Additional concerns were raised about capacity payments at K-Electric’s power plants, which are projected to cost more than Rs82 billion. PHOTO: FILE
Islamabad:
Experts have expressed concern that a revised decision by the National Electricity Regulatory Authority (Nepra) on K-Electric (KE) could have far-reaching financial and industrial consequences.
KE CEO Moonis Alvi clarified that recent comparisons between KE tariffs and the national grid overlook key structural differences, stressing that when assessed on a like-for-like basis, KE’s generation costs are lower than the national group’s. Speaking at a webinar organized by the Policy Research Institute of Market Economy (PRIME) on ‘Karachi’s Energy Security: Challenges & Opportunities’, Alvi stressed that the perception that KE is more expensive than the national grid is inaccurate. “If you exclude nuclear and hydel sources – which are not available to private players – and ensure the required gas supply, K-Electric’s cost of generation is at least Rs 4 per unit cheaper than the national group,” he said.
Alvi explained that KE’s operational efficiency has improved significantly since privatization, with total technical and commercial losses falling from around 45% to below 20%. “We continue to invest in cleaner, more efficient generation, transmission and distribution infrastructure,” he said.
Other speakers at the webinar, including Shabbar Zaidi, Haroon Shamsi, Zeeshan Ali and Rehan Javed expressed concern that Nepra’s revised determination on KE could have far-reaching economic and industrial consequences.
Former Federal Board of Revenue (FBR) chairman Shabbar Zaidi termed the revised tariff “financially unsustainable”, warning that KE’s current profits could turn into a loss within two years if the decision is not revised. “If Pakistan’s only privatized electricity distributor becomes financially unviable, it will delay the government’s privatization agenda for decades,” he warned.
Karachi industrialist Haroon Shamsi said the revision has created uncertainty for Karachi’s industries, many of which depend on affordable and stable power supply. “Pakistan’s energy costs are already higher than regional competitors,” he noted. “This decision will make it harder for SMEs to survive. Bigger companies can generate their own power, but smaller industries will have no choice.”
He questioned why Karachi consumers continue to pay the Power Holding Limited (PHL) surcharge linked to the inefficiency of the national grid despite the fact that KE is not part of the circular debt.
Zeeshan Ali, representing FPCCI’s Energy Advisory Committee, highlighted that KE’s investment plans to modernize the grid may be delayed due to the tariff reduction. “If the JV’s liquidity is squeezed, they will undergo upgrades to aging infrastructure and quality improvements,” he said. “This not only affects industries, but also everyday consumers.”
Alvi, however, maintained a constructive tone. He reiterated that the cost competitiveness of the JV depends on access to a consistent supply of fuel. “Give it to us [natural] natural gas is available to us and we can demonstrate efficiency and affordability,” he said.
He insisted that the company remains committed to serving Karachi despite financial pressures. “KE supplies more than 50,000 industries as well as essential services such as hospitals, military installations and water pumping stations. We take this responsibility seriously,” he said.
Moderator Ali Ehsan, Chief Development Officer at PRIME, summed up the discussion by highlighting the wider implications for policy and investor confidence. “Karachi is the economic engine of Pakistan. Any disruption to its ecosystem has ripple effects across the country,” he said. “This decision not only raises economic questions, but also calls into question the consistency of regulatory frameworks.”
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