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Aftab Maken
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has reviewed K-Electric’s Multi-Year Tariff (MYT) for 2024–2030 to correct structural flaws that risked creating an unnecessary financial burden on the national budget and giving the private power utility advantages not available to other electricity distribution companies (DISCOs). Power experts said the decision will ensure fairness, efficiency, and transparency in the country’s broader power sector reforms.
The MYT framework determines K-Electric’s allowable costs for power generation, transmission, and distribution, as well as its revenue requirements. However, under the government’s “uniform national tariff” policy, K-Electric consumers pay the same rates as consumers in other parts of the country. Therefore, the review will not change electricity bills for Karachi consumers. Instead, it corrects internal tariff components to prevent excessive subsidies funded by taxpayers.
K-Electric’s MYT petition was decided by NEPRA with input from the company’s respective stakeholders. However, the Power Ministry also provided its valuable input to guide the regulator in the best interest of consumers in this mega city, while keeping political considerations aside.
According to NEPRA, when the earlier MYT was issued in May 2025, some provisions granted K-Electric treatment more lenient than that of other state-owned DISCOs, undermining the government’s push to privatize power distribution on fair and competitive terms. For instance, K-Electric was allowed higher distribution losses than recommended by independent consultants, upfront recovery allowances without performance incentives, and a U.S. dollar-linked profit margin (Return on Equity) despite its investments being made in Pakistani rupees.
Other irregularities included capacity payments for idle and inefficient plants, erroneous fuel cost references, and an incorrect working capital formula. Collectively, these factors inflated the utility’s revenue requirement and would have resulted in larger federal subsidies to offset the gap under the uniform tariff regime. The revised tariff decision by NEPRA restores KE’s average tariff to around Rs. 32 per unit, reversing an unjustified Rs. 8 per unit increase proposed earlier.
Experts familiar with the development told this correspondent that the review strengthens the government’s efforts to enforce a uniform regulatory framework across all power companies. “If such deviations were allowed, every future privatized DISCO would demand similar concessions, making reforms unsustainable,” an energy sector official said. They added that the correction supports the ongoing reduction of circular debt and reinforces the principle that private utilities must improve performance rather than rely on subsidies.
Recent data show that operational improvements across public DISCOs are achievable. Sector-wide losses declined by Rs. 193 billion in FY2025 compared to FY2024, with companies such as LESCO cutting losses from 15.9% to 13.7%. The experts also said this demonstrates that efficiency is possible without tariff relaxation, and K-Electric must achieve similar results.
By carefully reviewing KE’s MYT, it was further revealed that the review does not reduce consumer subsidies or affect power supply to Karachi. It only ensures that inefficiencies are not embedded in the tariff framework. Additional cheap electricity from the National Grid is already being supplied to K-Electric, with further increases planned to enhance reliability.
In simple terms, the review keeps consumer tariffs unchanged, safeguards taxpayers’ money, encourages better performance from K-Electric, and sets a fair precedent for future private participation in Pakistan’s power sector. Officials described it as a “course correction” to ensure long-term sustainability and fairness in the country’s electricity reforms.
