ISLAMABAD; The Islamabad Electric Supply Company (IESCO), a loss-making power distribution company included in the first phase of the government’s privatisation programme, has sought an increase of over 54 per cent in its consumer-end tariff to Rs43.54 per kilowatt-hour (kWh) from the existing Rs28.20 per kWh for calendar year 2027 (CY27), starting January, to clean up its balance sheet before being offered to the private sector.
The proposed tariff increase was disclosed by IESCO Chief Executive Officer (CEO) Engineer Chaudhry Khalid Mahmood during a public hearing conducted by the National Electric Power Regulatory Authority (NEPRA) on Thursday. Tariff petitions of Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO), prepared under the guidance of the Power Planning and Monitoring Company (PPMC), were also taken up for scrutiny.
IESCO’s management told the NEPRA Authority that the company had incurred losses amounting to billions of rupees during 2025-26 and required adjustments to improve its financial position ahead of privatisation.
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Sharing details of the proposal, IESCO’s Chief Financial Officer (CFO) informed the Authority that the Privatisation Commission, which is overseeing the company’s proposed sell-off, had directed that its balance sheet be cleaned up before it was offered to potential private-sector investors.
For this purpose, IESCO has sought a Prior Year Adjustment (PYA) of Rs157.864 billion, covering various outstanding adjustments, including costs associated with the supply of relatively cheap electricity to Azad Jammu and Kashmir (AJ&K).
According to the company, around 17 per cent of its electricity supply is linked to the AJ&K territory, adding to the financial implications reflected in its tariff petition.
The proposed methodology for clearing the company’s accumulated financial burden, however, drew questions from the regulator.
NEPRA Member (Tariff and Finance) Amina Ahmed expressed surprise at the proposal to address the adjustments in one go, observing that the exercise should have been undertaken in phases rather than imposing the entire burden through a single adjustment.
The hearing also examined IESCO’s operational performance, particularly the installation of Advanced Metering Infrastructure (AMI) meters in parts of Rawalpindi and Islamabad.
NEPRA Member (Technical) Engineer Maqsood Anwar Khan questioned the approach adopted by IESCO for installing the meters, arguing that the exercise should initially have been undertaken in areas where electricity theft was more prevalent.
Responding to the observation, CEO IESCO explained that the company had started the exercise in urban areas because consumers in cities were more sophisticated and familiar with different methods of electricity theft.
The issue of electricity supplied to AJ&K also came under discussion during the proceedings.
One of the interveners, Amir Sheikh, argued that the government could provide electricity to AJ&K at any price it considered appropriate, but the resulting financial burden should be met through a government subsidy rather than being directly passed on to electricity consumers through tariffs.
IESCO’s team also presented the company’s performance during the preceding period and sought approval of revised assumptions for CY27.
The hearing subsequently examined HESCO’s tariff petition, with its chief executive officer presenting a positive assessment of the company’s performance and seeking approval of revised assumptions for the next calendar year.
However, MQM MPA Sabir Hussain Qaimkhani challenged the statistics presented by HESCO’s management, arguing that the company’s reported performance did not reflect the situation on the ground.
He urged NEPRA not to approve the revised tariff and assumptions, citing the absence of independent directors on HESCO’s board.
The HESCO chief executive disagreed with the MPA’s position, maintaining that the company’s overall performance was linked to the constitution and functioning of its board.
SEPCO’s performance came under sharper criticism during the hearing, particularly over its recovery rate and transmission and distribution (T&D) losses.
A representative of SEPCO informed the Authority that the company’s recovery stood at only 36 per cent during 2025-26, highlighting the scale of its revenue collection challenges.
A NEPRA member representing Sindh expressed displeasure over the company’s performance and T&D losses, contrasting its recovery rate with those of Punjab-based distribution companies, where recovery was around 95 per cent.
The regulator also questioned the commercial viability of SEPCO in its present condition and the effectiveness of measures being taken to improve its performance ahead of any potential privatisation.
NEPRA Member (Technical) remarked that the company, in its current state, would struggle to attract a buyer, observing that although steps were being taken on paper, its actual position remained extremely weak.
The proceedings highlighted the divergent financial and operational challenges confronting the three distribution companies as the government moves ahead with plans to privatise selected power distribution entities.
While IESCO is seeking substantial prior-year adjustments to improve its financial position before privatisation, HESCO’s performance claims faced objections from a legislator, and SEPCO’s low recovery rate raised serious questions about its financial sustainability and attractiveness to prospective investors.
The proposed IESCO tariff increase and the requested assumptions for CY27 will now be subject to NEPRA’s scrutiny and determination.
Copyright Business Recorder, 2026