ISLAMABAD: K-Electric (KE), Pakistan’s only privatised power utility, has cautioned that the tariff revisions proposed by the Power Division could inflict an annual loss of over Rs100 billion, threatening both the company’s financial stability and Karachi’s energy security.
In a strongly worded letter addressed to the Secretary Power Division — with copies sent to the Finance Minister and senior NEPRA officials — KE Chairman Mark Gerard Skelton and Chief Financial Officer Aamir Ghaziani warned that the proposed adjustments would severely distort the company’s revenue model.
The letter, dated October 7, preceded NEPRA’s hearing in which the Power Division reportedly adopted an aggressive position. KE informed government authorities of extensive week-long discussions between September 29 and October 3, held with delegations led by Rihan Akhtar, CEO of CPPA-G, and Additional Secretary Power Division Mahfooz Bhatti, along with officials from the Power Division, PPMC, and their legal counsel.
These meetings reviewed motions and reconsideration requests filed by the Power Division, contesting KE’s multi-year tariff determinations for generation, transmission, distribution, and supply for FY2024–2030, as well as the utility’s write-off decision for FY2017–2023.
KE stated that the Power Division’s proposed disallowances were based on procedural and factual deficiencies, which the utility had previously outlined and formally reiterated before NEPRA. The company also rejected the Power Division’s claim that the proposed tariff cuts would not affect its cash flow.
“With utmost respect, this assumption does not reflect the financial reality,” KE said, explaining that each rupee reduction in its approved tariff equates to a Rs15 billion drop in recoverable revenue.
The utility warned that, for FY2024 alone, a projected profit of Rs4 billion could turn into a loss exceeding Rs100 billion under the revised tariff plan. Such an outcome, it said, would erode margins entirely, shifting KE from an EBITDA-positive position to an operational deficit.
KE’s total debt stood at Rs272 billion as of August 31, 2025 — comprising Rs91 billion in foreign and Rs181 billion in local loans. The company cautioned that the losses could trigger default clauses in syndicated and multilateral financing agreements, forcing early repayment and cancellation of credit lines.
These financial constraints, KE added, would disrupt fuel procurement, vendor payments, and operational expenses, potentially endangering the continuity of power supply to Karachi, a metropolis of over 20 million people and the country’s economic hub.
Beyond corporate losses, KE warned of broader macroeconomic consequences, including eroding investor confidence and derailing the government’s privatisation and power sector reform agenda.
Concluding the letter, KE’s leadership urged the Power Division to adopt a balanced approach that ensures both operational sustainability and public interest, requesting an urgent meeting with the Secretary Power to present detailed financial data and seek a mutually viable resolution.
Story by Mushtaq Ghumman
