Islamabad, October 27, 2025 – The Power Division has termed the recent determination by the National Electric Power Regulatory Authority (NEPRA) regarding K-Electric’s multi-year tariff as a historic and consumer-centric decision designed to protect public interests, enhance regulatory transparency, and address inefficiencies within the power sector.
In a comprehensive statement issued on Monday, a Power Division spokesperson clarified that misleading claims circulating about NEPRA’s review being “anti-Karachi” were completely baseless. “The reality is quite the opposite,” the spokesperson emphasized. “This determination reinforces consumer rights and ensures equitable treatment for all electricity users across Pakistan.”
The spokesperson explained that K-Electric, as a private-sector utility, is expected to outperform government-run distribution companies. However, when compared with entities such as IESCO, FESCO, and GEPCO, public-sector utilities have demonstrated superior performance in crucial areas including recovery of dues, line loss reduction, and service delivery.
The Power Division clarified that NEPRA’s decision primarily concerns K-Electric’s operational and administrative structure. The utility currently draws around 2,000 megawatts (MW) from the national grid — power that is more economical than electricity generated by its own plants. Importantly, K-Electric consumers pay the same per-unit tariff as consumers elsewhere in Pakistan. Rationalizing internal costs will therefore help maintain uniform national electricity rates for Karachi consumers, benefiting them rather than imposing any new burden.
According to the division, K-Electric consumers will continue to receive subsidies under the national uniform tariff policy. However, subsidies will no longer transform into private profits due to inefficiency. The statement underscored that taxpayer-funded subsidies must not compensate for a private utility’s operational failures.
Previously, K-Electric was permitted to pass unrecovered dues onto the public — effectively transferring inefficiencies to taxpayers. Under the new regulatory framework, only genuinely unrecoverable receivables, verified with evidence, will be acknowledged by NEPRA. Arbitrary inclusion of inflated amounts in consumer bills will no longer be tolerated, marking a major step toward fair pricing and accountability.
The spokesperson also highlighted that the review caps K-Electric’s profit margins within reasonable limits. Earlier, the company enjoyed returns between 24% and 30%, indexed to the US dollar. The new policy eliminates this dollar linkage, recognizing that K-Electric’s assets and investments are in Pakistani rupees. Furthermore, the rate of return on K-Electric’s generation assets can now be adjusted, similar to the re-negotiated power purchase agreements with independent power producers (IPPs).
An independent consultant, appointed by K-Electric’s own board, previously confirmed that the company was permitted up to 6.5% losses in consumer bills — yet failed to achieve significant reduction despite heavy expenditure. Based on these findings, NEPRA reduced the permissible loss threshold to ensure greater efficiency and fairness.
Additionally, NEPRA has excluded non-operational K-Electric power plants from capacity payments, ensuring consumers are not unfairly charged for idle assets. This approach mirrors the federal government’s own reform efforts in public-sector generation, which have already lowered per-unit electricity costs nationwide.
The Power Division stressed that NEPRA’s determination represents a major milestone in Pakistan’s power regulation framework, establishing stronger oversight and protecting citizens from unjustified profits. The decision will lessen the fiscal burden on taxpayers, encourage K-Electric to minimize losses, and promote performance-based accountability.
Finally, the spokesperson assured that Karachi faces no threat of load-shedding due to the removal of inefficient plants, as the national grid now provides adequate and cheaper electricity to meet the city’s demand. The statement concluded that this decision will ensure a transparent, equitable, and efficient power supply for Karachi and the rest of Pakistan.