K-Electric secures Nepra approval for 3,20MW clean power projects

• Nepra bars cost transfer to consumers in case of delays.
• Renewable projects align with IGCEP and PAP planning tools.
• KE directed to align with CTBCM market reforms.

ISLAMABAD: K-Electric has received regulatory approval to accelerate 370 MW of renewable energy projects, following the National Electric Power Regulatory Authority’s (Nepra) clearance of its bid evaluation reports for three major clean energy initiatives, The News reported. 

These include two solar photovoltaic plants in Balochistan and a hybrid project at Dhabeji, enabling the company to proceed with formal tariff filings under the national energy framework.

The approved portfolio features a 100 MW solar plant in Bela and a 50 MW facility in Winder, both awarded to Master Textile Mills Ltd. In addition, Nepra approved K-Electric’s 220 MW hybrid project at Dhabeji, which offers a flexible combination of solar, potential wind, or storage technologies, along with a 20% capacity margin to support grid reliability.

The projects align with the Indicative Generation Capacity Expansion Plan (IGCEP) and Power Acquisition Plan (PAP), Pakistan’s key planning instruments for power sector development. 

Nepra further directed that any delays, whether on the part of K-Electric or the project developers, must not result in additional financial burden on consumers, and this condition must be explicitly written into the project agreements.

Beyond renewables, the regulator reviewed KE’s transition roadmap to the Competitive Trading Bilateral Contract Market (CTBCM)—a sweeping reform to liberalise Pakistan’s electricity sector. 

While hurdles remain, including legacy power purchase agreements and the need for a revamped capacity invoicing mechanism, Nepra directed KE to align its operations with the central dispatch model and file a revised tariff petition reflecting these reforms.

Meanwhile, Nepra on Tuesday raised the average base tariff for K-Electric by Rs6.15 per unit — an 18.18% increase, setting it at Rs39.97 per unit for fiscal year 2023-24 under a newly approved Multi-Year Tariff regime stretching to FY2030. The hike backs a Rs400 billion investment plan while cushioning against under-recovery risks to maintain power supply across Karachi.

Notably, the authority had earlier approved generation, transmission and distribution tariffs for the FY2024 to FY2030 control period.

According to Nepra’s determination issued on Tuesday, the new tariff structure includes Rs31.96 per unit for power purchase excluding transmission charges, Rs2.86 per unit for transmission cost, Rs3.31 for distribution cost, Rs2.28 for supply margin, and a negative Rs0.44 per unit adjustment on account of prior year adjustments. 

The decision said that the adjustments are vital for sustaining KE's Rs400 billion ($1.42 billion) investment plan over the next seven years, duly approved by Nepra. It also mentioned that ICE has successfully halved its line losses post-privatisation and continues to address issues like illegal connections (kundas) that stem from unplanned urban sprawl. 

KE says its $700 million investment and reinvested profits have driven $4 billion in post-privatisation upgrades, aligning returns with dollar-based benchmarks used by IPPs and IHVDC.