ISLAMABAD: Recent remarks by the Minister of Energy, Sardar Awais Leghari, regarding K-Electric’s seven-year Multi-Year Tariff (MYT) have sparked considerable controversy. His suggestion to reduce KE’s tariff application under the new MYT, purportedly to “protect” Karachi’s residents, has left industry experts confused.
Many experts argue that even if KE’s utility tariff is reduced, consumers’ electricity bills will likely remain the same due to the uniform tariff policy in place. Under Pakistan’s uniform tariff policy, electricity prices are standardized nationwide, regardless of regional differences in production and distribution costs. As a result, changes to KE’s MYT may not directly affect the tariffs consumers pay.
Another point of contention is the continued imposition of the Pakistan Holding Limited (PHL) surcharge on Karachi’s consumers. This surcharge, aimed at addressing the country’s growing circular debt, has been applied to Karachi residents since early 2023, despite the city’s minimal contribution to the national circular debt. “It’s contradictory to advocate for consumer protection while maintaining the PHL surcharge,” said a Karachi-based industrial analyst.
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“If the goal is to reduce the burden on Karachi’s residents, this surcharge needs urgent re-evaluation,” said the analyst.
In a televised appearance, Minister Awais Leghari explained that his Ministry’s recommendations to NEPRA regarding KE’s MYT request aimed at balancing the interests of both consumers and investors. He also expressed dissatisfaction with the regulatory framework he inherited and reaffirmed his commitment to reform.
Moonis Alvi, CEO of K-Electric, who also appeared on the same show, defended KE’s proposed tariff, stating that it was based on operational realities and designed to ensure the company’s sustainability while supporting growth in its service areas.
KE’s tariff expired in June 2023, and its renewal has been significantly delayed. NEPRA, the regulatory authority responsible for determining the MYT, had previously invited stakeholders to provide feedback, concerns, and suggestions. The Ministry’s remarks came weeks after this due process had concluded, raising questions about the timing of the statements.
The Minister’s comments coincide with Pakistan’s broader efforts to attract foreign investment in the energy sector, including the privatization of other distribution companies (DISCOs). Analysts caution that inconsistent tariff messaging and an ad-hoc approach could deter potential investors.
“Foreign investors, including those from the Middle East, are closely watching how Pakistan handles privatization and tariff reforms,” noted an industry analyst. For Karachi’s residents, issues such as the PHL surcharge and delays in infrastructure development highlight the need for a more cohesive and comprehensive strategy to address consumer concerns.
Copyright Business Recorder, 2025
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