Minister’s Comments Regarding KE’s MYT Stir Controversy
Staff Report
Recent statements made by the Minister of Energy Sardar Awais Leghari regarding K-Electric’s seven-year Multi-Year Tariff (MYT) has stirred controversy amongst many quarters. The call for a reduction in KE’s tariff application under the new MYT as a measure to “protect” Karachi’s citizens has left sector experts perplexed.
“There will be no change to your or my bill even if KE’s utility tariff is slashed as the two are different and determined through different mechanisms,” explained a Karachi based energy expert. “If minister sahab increases nationwide tariff then our bill will go up regardless of what NEPRA sets for KE,” he explained.
Under Pakistan’s uniform tariff policy, electricity prices are standardized across the country, regardless of regional variations in production and distribution costs. This means that adjustments to KE’s MYT would not necessarily translate into immediate changes to the tariff consumers pay.
As KE continues to grapple with operational challenges, including disputes over outstanding payments and aging infrastructure, experts suggest that the MYT framework is essential for enabling the utility to plan and invest in long-term improvements.
The power utility’s tariff expired in June 2023 and is already significantly delayed. Per the due process NEPRA, the regulatory authority responsible for MYT determinations. had invited all stakeholders to share their inputs, reservations and comments. Views from the Ministry came weeks after the due process was concluded by NEPRA raising eyebrows on the timing.
The Minister’s remarks also emerged at a time when the country is actively seeking foreign investment in its energy sector, including privatization of other distribution companies (DISCOs). Observers warn that inconsistent messaging and ad-hoc attitude regarding tariff policy could create uncertainty for potential investors. “Foreign investors including those from the Middle East are closely watching how Pakistan navigates privatization and tariff reforms,” said an industry analyst.
Experts also pointed to the continued application of the Pakistan Holding Limited (PHL) surcharge on Karachi’s consumers as a source of frustration. The surcharge, aimed at addressing Pakistan’s growing circular debt, has been levied on residents of Karachi since early 2023, despite the city’s negligible contribution to the national circular debt.
“It’s contradictory to claim consumer protection while continuing to impose the PHL surcharge,” noted another Karachi based industrial analyst. “If the aim is to alleviate Karachi’s consumer burden, this is an area that requires urgent review.”
Earlier on this matter, Minister of Energy – Awais Leghari appeared in a tv show and mentioned that the Ministry submitted its recommendation to NEPRA on KE’s MYT request, which according to him, was to bring a balance between consumers and investors’ interest.
He also expressed his disappointment over regulatory system before his appointment as a minister and stated that he was striving to bring a reform. Moonis Alvi – CEO K-Electric, who also appeared in the same show, stated that K-Electric’s requested tariff was based on ground realities and keeping the company’s sustainability and its serviced territory’s growth in view.Govt Claims Cut in Electricity Prices up to Rs 11 Per unit
The debate over KE’s MYT is emblematic of larger challenges facing Pakistan’s power sector, which continues to struggle with circular debt, theft, and inefficiencies in distribution. For Karachi’s residents, issues like the PHL surcharge and delays in infrastructure improvements underscore the need for a more coordinated approach to addressing consumer concerns. Policymakers and stakeholders must strike a delicate balance between protecting consumer interests, ensuring the financial viability of utilities, and maintaining a stable investment climate.
