Consumers have called for an audit of power distribution companies (DISCOs), following the latter's request to the regulator to approve the collection of Rs455 billion through an increase in electricity rates.
The regulator — the National Electric Power Regulatory Authority (Nepra) — conducted a public hearing on Friday to consider the interim tariff applications of eight DISCOs. They have asked for approval of a total revenue of Rs455 billion for the next financial year, to be recovered from electricity consumers.
"Before giving the go-ahead to the interim tariff increase, the regulator should conduct an audit of these companies," the interveners said during the hearing.
Tanveer Bari, a representative of the Karachi Chamber of Commerce and Industry (KCCI), stressed that the companies should present their investment plans. He noted that DISCOs were incurring higher losses compared to the targets set by Nepra, adding that the government was going to impose a surcharge for five years to reduce circular debt.
The petitions, under the multiyear tariff (MYT) regime covering the period from financial year 2025-26 to 2029-30, have been filed by the Gujranwala Electric Power Company (Gepco), Multan Electric Power Company (Mepco), Quetta Electric Supply Company (Qesco), Sukkur Electric Power Company (Sepco), Hyderabad Electric Supply Company (Hesco), Peshawar Electric Supply Company (Pesco), Tribal Areas Electric Supply Company (Tesco) and Hazara Electric Supply Company (Hazeco).
The revenue requirements of DISCOs show a significant financial burden in the upcoming fiscal year, which may be passed on to consumers. Mepco has cited the highest interim revenue requirement of Rs139.1 billion, followed by Pesco at Rs81.4 billion, Gepco Rs67.8 billion, Sepco Rs58 billion, Qesco Rs50.1 billion, Hesco Rs39.4 billion, Hazeco Rs12.3 billion and Tesco Rs7.3 billion.
Mepco has also made a higher demand on account of operation and maintenance (O&M) cost at Rs63.1 billion, largely driven by staff pay and allowances of Rs22.3 billion, post-retirement benefits of Rs29 billion and repair and maintenance expenses of Rs7.8 billion.
Gepco has estimated O&M cost at Rs35.3 billion, including Rs16.6 billion for pay and allowances and Rs13.8 billion for retirement benefits. Pesco has put its O&M cost at Rs37 billion, with Rs32.7 billion for salaries.
Other companies have also quoted sizeable O&M allocations. Hesco has mentioned Rs25.1 billion, Sepco Rs22.2 billion, Qesco Rs17 billion, Tesco Rs3.8 billion and Hazeco Rs7.8 billion.
Depreciation and the return on rate base (RORB) form another significant part of the cost buildup. Mepco has again topped the list with Rs8.9 billion worth of depreciation and Rs16.3 billion in RORB. Gepco follows with Rs4.8 billion in depreciation and Rs8.8 billion in RORB.
Pesco has sought Rs5.6 billion and Rs12.3 billion under the same heads while Hesco has demanded Rs3.2 billion in depreciation and Rs6.8 billion in RORB. Qesco's RORB is estimated at Rs15.7 billion alongside Rs297 million for depreciation.
Some DISCOs have sought adjustments for prior years as well, which results in an increase in their revenue requirements. Mepco has claimed Rs59.5 billion, Pesco Rs29.3 billion, Gepco Rs24.4 billion and Sepco Rs25.6 billion. Qesco and Hesco have requested Rs16.3 billion and Rs5.8 billion, respectively, while Tesco and Hazeco have not included prior year adjustments.
Tesco and Sepco have also factored in bad debt provisions, with Rs1.6 billion and Rs5.6 billion, respectively. Sepco has estimated Rs1.6 billion in finance costs.
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