Multi-year tariff: NEPRA ensures investment in Karachi's power infrastructure

Business Recorder

25-05-2025

In a significant move for Pakistan's power sector, the National Electric Power Regulatory Authority (NEPRA) approved K-Electric's (KE) Distribution Network and Transmission's Multi-Year Tariff (MYT) for the period FY 2023-24 to FY 2029-30.
This long-awaited determination provides a vital foundation for KE's ongoing unbundling and investment programme and is expected to restore investor confidence amid a challenging macroeconomic environment.
It is important, however, to highlight that this cost-side component will not currently impact the consumer tariff, which is uniform across Pakistan and determined by the federal power regulator.
But what it does achieve is KE's ability to plan and prepare for Karachi's burgeoning energy needs. The seven-year tariff control period aligns with KE's transmission and distribution investment plan worth $2 billion. This longer-term certainty is critical for KE's financing strategy as the company raises capital without government guarantees—a distinguishing factor compared to public DISCOs.
In KE's case, investors who have backed the company after its privatisation need to be fully satisfied with the utility's performance. Hence, the MYT becomes all the more critical for the company serving Pakistan's biggest and most populated city.
NEPRA's decision also aligns with the previously approved T&D investment plan and allows KE to maintain momentum on its $2 billion capital expenditure program through 2030.
This decision comes on the heels of last year's approval of KE's generation tariff, marking continued regulatory momentum in Pakistan's evolving power sector where reforms have been promised to the International Monetary Fund (IMF) as well.
NEPRA's decisions create a stable, performance-linked environment for long-term growth. They have allowed KE to mobilize capital, implement reforms, and scale its infrastructure responsibly, while holding, like always, the company accountable to efficiency and consumer service benchmarks.
KE now benefits from a mechanism to adjust tariffs based on actual electricity sold (sent-out), helping the company mitigate demand-side risks and external economic shocks. NEPRA also identified that this forms the basis of strict load-shedding monitoring.
While KE gains flexibility, it will now face more transparent, segment-wise scrutiny, and third-party audits of its investment execution, reinforcing corporate governance.
With NEPRA's endorsement of a multi-year investment plan, customers can expect progressive improvements in service quality. These include upgraded transmission and distribution infrastructure, and expansion of load-shedding-free zones. The regulatory backing enables KE to finance and implement much-needed upgrades across its grid, translating into greater supply reliability and long-term network resilience.
For consumers in Karachi, this translates into a path toward better electricity supply, ability to handle disruptions, and greater transparency from their utility provider.
This also strengthens KE's ability to execute its capex plan and meet Karachi's fast-growing demand. Since its privatization, KE has invested over $4 billion in Karachi's power ecosystem—doubling its customer base and halving its losses.
The distribution and transmission tariff approval may mark a milestone toward a more reliable and financially sustainable urban energy model, provided there is intent.
Together with the previously approved generation tariff, this tariff decision builds a regulatory framework that can unlock long-term capital, enable infrastructure expansion, and assure private investors of Pakistan's commitment to power sector reforms.