ISLAMABAD: The government on Wednesday welcomed the National Electric Power Regulatory Authority’s (Nepra) review of K-Electric’s multi-year tariff, calling it a landmark decision that ensures fairness and regulatory consistency for the people of Karachi.
In a statement, a spokesperson for the Power Division said the ministry was “proud of filing an in-time, merit-based review” in the case, describing the decision as a major step toward harmonizing K-Electric’s tariff framework with other transmission and distribution companies nationwide.
Nepra’s review eliminated several tariff elements that were inconsistent with national regulatory standards — including foreign currency-indexed returns and excessive loss allowances — and restructured the Return on Equity (RoE) from U.S. dollar-based to Pakistani rupee-based. The rationalization of transmission and distribution (T&D) losses and recalibration of working capital allowances were meant to correct structural imbalances without undermining legitimate recoveries, the statement said.
Notably, Nepra on Monday had cut the utility’s multi-year tariff from Rs39.97 per unit to Rs32.37 per unit after reviewing the Power Division’s petition on its earlier decision. The tariff revision marks a sharp reversal from Nepra’s May 27, 2025 determination, which had raised KE’s average base tariff by Rs6.15 per unit — an 18.18% increase — to Rs39.97 per unit for FY2023-24.
On Tuesday, in a disclosure to the Pakistan Stock Exchange, the K-Electric warned that the move would have significant consequences for the company’s financial health, its stakeholders, including consumers.
Every rupee cut in K-Electric’s tariff means about Rs15 billion in yearly losses for the utility. An energy expert said Nepra’s revised decision would trim the government’s subsidy load by roughly Rs7.6 per unit—shifting nearly Rs100–110 billion a year, or around Rs700 billion over seven years, from the national budget onto the company.
The Power division spokesperson said that Nepra’s review was a regulatory correction, not a fiscal maneuver or a new burden on consumers. Some circles are misrepresenting this as a withdrawal of relief, which is simply incorrect, the statement noted.
The Power Division explained that K-Electric’s multi-year tariff pertains only to the company’s internal revenue requirements, not the consumer-end tariff. Consumer tariffs across all utilities, including K-Electric, continue to be determined by the government under the national uniform tariff policy.
The spokesperson also dismissed suggestions that the decision diverted a subsidy previously provided to Karachi’s consumers. “The subsidy to K-Electric consumers is still in place under the uniform tariff framework,” he said, adding that Nepra’s review reaffirmed the regulator’s independence and commitment to transparency and the public interest. A reduction in subsidy is not a diversion of funds; it simply lessens fiscal expenditure that would otherwise burden the national budget.
