Privatization was supposed to rescue Karachi’s power grid. However, two decades after handing Karachi Electric (KE) to private investors, the city’s homes and businesses continue to suffer from repeat blackouts, erratic billing, stalled investments and even fatalities.

As Islamabad prepares to privatise FESCO, GEPCO, IESCO, and other Discos, the Karachi experience offers important lessons to ensure the rest of Pakistan is not subjected to the horrors that have been inflicted upon 20 million Karachiites for years.

KE’s privatization was pitched as a turning point for the utility, with injection of fresh capital, private expertise and market discipline that would replace the old and inefficient state-run enterprise, and end Karachi’s decades-old legacy of chronic outages.

However, instead of steady power supply and happier consumers, Karachi has come to expect routine load-shedding, unannounced blackouts that stretch entire days, and a utility more focused on protecting profits than ensuring the lights stay on.

Impact on industry and the economy

Karachi is a central pillar of Pakistan’s economy, with its port handling over 60 percent of trade, its factories manufacturing key exports, and its services sector supporting finance, retail and hospitality industries across the country. However, under KE’s erratic supply regime, businesses and industries have to run at partial capacity or resort to expensive captive generation, slashing margins and spooking investors.

Manufacturers of everything from garments to food products wrestle with unannounced blackouts that halt machinery and damage sensitive equipment. A voltage spike during an unscheduled cut can destroy motors, ruin production batches and require costly repairs running into tens of millions of rupees for each incident. Export-oriented factories, bound by tight shipping schedules, miss international delivery windows, damaging reputations and risking contract penalties.

As per a 2024 report before the Sindh Assembly, between 2019 and 2024, at least 81 industrial units—including textile mills, sugar plants and cement factories—had shut down due to KE’s electricity crisis. Each closure translates into hundreds of jobs losses, federal and provincial revenues losses, and a shrinking industrial and export base. Remaining industries often downsize or freeze expansion plans, unwilling to risk fresh investment under an unstable power setup.

To cope, most industrial units have installed diesel generators, gas-fired captive power plants or solar arrays. These stopgap measures are expensive with fuel, maintenance, capital amortization and staff required to run the systems.

Effectively, anyone who wants to manufacture in Pakistan not only has to set up a factory but also multiple power generation systems to hedge against risks from the grid, and hence end up paying twice, once through KE’s tariff and again through backup-power costs. For a garment manufacturer operating on razor-thin margins, a heavy fuel-bill can tip profitability into fateful losses.

Moreover, recent........

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