related to unrecoverable dues against chronic defaulters filed by K-Electric. KE is allowed to claim these costs in the Multi-Year Tariff awarded to the utility, which is independent of the rates of electricity charged to customers in monthly bills under the uniform tariff policy.
The incremental amount of Rs 8.1 billion discussed in the hearing had accumulated over a 7-year period and are now being requested as they have met the eligibility criteria set by Nepra since the hearing in December.
The approval of these claims is critical to the company’s continued financial sustainability. These amounts have been unrecoverable despite KE’s best efforts against defaulters including multiple disconnections, engagement with specialized recovery agencies, and area specific initiatives etc. The submissions to Nepra have also undergone strict internal scrutiny as well as external audits by well-accredited and renowned audit firms as required by the Nepra Authority, “said KE.
K-Electric spokesperson stated, “as a private utility, KE has no contribution to circular debt, a fact that has been recognized by renowned global institutions. Allowing legitimate claims will strengthen KE’s cash flows, enabling KE to accelerate planned infrastructure upgrades and deliver a more reliable power supply for its customers.”
KE’s CEO Moonis Alvi defended the legitimacy of the claims, emphasizing that the audit was conducted by A. F. Ferguson & Co. (a member firm of PricewaterhouseCoopers network), a globally recognized firm known for its independence and adherence to international standards. A partner from A.F. Ferguson & Co, present during the hearing confirmed the statement made by CEO K-Electric stating that the audit process was strict and transparent, based on international practices.
Former Prime Minister Shahid Khaqan Abbasi, speaking in his capacity as the former head of the taskforce of Energy, supported the write-off request. He argued that due to Karachi’s unique socio-economic dynamics, achieving 100% recovery is unrealistic. Abbasi highlighted that such financial adjustments are critical for KE’s sustainability and that Nepra’s decision would significantly influence investor sentiment, especially as the government considers privatizing other distribution companies (DISCOs) in the country.
Nepra officials clarified that the write-off claims originate from determinations made by the authority itself. “It is KE’s right to file for such claims, and if found prudent, the Authority will decide accordingly,” a Nepra representative stated during the hearing.
One stakeholder addressed a common misconception by pointing out that other distribution companies (DISCOs) also struggle with recovery losses, but their burden is absorbed into the circular debt and eventually passed on to the consumers through Power Holding Limited (PHL) surcharge.
Various stakeholders urged NEPRA to expedite its decision on the claims to bolster investor confidence and support the broader privatization agenda.
Copyright Business Recorder, 2025
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