Tug of War: Govt defends NEPRA verdict, says new KE tariff curbs inefficiency,

The Ministry of Energy on Monday once again strongly defended the National Electric Power Regulatory Authority’s (NEPRA) recent determination on K-Electric’s multi-year tariff, calling it a “landmark step” that safeguards Karachi consumers and prevents private gain at the expense of taxpayers.

In an official statement, the Power Division said some elements were distorting the regulator’s review, portraying it as being against Karachi’s electricity consumers. “The reality is exactly the opposite,” the spokesperson said, asserting that NEPRA’s decision would lead to lower inefficiencies, fairer pricing, and long-term consumer protection.

K-Electric, the country’s only private power utility, will now be required to justify any unrecovered dues instead of automatically passing them on to consumers. “Under the new framework, only receivables that K-Electric can prove to be genuinely unrecoverable despite all reasonable efforts will be considered,” the ministry said. “This prevents inefficiency from being converted into a burden on taxpayers.”

The statement noted that while K-Electric’s consumers are already paying the same per-unit tariff as the rest of the country, its internal cost reductions should help maintain uniform national rates rather than raise prices. “If inefficiencies are reduced, is that not a positive outcome for Karachi’s people?” the spokesperson asked.

NEPRA’s review also curtails K-Electric’s previously high profit margins. The utility’s earlier allowed return of 24% to 30%, linked to the U.S. dollar, has been rationalized and delinked from dollar indexation. “K-Electric’s assets are denominated in Pakistani rupees, and it is only fair that its return be aligned with the domestic market,” the ministry said, adding that the move could further allow renegotiation of power purchase agreements in line with national reforms.

The statement cited a report by K-Electric’s own independent consultant, which admitted failure to curb losses despite heavy expenditure. Based on these findings, NEPRA has reduced the loss levels that can be built into consumer bills — a move the Power Division said was “clearly in the public interest.”

Moreover, NEPRA’s determination excludes non-operational K-Electric plants from tariff calculations, preventing capacity charges from idle assets being passed to consumers. “If unnecessary costs are removed and cheaper national grid power replaces expensive local generation, it directly benefits Karachi’s citizens,” the ministry added.

Calling the review “a milestone in regulatory reform,” the Power Division said it will reduce the annual fiscal burden on taxpayers and push K-Electric to improve performance rather than rely on subsidies. “There is no risk of additional load-shedding,” it concluded, “as sufficient, cheaper electricity is available from the national grid.”