The National Electric Power Regulatory Authority (NEPRA) has upheld K-Electric’s revised base tariff of Rs32.37 per unit for FY2024 to FY2030.
The decision could reduce the government’s subsidy burden by around Rs200 billion over the seven-year tariff period.
NEPRA originally determined K-Electric’s base tariff at Rs39.97 per unit. However, the regulator later reduced it by Rs7.60 per unit after reviewing petitions from the government, Jamaat-i-Islami, Karachi-based industrialists and K-Electric.
Tribunal Upholds Revised K-Electric Tariff
A three-member NEPRA Appellate Tribunal rejected K-Electric’s appeals against the revised tariff determination.
The tribunal announced its verbal order on Wednesday, while the detailed written order is still awaited.
The decision follows a legal dispute that began after K-Electric challenged NEPRA’s revised determination in the Sindh High Court.
The company secured a stay against implementation before the court referred the matter to NEPRA’s Appellate Tribunal.
Government Subsidy Burden Could Fall by Rs200bn
The revised tariff is expected to significantly reduce government payments to K-Electric.
According to informed sources, the decision could lower subsidy payables by around Rs200 billion over the seven-year control period.
The revised determination also reduces K-Electric’s effective rate of return to around 13-14%, compared with 22-23% under the earlier determination.
The government had previously argued that the original Rs39.97 tariff would provide K-Electric with an undue benefit of almost Rs750 billion.
Officials said the higher figure would ultimately place a greater burden on the national exchequer, consumers and taxpayers.
K-Electric Tariff Will Remain Linked to Uniform Rate
Despite NEPRA’s revised base tariff, K-Electric consumers will not simply be charged Rs32.37 per unit.
NEPRA clarified that consumers in Karachi will continue paying the uniform tariff applicable to consumers of other distribution companies.
The arrangement follows federal government policy guidelines issued under the National Electricity Policy 2021.
The Rs32.37 base tariff will also remain subject to adjustments for inflation and exchange-rate movements during the remaining years of the FY2024-FY2030 tariff period.
K-Electric Calls Decision Financially Unsustainable
K-Electric has criticised the tribunal’s decision and indicated that it could pursue further legal options.
A company spokesperson said the tribunal had verbally dismissed K-Electric’s appeals, although the written order had not yet been issued.
The company said the development would have a “substantial adverse impact” on its Multi-Year Tariff for FY2024 to FY2030.
K-Electric also described the revised tariff as financially unsustainable for the company.
The utility said it would consider all available legal remedies after receiving the tribunal’s detailed order.
Why Was K-Electric’s Tariff Revised?
The government had challenged NEPRA’s original Rs39.97 per-unit determination.
It argued that several allowances granted to K-Electric were higher than those available to other distribution companies.
These included allowances related to law and order, losses and fuel price adjustments.
NEPRA subsequently accepted several substantive points raised through review petitions.
The regulator said its review powers allowed it to correct material errors and ensure that tariff decisions remained consistent with public interest and changing sector conditions.
What Happens Next?
The tribunal’s decision gives greater certainty to the revised tariff framework, although K-Electric could still challenge the ruling through an appropriate higher legal forum.
NEPRA’s gazette notifications have given formal effect to the revised determination.
The matter could therefore move to a higher court if K-Electric decides to pursue further legal action.
For now, the revised Rs32.37 base tariff remains the regulator’s determination for K-Electric’s FY2024-FY2030 control period, while Karachi consumers will continue to be billed under the applicable uniform tariff system.
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