ISLAMABAD: NEPRA’s revised Multi-Year Tariff (MYT) determination for K-Electric puts the government’s privatization agenda at risk, while also adversely affecting Karachi’s stability, stated energy experts and industrialists on Saturday during a webinar organized by the Policy Research Institute of Market Economy (PRIME) titled ‘Karachi’s Energy Security: Challenges and Opportunities’.
K-Electric CEO Moonis Alvi said the MYT should have reflected the company’s continuous operational improvements and the realities of power supply in a complex urban setting. He said that since privatization, K-Electric has significantly reduced aggregate technical and commercial losses from around 45 percent to below 20 percent.
He further noted that while the new tariff structure brings certain challenges, KE remains committed to serving Karachi. He explained that the changes in the fuel reference mechanism may result in additional financial obligations for Karachi consumers, including retrospective adjustments.
“We believe these issues can be addressed through constructive engagement with NEPRA and the government”, he said while also clarifying the fact that in an apple-to-apple comparison with the national grid and XWDISCOS, KE’s cost of generation was lower and the company was more efficient. Among the panelists was former FBR chairman Shabbar Zaidi who termed NEPRA’s decision financially unviable, predicting that within two years KE could face bankruptcy. Zaidi added that NEPRA’s approach of enforcing uniform tariffs across all cities ignores ground realities.
He said a privatised DISCO cannot disconnect high-loss areas or adjust prices. Karachi’s consumer composition is not comparable to other regions. Haroon Shamsi, an industrialist at Karachi and Member steering committee at Better Work Pakistan, said the revised tariff is not feasible for industries that depend on reliable and affordable power.
He added that accounts for FY2024 have already been filed and it was difficult to retrospectively adjust costs. Shamsi also questioned why Karachiites are paying the PHL surcharge, which stems from inefficiencies of the national grid.
Zeeshan Ali, Member of the Advisory Committee on Energy, FPCCI, while representing Karachi’s business community, warned that the decision will derail planned investments to upgrade infrastructure and improve reliability of power supply. “Even small power dips can damage industrial machinery,” he cautioned.
Rehan Javed, prominent industrialist and energy expert, pointed out that KE’s actual contribution to national power stability is often misunderstood.
“KE draws 2,000 MW from the national grid but pays for 2,600 MW in capacity charges, effectively reducing the national grid’s burden,” he said. “NEPRA revising its own determination means either this one or the previous one was a mistake.”
In concluding remarks, Zeeshan Ali stressed that Karachi’s local and provincial governments must actively take up the issue. “There’s a serious communication gap between the technical community, the regulator, and the public,” he said.
Haroon Shamsi suggested that while regulation is necessary, pricing should be deregulated, similar to the telecom sector, to encourage competition and efficiency. –Agencies
