KE tariff: NEPRA’s determination safeguards consumers’ interests and avoid unjustified spending of public money

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has revised its earlier tariff determinations for K-Electric (KE) following Review Motions filed by the Power Division and Karachi-based stakeholders — including the Karachi Chamber of Commerce and Industry (KCCI), a Member of the National Assembly from MQM (Pakistan), and representatives of Jamaat-e-Islami — aimed at shielding Karachi’s consumers from what they termed an “unjustified” increase in tariff and safeguard tax payers money, said an official.
Prominent Karachi figures such as KE shareholder Arif Bilwani, MNA Syed Hafeezuddin, Tanveer Barry, and Monem Zafar Khan played key roles in advocating for the rights of Karachi’s electricity consumers.
The Federal Government filed the Review Motion , through the Power Division, sought a reassessment of K-Electric’s Multi-Year Tariff (MYT) for 2024–2030, what has changed, and what it means for consumers and the national exchequer.
According to background discussions with senior government officials, the MYT defines the parameters for KE’s allowable costs of generation, transmission, distribution, and supply of electricity, as well as its revenue requirements. However, consumer electricity rates are set separately under the Government’s “uniform national tariff” policy — meaning KE consumers pay the same rates as consumers nationwide. Any change in KE’s MYT therefore does not directly alter consumer-end tariffs.
Officials emphasized that a fair MYT is essential to ensure KE operates efficiently without imposing an unnecessary burden on the national budget through excessive subsidies.
“When the MYT was issued in May 2025, certain components created unnecessary fiscal pressure on taxpayers, offered KE advantages unavailable to other power companies, and set an undesirable precedent for future privatization of distribution companies,” the officials noted.
They said that under the earlier decision, KE’s tariff stood at around Rs 32 per unit, and NEPRA’s determination of an additional Rs 8 per unit increase was “unjustified.” The review, therefore, sought to correct multiple flaws to protect public money and ensure fairness.
Key issues identified in the previous MYT included: (i) allowing distribution losses higher than those recommended by independent consultants, incentivizing inefficiency ;(ii) granting an upfront and unconditional non-recovery allowance ;(iii) providing no incentive for improvement in recoveries;(iv) allowing under-recovery allowances not granted to other DISCOs ;(v) approving a USD-based Return on Equity (RoE) despite investments being in PKR — contrary to the treatment of other DISCOs and KE’s own historical precedent ;(vi) capacity payments for inefficient or idle plants ;(vii) incorrect formula for working capital ;(viii) erroneous fuel cost references ; and (ix) unfair competitive advantages over other power companies.
“If left unchanged, these provisions would have increased federal subsidies and given KE preferential treatment at taxpayers’ expense. The revised decision restores the tariff to around Rs 32 per unit,” the officials said.
They added that keeping the earlier tariff unchanged would have led to higher subsidy requirements, rewarded inefficiency, encouraged special treatment for KE, and undermined the government’s broader power sector reform and privatization agenda.
“The review ensures that KE follows the same regulatory rules as other distribution companies,” the officials maintained. “It establishes a healthy precedent for future privatizations based on fairness, transparency, and performance — not special concessions. Failure to rectify these deviations would have encouraged future private entities to demand similar favors, weakening regulatory discipline.”
Officials pointed out that operational improvements are achievable, as shown by the performance of public-sector DISCOs, which collectively reduced losses by Rs 193 billion in FY 2025 compared to FY 2024. For instance, LESCO cut its losses from 15.9% to 13.7% during the same period.
“If other DISCOs can improve, why should KE be allowed to perpetuate inefficiency?” one official asked.
They clarified that the revised tariff review does not change electricity bills for Karachi consumers. “The per-unit rate remains the same under the uniform national tariff policy. Subsidies also remain intact — the review merely corrects internal revenue mechanisms to make them fair and efficient,” the officials said.
The review’s purpose, they added, was to ensure inefficiencies are not embedded in the tariff structure and that KE cannot justify higher tariffs to offset managerial shortcomings. “Reliable power supply to Karachi remains a national priority, but inefficiency must be addressed through better management, not tariff leniency.”
The government has already increased the supply of cheaper power from the National Grid to KE and plans to expand it further. “There is no risk of load-shedding if KE’s old, inefficient idle plants are phased out,” the officials added.
“The revised tariff will not raise costs for consumers — it only prevents unnecessary burden on taxpayers. KE will continue to earn a fair profit, but not at public expense,” they said, adding that the correction is crucial as Pakistan prepares to privatize more power companies.
“This decision is a course correction — protecting consumers, taxpayers, and the future of Pakistan’s power sector,” the officials concluded.
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