EDITORIAL: The government is attempting to amend the Nepra Act, 1997 and the Electricity Act, 1910 by replacing the term “federal government” with phrases “appropriate authority” or “division concerned.” In effect, this would place Nepra under the control of the Power Division.
The World Bank and private sector stakeholders have rightly expressed their concerns over these proposed amendments.
The proposed changes would weaken the regulator and increase the influence of the sector’s largest player—the Power Division—over the electricity market. This creates an inherent conflict of interest. It not only expands the ministry’s authority but also undermines the system of checks and balances that an independent regulator is meant to uphold.
Recent developments in the K-Electric (KE) multi-year tariff case illustrate Nepra’s diminishing capacity and authority.
After 18 months of deliberation and due process, the regulator issued a tariff determination. Within two months, following criticism from the Power Ministry, Nepra reversed its decision entirely. This episode highlights two critical issues. First, the regulator’s technical capacity appears weak—its decision was flawed either initially or in the reversal. Second, its institutional authority is fragile, as public pressure from the ministry was sufficient to overturn a major regulatory determination.
These developments have heightened regulatory risks and are emerging as a key obstacle to the planned privatisation of electricity distribution companies (Discos). Bringing Nepra directly under the Power Ministry—its largest stakeholder—would further erode its credibility and independence. Instead of undermining the regulator, the priority should be to strengthen its institutional capacity, as was done with the State Bank of Pakistan during the banking sector privatisation process. Unfortunately, however, the government is moving in the opposite direction.
Recently, Nepra released its annual report, which exposed the poor performance and weaknesses in the balance sheets of Discos. The report is for FY25, and as always, it was released after a 6- to 8-month gap. There is nothing unusual or unexpected in the report. However, it is a charge-sheet against claims of improved Disco performance, which are managed by the Power Division in Islamabad.
The exception is the way the Power Ministry bashed Nepra and rejected the report. It leaves a bad taste. Regulators ought to be autonomous and should show the real picture in the greater public interest. The government should instead focus on achieving targets and reducing losses. Rather than that, it is trying to hide errors under the carpet. This would do more harm than good. The power sector would suffer from increased bureaucratic control and diminished regulatory independence. A regulator cannot effectively function if it is subservient to the very entity it is meant to regulate.
This shift would also have serious implications for tariff notifications and long-overdue reforms. It would complicate the resolution of issues such as wheeling charges and hinder the development of competitive and open electricity markets. The government should reconsider its approach. Strengthening Nepra’s capacity and autonomy is essential for the sector’s long-term stability, investor confidence, and the provision of affordable and reliable electricity to consumers.
Copyright Business Recorder, 2026