Islamabad Electric Supply Company (IESCO) has requested a 54% increase in its electricity tariff to Rs43.54 per unit from the existing Rs28.20 per unit for calendar year 2027, as the power distribution company seeks to strengthen its financial position before privatisation. The proposal was presented during a public hearing conducted by the National Electric Power Regulatory Authority (NEPRA) on October 15, where tariff petitions submitted by Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO) were also reviewed. The proposed increase and related financial adjustments remain subject to the regulator’s assessment and final determination.
IESCO has requested Rs157.864 billion in prior-year adjustments to address accumulated financial obligations and improve its balance sheet ahead of a potential sale to private investors. The company is included in the first phase of the government’s privatisation programme, and its management told the hearing that the Privatisation Commission had directed it to clear its balance sheet before the company is offered to investors. The requested amount represents a substantial financial adjustment, making the proposed recovery method a central issue in the regulatory proceedings. If approved, the adjustments could affect the electricity charges paid by consumers, depending on how the costs are allocated and recovered.
A significant portion of IESCO’s requested adjustments relates to the cost of supplying electricity to Azad Jammu and Kashmir (AJ&K), which accounts for approximately 17% of the company’s electricity supply. During the hearing, an intervener argued that the cost of subsidised electricity provided to AJ&K should be covered by the government rather than transferred to electricity consumers through higher tariffs. The issue highlights the broader question of how electricity subsidies and supply-related obligations should be funded, particularly when distribution companies are preparing their accounts for privatisation. The final treatment of these costs will depend on NEPRA’s review of the petition and the applicable financial arrangements.
NEPRA Member for Tariff and Finance Amina Ahmed questioned IESCO’s proposal to recover the entire Rs157.864 billion through a single prior-year adjustment. She suggested that the financial burden should have been addressed in phases rather than recovered at once. The regulator’s concern reflects the potential impact of a large one-time adjustment on consumers, particularly if it results in a sharp increase in electricity bills. While IESCO has argued that its financial position needs to be addressed before privatisation, the hearing raised questions about the timing and method of recovery. NEPRA’s decision will determine whether the requested amount is accepted in full, modified or recovered through a different approach.
The regulator also questioned IESCO’s installation of advanced metering infrastructure in Islamabad and Rawalpindi. During the proceedings, members suggested that priority should have been given to areas experiencing higher levels of electricity theft. Advanced metering can improve monitoring and billing, but the regulator’s questions indicate that investment priorities and their expected benefits are also under scrutiny. For a distribution company preparing for privatisation, reducing losses, improving collection and demonstrating effective use of capital are important elements of its financial and operational position. The hearing did not establish that the metering investment would be discontinued, but it raised concerns over whether resources had been directed towards the areas with the greatest need.
The tariff petitions of HESCO and SEPCO also faced scrutiny during the hearing. MQM Member of the Provincial Assembly Sabir Hussain Qaimkhani challenged HESCO’s reported performance and urged NEPRA not to approve the company’s revised tariff assumptions. SEPCO’s financial condition attracted further concern after its management disclosed a recovery rate of just 36% during fiscal year 2026, compared with approximately 95% for distribution companies operating in Punjab. NEPRA members questioned SEPCO’s high transmission and distribution losses and its ability to attract private investors under its current financial conditions. These concerns underline the operational and financial challenges facing distribution companies as the government pursues reforms in the power sector.
The hearing has brought attention to the competing priorities of improving distribution companies’ financial health, preparing them for private investment and limiting the burden on electricity consumers. IESCO’s request is intended to address accumulated liabilities before privatisation, but the proposed tariff increase and the recovery of prior-year costs require regulatory scrutiny. NEPRA will need to assess the company’s financial claims, the treatment of subsidised electricity supplied to AJ&K and the implications of recovering a large amount in one adjustment. Until the authority issues its determination, the requested tariff of Rs43.54 per unit and the Rs157.864 billion adjustment remain proposals rather than approved changes.
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