Power Division defends NEPRA’s K-Electric tariff review, counters misleading claims

The Power Division has clarified that NEPRA’s recent review of K-Electric’s multi-tier tariff protects Karachi electricity consumers, countering claims that the decision is against them.

Previously, K-Electric’s (KE) could adjust unpaid dues into consumer bills arbitrarily. Under the new NEPRA directive, inclusion in tariffs is allowed only if KE proves dues could not be recovered, preventing arbitrary per-unit increases.

KE consumers will continue to receive subsidies, but excess profits from inefficiency are now curtailed. Profit returns linked to the dollar have been removed, and future contract renewals with IPPs may reduce KE’s plant profit margins.

Read: 'Decision on KE tariff a landmark'

The spokesperson said some quarters are presenting facts misleadingly to create the impression that the review harms consumers, stressing the need to present facts clearly to Karachi and the country. KE, a private utility, lags behind public sector distributors in recovery, line losses, and consumer services, highlighting the need for efficiency improvements.

The review addresses administrative operations, costs, and profit regulation. KE currently imports 2,000 MW from the National Grid and may procure more. Its own plants generate cheaper electricity than the grid. Idle and loss-making plants will be decommissioned, preventing unnecessary charges from being passed to consumers, while increased imports from the grid are expected to lower monthly fuel costs.

NEPRA’s tariff cut of Rs7 per unit and lower loss targets raised concerns over KE’s financial sustainability.

KE CEO Moonis Alvi said the company is reviewing operations to minimise consumer impact. Experts warned the reduction could affect Karachi industries, delay grid modernisation, and jeopardise investment confidence.

Read More: Tariff revision threatens KE profitability: analysts

Alvi stressed KE’s generation cost is lower than the national pool when compared fairly, and operational efficiency has improved since privatisation, with technical and commercial losses falling from 45% to below 20%. Karachi industrialists and FPCCI representatives echoed concerns about affordability and industrial competitiveness.

The Power Division said NEPRA’s review ensures accountability, prevents undue profits, and aligns KE operations with national interest, marking a milestone for Pakistan’s regulatory framework. The review will reduce the financial burden on taxpayers, encourage efficiency, and safeguard consumer interests, while decommissioning loss-making plants without threatening electricity supply to Karachi.