IESCO Asks NEPRA for 54 Percent Tariff Rise Ahead of Privatisation

The company that supplies electricity to Islamabad and Rawalpindi has asked the national power regulator to raise its average tariff by 54 percent, to Rs43.54 a unit for calendar year 2027, as the government prepares to sell it to private investors. The Islamabad Electric Supply Company (IESCO) made the request at a National Electric Power Regulatory Authority (NEPRA) public hearing on October 15, where its chief executive, Chaudhry Khalid Mahmood, presented the petition.

IESCO's current average tariff is Rs28.20 a unit. The requested rate would add about Rs15.34 a unit, pushing the energy cost of a typical 200-unit monthly bill from Rs5,640 to Rs8,708 before taxes and other surcharges, according to the figures presented at the hearing. IESCO supplies Islamabad, Rawalpindi, Attock, Jhelum and Chakwal.

A Rs157.9 billion bill for past years, much of it tied to AJK

Beyond the 2027 rate itself, IESCO is separately seeking Rs157.864 billion in prior-year adjustments — costs the company says it has already incurred but not yet recovered through tariffs. A significant share relates to supplying relatively cheap electricity to Azad Jammu and Kashmir (AJK), which accounts for about 17 percent of IESCO's total electricity supply. At the hearing, intervener Amir Sheikh argued that the cost of AJK's subsidised supply should be covered by a direct government subsidy rather than passed on to IESCO's other consumers.

Clean up the books, then find a buyer

IESCO sits in the first phase of the government's privatisation programme, and the company says the Privatisation Commission told it to clean up its balance sheet before it is offered to private buyers. Ten parties submitted expressions of interest in IESCO last month. The tariff and past-cost claims now before NEPRA are, in effect, IESCO trying to clear its accumulated financial obligations before a sale goes ahead — the kind of balance-sheet reckoning that tends to show up, at least in part, on consumer bills.

NEPRA pushed back on parts of the request. Member (Tariff and Finance) Amina Ahmed questioned recovering the full Rs157.9 billion adjustment in one step and suggested spreading it over several phases instead. A NEPRA technical member also asked why IESCO's advanced metering rollout was focused on Islamabad and Rawalpindi rather than areas with higher electricity theft; the company's CEO replied that city consumers use more sophisticated methods to steal power.

Not the only distribution company under strain

The same hearing took up petitions from two other distribution companies. An MQM provincial lawmaker, Sabir Hussain Qaimkhani, objected to Hyderabad Electric Supply Company's (HESCO) tariff petition and urged NEPRA to reject its revised assumptions. Sukkur Electric Power Company (SEPCO) reported a bill recovery rate of just 36 percent in the last fiscal year, against roughly 95 percent for Punjab's distribution companies — a gap a NEPRA member said would make it difficult for SEPCO to attract a private buyer in its current state. We've covered the wider dispute over who absorbs distribution companies' unrecovered costs separately.

NEPRA, not IESCO, has the last word

NEPRA has not ruled on any of the three petitions. It will review IESCO's numbers before issuing its own determination, and the federal government then sets the tariff that actually appears on bills — a step that, in past adjustments, has sometimes landed below what a distribution company asked for. Pakistan's broader circular debt problem, which these unresolved utility costs feed into, remains the backdrop against which every such request is heard. For now, Islamabad and Rawalpindi households have a number to watch — Rs43.54 a unit — rather than a bill that has actually changed.

Build Better Pakistan's Energy Desk is tracking NEPRA's review of IESCO's tariff petition ahead of the company's planned privatisation.