Govt says Nepra's move to slash KE's tariff will ease burden on taxpayers

• Govt defends Nepra’s KE tariff decision amid criticism.
• Power Division calls Nepra ruling landmark for transparency.
• Says move curbs profits, protects consumers, cuts subsidies.
  

The Ministry of Energy (Power Division) has defended the National Electric Power Regulatory Authority's (Nepra) latest determination on K-Electric's multi-year tariff, rejecting criticism that the decision would negatively impact consumers in Karachi, The News reported on Tuesday.

The government said the decision, in fact, shields consumers from inefficiency-driven costs and prevents taxpayer money from being siphoned off as private profit.

"Certain elements are presenting a distorted picture, implying this decision goes against Karachi;s people. The reality is exactly the opposite," a Power Division spokesperson said in a strongly worded statement, calling the Nepra review a "landmark for the country's regulatory framework, but will also have long-term positive effects".

The ministry said K-Electric has lagged behind public utilities like Iesco, Fesco and Gepco in dues recovery, line-loss reduction, and service quality, and must now justify all unrecovered bills before passing costs to consumers.

Before the review, K-Electric could pass unrecovered dues to the public, turning inefficiencies into taxpayer burdens. Under the new framework, only verified, unrecoverable receivables will be allowed, protecting consumers from arbitrary costs.

The government also highlighted that the same per-unit tariff already applies nationwide, and cost rationalisation within KE will help keep Karachi’s rates stable. "If inefficiencies are cut and cheaper grid power replaces costly in-house generation, it benefits Karachi consumers directly," the ministry added.

Another key reform under ruling ends dollar-based profit indexation. KE's earlier 24-30% dollar-linked returns are now pegged to Pakistani rupees, aligning profits with domestic market conditions.

An independent consultant hired by KE's own board found the utility failed to cut losses despite heavy spending and allowed 6.5% losses in consumer bills. Acting on these findings, Nepra reduced recognised loss levels and excluded non-operational K-Electric plants from tariff calculations to prevent idle capacity costs being passed on to consumers.

With KE drawing more power from the cheaper national grid, its fuel costs are expected to drop. The Power Division said Nepra's review will curb unjustified profits, protect consumers, and ease the fiscal burden on taxpayers long forced to subsidise inefficiencies.

The decision, it added, aligns K-Electric with public utilities, promotes efficiency, and ensures no added load-shedding, as sufficient grid power and infrastructure are already in place. This move protects consumers, not corporations, the ministry said, calling it a major step towards accountability and fair pricing.