K-Electric Seeks Rs47.1bn TDS for FY2027

K-Electric has formally sought Rs47.1 billion in Tariff Differential Subsidy (TDS) for FY2026–27 and has additionally pressed for the immediate disbursement of over Rs100 billion in outstanding subsidy receivables, as reported by Business Recorder citing official sources.

Through correspondence dated February 19, 2026, the Power Division directed the utility to furnish its projected subsidy requirements for the forthcoming fiscal year pursuant to Clause 3 of the governing TDS Agreement. In response, KE submitted consolidated estimates covering both the ongoing and the next financial year.

For FY2026, the company has projected aggregate TDS claims of Rs80.1 billion. This figure comprises Rs45 billion attributable to the period July 2025 through January 2026, alongside a further Rs35.1 billion estimated for February to June 2026. KE has stated that no subsidy payments have been received during FY2026 to date, rendering the full claimed amount outstanding. Notably, Rs125 billion had been earmarked in the federal budget for KE for FY2026.

The utility has also disclosed an opening receivable balance of Rs101.4 billion in unpaid TDS claims. Against the FY2025 budgetary allocation of Rs174 billion, only Rs3.1 billion was released. KE has therefore requested an additional Rs56.5 billion to settle residual liabilities under the FY2025 allocation, separate from the sums budgeted for FY2026.

Looking ahead to FY2027, KE has forecast a subsidy requirement of Rs47.1 billion. This projection is grounded in the determination issued on May 27, 2025 by the National Electric Power Regulatory Authority (NEPRA), subsequently notified on July 18, 2025, together with the applicable adjustment mechanisms embedded in the regulatory framework.

KE has reiterated that TDS disbursements relating to periods subsequent to December 31, 2023 should be made directly to the company in accordance with the operative contractual arrangement.

The company has emphasized that the timely and complete release of TDS funds is operationally critical. These payments underpin obligations to fuel suppliers, independent power producers, and the Central Power Purchasing Agency-Guaranteed (CPPA-G), in addition to supporting planned capital investments and grid sustainability measures.

Subsidy claims for FY2024 are anchored in NEPRA’s May 27, 2025 determination. Claims for FY2025 and FY2026 incorporate annual indexation and adjustment requests. Outstanding receivables further encompass estimated annual true-ups, quarterly adjustments under the Multi-Year Tariff (MYT) framework spanning FY2024–FY2030, regulator-approved write-offs, and end-of-term reconciliations currently under review.

The FY2027 projections are predicated on anticipated electricity sales volumes, fuel cost assumptions, and projected generation mix. The financial modelling assumes no upward revision in consumer-end tariffs through June 2026 beyond the rates notified on February 12, 2026, the continuation of prevailing subsidy structures and adjustment mechanisms, and the imposition of a uniform positive Quarterly Tariff Adjustment of Rs0.40 per kWh from March through June 2026. Any deviation from these underlying assumptions would materially affect the projected subsidy requirement.

It is further clarified that estimated mark-up and Fuel Cost Adjustment (FCA) subsidy components have been excluded from the projections. Under the TDS Agreement, delayed settlement of validated claims may trigger mark-up liabilities if not processed within the stipulated contractual timelines.