Karachi Finally Got Something: KE’s MYT Gives Us Something to Cheer About

For those who have lived in Karachi their entire lives, it’s easy to feel the city has been left behind. Its infrastructure has struggled to keep pace with the growing population, and public safety remains a challenge. One area that has seen some progress, however, is electricity supply. Where once the entire city faced prolonged power outages, the situation has improved to more localized and scheduled outages. These, unfortunately, are still driven by issues like power losses and electricity theft. But given Karachi’s evolving needs, influx of people, and unplanned expansion, one would imagine that the city’s power utility would need a roadmap: a plan to cater to the increasing demand and bring innovation. For this purpose, the multi-year tariff notified by NEPRA on Friday evening does just that. It gives K-Electric its cost-side tariff – mind you, this doesn’t impact the consumer tariff at all at the moment – so that it can have a sense of certainty on its distribution network and transmission of electricity. The seven-year control period, which runs from FY24 to FY30, also gives a sense of certainty to KE on its investment plan and how to move forward. Since its privatisation, KE has doubled its customer base and halved its losses. This is no mean feat. Yes, there are pockets of loss-making areas but that has come primarily on theft and general unwillingness and inability to clear electricity dues on time. The economic crisis has not helped this case either. It is hardly surprising to hear that KE operates in probably what is the most multi-faceted city of the country. In such a situation, through investments of USD 4 billion into infrastructure since privatization, KE has improved generation efficiency and reduced T&D losses which resulted in decrease in tariff requirements by PKR 113 billion and PKR 155 billion. It has also overcome challenges such as asking for operational subsidy from the government, making it the sole entity in the private sector to not need government handouts to handle operations. Given this, the MYT was a much-needed roadmap that would allow for KE to plan and operate in a financially responsible manner. It is good omen for Karachi’s citizens, KE’s investors, and the government. This may be one of those times when Pakistan has created a win-win-win situation. This is also a good sign for prospective investors looking at the viability of other DISCOs when dollar-pegged ROI has been incorporated. The government wants to sell-off other companies, and this decision on KE’s MYT by NEPRA is a good step in that direction.