K-Electric’s profit cut aims to safeguard consumer subsidies: Power Division

ISLAMABAD: The Power Division has issued a detailed clarification on the National Electric Power Regulatory Authority (NEPRA)’s decision to revise K-Electric’s multi-year tariff, saying the verdict is in favour of Karachi residents.

It said Karachi consumers will continue to receive subsidies, while preventing those subsidies from becoming part of K-Electric’s profit.

In its statement, the Power Division spokesperson said that NEPRA has issued a revised decision on K-Electric’s multi-year tariff, adding that some quarters are spreading misleading claims about it. “NEPRA’s decision is not against Karachi consumers but in their favour,” the spokesperson said.

The Power Division further said that K-Electric must improve its performance to match public-sector power companies such as IESCO, FESCO and GEPCO, which are ahead in recovery and service delivery. The revised NEPRA decision, it added, is focused on administrative reforms.

According to the statement, K-Electric currently draws 2,000 megawatts of electricity from the national grid, which is cheaper than power generated by its own plants. The per-unit tariff for K-Electric consumers remains uniform at the national level, and any reduction in operational costs will ultimately benefit consumers.

K-Electric’s profit linked to Pakistani rupee

The Power Division clarified that under the revised NEPRA decision, unverified dues can no longer be included in consumer bills — only verified amounts will be allowed.

The spokesperson said that NEPRA’s decision is a positive step for consumer protection, ensuring that K-Electric’s profits remain within a fair limit. The company’s profit will now be linked to the Pakistani rupee instead of the US dollar, and the rate has been reduced by 24 to 30 per cent.

“Consumers won’t be charged for idle power plants”

According to the spokesperson, an independent consultant highlighted K-Electric’s inefficiencies and excessive costs. NEPRA reduced the permissible loss ratio to safeguard public interest. Consumers will not bear the cost of non-operational power plants, and cheaper power from the national grid will help cut fuel expenses.

The Power Division noted that NEPRA’s revised decision marks a significant step toward strengthening the regulatory framework, reducing the burden on taxpayers and creating a fair balance between K-Electric and state-run distribution companies.

The spokesperson also assured that Karachi faces no risk of load-shedding, as sufficient and affordable electricity is available in the national grid.

It is worth noting that NEPRA, on October 21, issued its revised decision on K-Electric’s multi-year tariff petitions, lowering the company’s average tariff from Rs39.97 per unit to Rs32.37 per unit.

The revised determination covers several key areas, including multi-year tariff determinations for K-Electric’s generation plants, transmission, distribution and supply businesses for fiscal years 2024 to 2030; transmission and distribution investment plans; loss assessments; and write-off claims for the 2017–23 multi-year tariff period.

As a result, the average tariff — previously set at Rs39.97 per kilowatt-hour on May 27, 2025 — has now been reduced to Rs32.37 per kilowatt-hour.

In response, a K-Electric spokesperson said NEPRA had maintained its previous stance regarding the write-off claims but made significant changes in other areas that are “unsustainable” for the company and will have long-term implications for its stakeholders, including consumers.