Nepra’s surprise tariff cut may ripple far beyond Karachi’s power grid as KE’s profits sink and investors threaten arbitration.

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THIS is the kind of blow that would sink even the Titanic.

Within days, K-Electric’s share price slid, foreign sponsors weighed international arbitration and analysts warned that a once-profitable utility could be pushed deep into the red, imperilling Karachi’s power supply and perhaps the government’s privatisation plans.

At the heart of the shock is a sharp cut in K-Electric’s multi-year tariff. Last week the National Electric Power Regulatory Authority (Nepra) reduced the rate by Rs7.6 per unit, from Rs39.97 to Rs32.37, effectively overturning its own May determination made after more than two years of consultations and public hearings.

The revision followed review motions filed by the Ministry of Energy and others, who argued for parity with models elsewhere in the power sector after negotiations with private producers. The government has defended the review as a landmark step promoting fairness and regulatory consistency for Karachi’s consumers.

The previous tariff for K-Electric was almost 40 per cent higher than the national average of Rs28 per unit projected for 2025-26 for state-owned distribution companies (Discos). The federal government covered the difference by providing subsidies to K-Electric’s consumers.

To bring in the Titanic analogy again, K-Electric is like a multi-storey cruise ship in which different parts are vertically integrated. And just like those travelling in Titanic, its customers are divided into many categories — with varying degrees of access to electricity depending on their affordability.

Now that this giant ship has hit an iceberg, its financiers are wondering if they could survive the blow.

K-Electric is Pakistan’s only privatised and foreign-owned electricity utility, with investors from Saudi Arabia and Kuwait holding 66.4pc stakes in it.

The abrupt tariff change reinforces the fears of these investors about regulatory inconsistency and political interference —