People of Karachi feeling the pinch
The Red Line Bus Rapid Transit (BRT) bridge collapsed in Karachi's Gulshan-e-Iqbal and killed a security guard on duty. This was just another story, another headline. And that is all Karachi is; a story, a headline of an unfulfilled promise that is now forgotten.
The BRT project was launched in 2022, had a 30-month deadline and was expected to be completed in June 2024. Not only has it cost time and damaged vehicles but also cost lives and livelihoods. Imagine the cost escalation during this time.
For long, Karachi and its people have suffered at the cost of policies and general ignorance that completely discount the city's influx of people. Its rapidly increasing boundaries now go so far out that you don't know where Karachi begins and where it ends. Add the deteriorating law-and-order situation, dilapidated infrastructure, projects that are left stranded, lack of basic utilities and you have a city that is undoubtedly and certifiably among the worst to live in.
On the other end of the spectrum is life in the capital city where policymakers walk along the power corridors and pay little heed to the bumps in the south. But why does everyone in Karachi feel the pinch; there is an easy answer. Pakistan's direct taxation stood at Rs5.792 trillion in 2024-25. Karachi's LTO (Large Taxpayer Office) and MTO (Medium Taxpayer Office) alone contributed Rs1.94 trillion, according to data available with the Federal Board of Revenue (FBR).
This is one-third of all direct taxes in Pakistan. Karachi's contribution to GDP, by several estimates, is over one-fourth. This is one city, which hosts around one-tenth of the population. One can imagine how economically productive this 10% of the population is that it contributes one-fourth of all productivity and one-third of all direct taxation. This is just the part that is documented.
Now add all the projects that Pakistan has all over the country. The cheapest electricity largely comes from hydro and nuclear generation, much of which is located in the north. But the fact that these projects are geographically located there does not mean they were financed by the people of that region alone. They were built through national public resources, funded by federal revenues and taxes collected from across Pakistan. Karachi, as the country's principal commercial and revenue-generating centre, could argue that it should get a bigger share. But it is not the case.
The question, therefore, is one of equitable access to the benefits of national investment. If Karachi contributes significantly to the national pool that finances the country's infrastructure, it should not be treated as though access to the resulting low-cost power is a concession or favour. Now, the capital may argue that such capital expenditure and major infrastructure projects are financed by international financial institutions over the life of the projects rather than directly through taxpayers' money.
However, these loans do not exist in isolation: principal repayments, interest payments and sovereign obligations are ultimately serviced through public revenues. What gives international lenders the confidence to extend such financing in the first place? The answer lies in the state's repayment capacity, fiscal credibility and overall solvency, all of which depend on the revenues generated by the national economy. In Pakistan's case, Karachi remains one of the most important engines of that economic and revenue base.
In other words, whether the benefits of that national investment are being shared equitably? A national system should not socialise the cost of infrastructure across the country while concentrating its benefits in particular regions and then presenting any subsequent support to Karachi as a subsidy or favour.
Not to add fuel to the fire, Karachiites also pay for the PHL surcharge, which is an extra fee made part of electricity bills across Pakistan to pay the interest and markup on government power-sector loans. In other words, the city pays for the circular debt of the power sector despite having zero contribution to it. From May 2023 till June this year, the PHL surcharge paid by Karachi has been ascertained to be around Rs124 billion.
The recent revision of KE's tariff framework has also raised significant concerns among Karachi's industrial community. In May 2025, Nepra determined K-Electric's tariff at Rs39.97/kWh against a requested rate of Rs44.69/kWh. This was subsequently revised to Rs32.37/kWh in October 2025, a rate Nepra Appellate Tribunal upheld on September 22, 2026. Now, reports suggest there has been a suspension in that order. Imagine the utility being in its third year of the Multi-Year Tariff control period FY2024-2030 and still having itself confined in a box when it comes to serving Karachi.
Such a substantial revision has created uncertainty and without the environment that enables adequate and predictable investment becomes increasingly challenging. IESCO, FESCO, GEPCO are next in line to be privatised, however, under these circumstances, the case for the privatisation agenda may have a long way to go. Shanghai Electric pulled its $1.77 billion offer to acquire KE owing to regulatory uncertainty and ambiguous economic situation of the country.
The centre argues that Karachi gets subsidy, but that is for customers to ensure the uniformity of the consumer end-tariff across the country. Karachiites do not have the liberty of dams. Put all cities and provinces in one basket, the South alone cannot be blamed for not having access to what our North possesses. Hence, subsidies are not a favour. It's about time Karachi was given what it deserved.
The writer is an economist with nearly 20 years of experience