Power Division, K-Electric Clash Over Tariff Differential Subsidy Payment Basis

A dispute has emerged between K-Electric and the Power Division over the payment of Tariff Differential Subsidy (TDS), with the utility demanding payments under original tariff determinations, while the government insists on using NEPRA’s revised tariffs, citing regulatory authority.
According to a report by officials, K-Electric has linked its position to interim stay orders issued by the Sindh High Court (SHC), arguing that revised tariff determinations are currently under judicial review and cannot be enforced. The utility maintains that processing TDS under revised tariffs could amount to contempt of court.

In formal correspondence with the Power Division, K-Electric said its legal counsel believes that all provisional TDS claims must continue to be processed under the original tariff framework until the SHC delivers a final verdict. The Power Division, however, has rejected K-Electric’s interpretation, reiterating that subsidy payments will be made strictly in line with revised tariff determinations approved by NEPRA. Officials argue that revised tariffs are legally valid unless explicitly suspended and form the basis for current subsidy calculations.

K-Electric has also pointed out that Habib Bank Limited, acting as the agent bank under the Master Collection Agreement, is bound by SHC interim orders and cannot process payments linked to revised tariffs. The utility cited Clause 2.1 of the TDS Agreement, which allows provisional claims to be filed under the preceding tariff in case of restraining court orders.

Additionally, the company argued that under Clause 2.6, only K-Electric has the authority to prepare TDS balance reports, and the Ministry of Energy cannot revise these reports based on tariffs that are sub judice.

The standoff adds to broader challenges in Pakistan’s power sector, already under strain from subsidy disputes, litigation, and rising fiscal pressures.