The government on Monday hailed the National Electric Power Regulatory Authority’s (Nepra) recent decision to slash K-Electric’s multi-year tariff, saying it will reduce the “additional burden on taxpayers” and that the move was not against the interests of Karachi’s power consumers.

Last week, Nepra reduced KE’s multi-year tariff for the fiscal year 2023-24 by Rs7.6 per unit, from Rs39.97 to Rs32.37. KE warned that the move will have “far-reaching consequences for its stakeholders, including consumers”.

Shares of KE, Pakistan’s only privatised and foreign-owned electricity utility, plunged on the stock exchange following the tariff cut, as investors sold heavily. According to a Dawn report, KE’s foreign owners are threatening to take the government to an international litigation forum. Analysts have warned that the tariff revision and regulatory uncertainty could hurt the company’s finances.

In a subsequent statement today, the Ministry of Energy’s Power Division termed those opinions a “malicious campaign”.

It said certain elements were unfortunately presenting the Nepra decision in a “distorted and misleading manner, attempting to create the false impression that the decision is against the interests of electricity consumers in Karachi”.

“The reality is exactly the opposite,” the Power Division asserted.

The Power Division spokesperson clarified that Nepra’s review in this matter was primarily related to KE’s administrative and operational affairs.

The statement read: “As a result of Nepra’s decision, the additional burden on taxpayers will be reduced, and K-Electric will be incentivised to cut losses instead of passing them on.

“Previously, due to inefficiencies, K-Electric was effectively compensated with billions of rupees in subsidies, financed through the national budget. This revised determination will help reduce that unnecessary annual fiscal burden.”

The Power Division highlighted that the regulator’s review “removes the unfair disparity” that existed between KE and public-sector distribution companies (Discos). “K-Electric must now undertake administrative reforms and demonstrate operational improvement to control its........

© Dawn Business