The National Electric Power Regulatory Authority (NEPRA) has authorized a Rs 2.818 billion investment plan for the Hazara Electric Supply Company (HAZECO) for the 2025-26 fiscal year. This approval comes after the regulator significantly trimmed HAZECO’s initial request, which had peaked at Rs 5.363 billion before being revised down to Rs 4.268 billion.
Why the Budget Was Cut
Following a comprehensive audit of HAZECO’s network and operational data, NEPRA concluded that the company’s original proposals did not align with actual field conditions. Key reasons for the downward revision include:
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Underutilization: Many of the company’s grid stations and transmission assets were found to be operating well below their capacity.
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Lack of Planning: The regulator identified significant gaps in HAZECO’s cost-benefit analysis and technical documentation, noting that the plan failed to justify the required spending.
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Consumer Protection: NEPRA emphasized that approving the higher requested amounts would have placed an unnecessary financial burden on consumers through increased electricity tariffs.
Regulatory Requirements
NEPRA has directed HAZECO to overhaul its approach to project management. To ensure future investment efficiency, the regulator has demanded:
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Better Demand Forecasting: More accurate projections for regional energy needs.
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Regulatory Compliance: Strict adherence to the Grid Code, Distribution Code, and national performance standards.
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Optimized Engineering: A greater focus on maximizing existing infrastructure rather than relying solely on new capital expenditure.
Financial Context
HAZECO had aimed to fund its proposed budget through a combination of depreciation and the Return on Rate Base (RoRB) the profit mechanism allowed by regulators for utility companies. While HAZECO sought to utilize Rs 3.811 billion through these channels, NEPRA’s final approval of Rs 2.818 billion ensures that company spending remains within a range that balances system upgrades with the necessity of keeping costs affordable for the public.
The approval remains subject to specific performance-based conditions, ensuring that HAZECO remains accountable for every rupee spent during the fiscal year.
