ISLAMABAD: The Power Division has hailed the National Electric Power Regulatory Authority’s (Nepra) decision to review K-Electric’s multi-year tariff as a landmark move promoting fairness, transparency, and regulatory consistency for the people of Karachi.
In an official statement issued Wednesday, a Power Division spokesperson said the ministry was “proud of filing an in-time, merit-based review,” describing Nepra’s revised determination as a vital step toward aligning K-Electric’s tariff framework with national regulatory standards applied to other power utilities.
Nepra’s review removed several tariff components deemed inconsistent with national norms — including foreign currency-indexed returns and excessive loss allowances — while restructuring the Return on Equity (RoE) from U.S. dollar-based to Pakistani rupee-based. It also rationalized transmission and distribution (T&D) loss targets and recalibrated working capital allowances to correct long-standing structural disparities without undermining the utility’s legitimate recoveries.
Earlier this week, Nepra reduced K-Electric’s multi-year tariff from Rs39.97 per unit to Rs32.37 per unit after reviewing the Power Division’s petition against its May 27, 2025, decision that had increased the average base tariff by Rs6.15 per unit — an 18.18% hike.
K-Electric, in a disclosure to the Pakistan Stock Exchange, warned that the tariff revision could significantly impact its financial sustainability. Industry experts estimate the revised rates could reduce the government’s subsidy burden by approximately Rs7.6 per unit, transferring around Rs100–110 billion annually — or Rs700 billion over seven years — from the national budget to the utility.
The Power Division clarified that Nepra’s move represents a “regulatory correction, not a fiscal maneuver,” and does not translate into any new burden on consumers. “Some circles are misrepresenting this as the withdrawal of relief, which is simply incorrect,” the statement emphasized.
It further explained that K-Electric’s multi-year tariff pertains solely to the company’s internal revenue requirements. Consumer-end tariffs remain determined by the federal government under the national uniform tariff policy.
Dismissing claims that the review diverted subsidies meant for Karachi’s consumers, the spokesperson reaffirmed: “The subsidy for K-Electric consumers remains intact under the uniform tariff framework.” The statement concluded that Nepra’s decision underscores the regulator’s independence and reinforces its commitment to transparency, fiscal responsibility, and the broader public interest.
Story by Israr Khan
