ISLAMABAD: K-Electric (KE) has reportedly sought Rs 47.1 billion in Tariff Differential Subsidy (TDS) for the financial year 2026-27 and requested the release of pending TDS claims exceeding Rs 100 billion, well-informed sources told Business Recorder . In a communication of February 19, 2026, the Power Division asked the utility — which is currently finalising its strategy to reduce electricity costs under its newly appointed CEO — to submit its TDS estimates for FY2026-27. Under Clause 3 of the TDS agreement, KE is required to provide its subsidy budget requirement for the forthcoming financial year. READ ALSO: Tariff Differential Subsidy: KE slams Power Div’s ‘violation’ of interim court orders According to KE, its TDS claims position as of June 30, 2026, includes: (i) Rs 45 billion for the period July 2025 to January 2026; and (ii) an estimated Rs 35.1 billion for February 2026 to June 2026. This brings the total estimated subsidy requirement for FY2026 to Rs 80.1 billion. However, no subsidy has been released during FY2026 so far, making the entire Rs 80.1 billion payable. The total budget allocated for KE in FY2026 stood at Rs 125 billion. In addition, an opening balance of outstanding TDS receivables amounting to Rs 101.4 billion remains unpaid. Of the Rs 174 billion allocated in the FY2025 budget, only Rs 3.1 billion was released. KE has; therefore, requested the Power Division to allocate an additional Rs 56.5 billion to clear arrears under the FY2025 budget, over and above the Rs 125 billion already allocated for FY2026. The utility further stated that its TDS forecast for FY2027, based on the decision of National Electric Power Regulatory Authority (Nepra) dated May 27, 2025 and notified on July 18, 2025 — along with the adjustment mechanism prescribed therein — requires an allocation of Rs 47.1 billion. Additionally, KE reiterated its earlier request that all TDS payments pertaining to the period after December 31, 2023, be released directly to the company in accordance with the TDS agreement. “In view of the foregoing estimates relating to KE’s TDS claims, we strongly urge the Ministry of Energy (Power Division) to ensure timely release of the FY2026 budget and make appropriate allocations for FY2027,” sources quoted KE as stating. While appreciating the government’s efforts to reduce and contain circular debt, KE emphasised that full allocation and timely release of TDS are critical to sustaining these improvements. “We urge the government of Pakistan to release and allocate due funds to clear KE’s outstanding TDS claims and ensure smooth disbursement in the coming years. Timely release will be critical to sustaining KE’s operations, including meeting obligations to key fuel suppliers, IPPs and CPPA-G, as well as enabling timely investments,” the company maintained. TDS claims for FY2024 are based on Nepra’s decision of May 27, 2025, while claims for FY2025 and FY2026 are based on KE’s requests filed with Nepra for annual adjustment/ indexation for those years. Outstanding claims also include the impact of estimated annual adjustments and quarterly variations for FY2024 and FY2025 in line with the mechanism defined in KE’s Multi-Year Tariff (MYT) for FY2024–FY2030. The claims further incorporate previous MYT tariff adjustments, including write-off claims approved by Nepra and end-of-term adjustments currently under determination. Forecast TDS claims are based on estimated electricity sales, fuel prices, and the generation and power purchase mix. The projections assume no increase in consumer tariffs up to June 2026 compared to the tariff notified on February 12, 2026, along with continuation of existing subsidies and adjustments. A uniform Quarterly Tariff Adjustment (QTA) of positive Rs 0.40 per kWh has been assumed for the period March to June 2026, based on the latest QTA request filed by Discos for the second quarter of FY2026. Any change in these assumptions would affect the subsidy requirement. The estimated mark-up claim and Fuel Cost Adjustment (FCA) subsidy have not been included. Under the TDS agreement, unpaid claims will attract mark-up if not processed within the stipulated timeframe. Copyright Business Recorder, 2026