K-Electric Warns of Rs100B Loss from Tariff Cuts

KARACHI: K-Electric has cautioned that tariff revisions proposed by the Power Division could trigger an annual financial loss of Rs100 billion, jeopardizing its financial stability and threatening Karachi’s energy security, according to Business Recorder.

In a letter dated October 7 to the Secretary Power, with copies sent to the Finance Minister and senior National Electric Power Regulatory Authority (NEPRA) officials, KE Chairman Mark Gerard Skelton and CFO Aamir Ghaziani warned that the proposed tariff adjustments would have “severe financial implications” for the utility.

The letter, issued two days before a NEPRA hearing, followed a week of discussions from September 29 to October 3 regarding review motions and reconsideration requests filed by the Power Division. These challenged K-Electric’s multi-year tariffs for FY2024–30 and its write-off decisions for FY2017–23. The talks involved representatives from the Power Division, Central Power Purchasing Agency (CPPA-G), and Pakistan Power Management Company (PPMC).

KE officials refuted claims by a Power Division representative that the revisions would not impact cash flow, asserting that each rupee cut in tariff would slash recoverable revenue by Rs15 billion, undermining operational sustainability.

The utility warned that the proposed tariff reductions would convert its projected earnings of Rs4 billion for FY2024 into a loss exceeding Rs100 billion, shifting K-Electric from an EBITDA-positive position to an operating deficit. This would jeopardize its ability to meet investment and service obligations.

K-Electric requested an urgent meeting with the Power Division Secretary to present financial data and discuss the issue, emphasizing the need for a “balanced decision” to safeguard Karachi’s energy security and the power sector’s financial stability.