By Staff Reporter
ISLAMABAD: The National Electric Power Regulatory Authority won a bid to keep in place a steep cut to K-Electric Ltd.’s power tariff, a decision that preserves close to 200 billion rupees in savings for the government and deals a setback to a utility already grappling with a bank-led liquidity squeeze.
A three-member appellate tribunal on Wednesday dismissed K-Electric’s challenge to the regulator’s revised multiyear tariff, according to the company and people familiar with the matter. Nepra, as the authority is known, subsequently notified an average base tariff of 32.37 rupees per unit for Karachi’s sole electricity distributor, covering the seven-year period from the 2024 to 2030 fiscal years.
The ruling closes out nearly a year of litigation over what K-Electric is allowed to charge, and comes as the company discloses mounting financial strain. Banks have pulled back roughly 65 billion rupees in liquidity from K-Electric’s accounts in recent weeks, including about 30 billion rupees in direct withdrawals, and have curtailed fresh lending to the utility, according to people familiar with the matter.
Rate Reversed, Then Cut Further
The base tariff notified Wednesday is 7.60 rupees per unit, or 19%, below the 39.97 rupees Nepra had originally set for K-Electric last year. The regulator reduced that rate in October following review petitions from the federal power division, the Jamaat-i-Islami political party, Karachi-based industrial groups and K-Electric itself, each contesting different elements of the determination.
The 32.37-rupee figure breaks down into about 27.83 rupees per unit for power purchases, 2.40 rupees for transmission, 2.90 rupees for distribution and a credit of 0.78 rupees tied to supply costs, according to the regulator’s decision. It will be adjusted annually for inflation and currency swings through the end of the control period.
People familiar with the determination said the revision lowers K-Electric’s effective rate of return to about 13% to 14%, down from 22% to 23% under the original tariff — a reduction that officials estimate will save the federal government close to 200 billion rupees in subsidy payments over seven years.
The Power Division had argued the original rate handed K-Electric an unwarranted benefit of almost 750 billion rupees over the life of the tariff, pointing to allowances for law-and-order costs, distribution losses and fuel-price adjustments that exceeded those given to Pakistan’s other, state-owned distribution companies.
Company Says Outcome Threatens Viability
K-Electric took Nepra’s revised determination to the Sindh High Court and won a stay blocking its implementation. The court referred the case to Nepra’s own appellate tribunal, which Wednesday’s ruling now resolves in the regulator’s favour.
“In pursuance of the order of the Nepra Appellate Tribunal in the matter of appeals filed by K-Electric against Nepra’s decisions dated Oct. 20, 2025, today a verbal order was announced where it was informed that K-Electric’s appeals have been dismissed,” a company spokesperson said, adding that the tribunal’s written order has not yet been issued.
“This development has a substantial adverse impact on K-Electric’s Multi-Year Tariff for the control period FY2024 to FY2030 and is therefore not considered financially sustainable for the company,” the spokesperson said. K-Electric said it will weigh its legal options once it receives the tribunal’s full written decision — an appeal that would go next to a high court, Pakistan’s Federal Constitutional Court or the Supreme Court.
The dispute has already weighed on K-Electric’s finances. The company has told the Pakistan Stock Exchange that the unresolved tariff litigation is delaying publication of its financial statements, saying the matter’s status before the tribunal has prevented it from finalizing its accounts. K-Electric has also been pursuing a 35 billion-rupee Islamic financing facility, a process complicated by the prolonged uncertainty over its rate structure, according to people familiar with the matter.
Consumers Shielded From Regulator’s Rate
Despite Wednesday’s decision, Karachi households and businesses won’t pay the tariff Nepra has set. The regulator’s notifications confirmed that K-Electric customers will continue to be billed at the uniform national tariff charged to customers of Pakistan’s other distribution companies, under federal policy guidance issued in August 2023 as part of the National Electricity Policy of 2021. The difference between that uniform rate and K-Electric’s own cost-based tariff is covered by government subsidy — the gap Wednesday’s ruling now narrows.
Nepra said the matter has reached finality through its gazette notifications unless a higher court intervenes. In its written reasoning, the regulator said it retained authority to revisit its own prior determinations even where petitions challenging them carried procedural defects, citing precedent for exercising self-review powers under the Nepra Act, its tariff rules and review regulations to correct errors and align outcomes with conditions in the power sector.
“These decisions confirm that the authority’s power to review and correct its determinations in the interest of justice is not extinguished by procedural infirmities in the initiating pleadings,” Nepra said.
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