In a harrowing revelation regarding the governance of Pakistan's power sector, the National Electric Power Regulatory Authority (NEPRA) has been implicated in serious financial malfeasance and derelictions, according to a scrutinizing audit report published on Monday, July 7, 2026.

The meticulous audit for the fiscal year 2024-25 disclosed that despite posting record-setting financial gains, the regulatory behemothcontravened its own governing statute by omitting to transfer the full surplus to the Federal Consolidated Fund (FCF).

The labyrinth of Statutory Breaches

Against a cumulative comprehensive income of Rs1.58 billion, the Authority remitted a mere Rs921.99 million, sequestering nearly Rs884 million in palpable breach of Section 17 of the NEPRA Act, 1997. This legislative injunctionstipulates that all surplus funds, post-taxation, must be expeditiously transferred to the federal kitty.

"Instead of fulfilling its legal obligation, NEPRA allowed public funds to accumulate on its balance sheet, with payable amounts swelling alarmingly from Rs221.99 million to Rs883.91 million within a single year, highlighting weak financial discipline and misplaced priorities."— Audit Report 2025-26

The inquiry further unearthed a salient deviation from approved accounting canons. While the institutional framework mandates revenue recognition on an accrual basis, the auditors found that revenue was recorded on a cash basis, precipitating an understatement of income by Rs91.34 million. This misrepresentationerodes the credibility of the regulator’s financial statements.

Enforcement Failures and Questionable Expenditures

Adding to the turmoil, the audit exposedineffectual enforcement mechanisms, revealing that NEPRA failed to recover Rs161.94 million in outstanding dues from licensees. Despite being fully provisioned as doubtful debt, the amount has remained in limbo for years without meaningful regulatory action.

Furthermore, advances extended to employees surged by over 51 percent in five years to nearly Rs984 million. This accretion occurred while liabilities towards the federal government were mounting, indicating poor financial planning and questionable spending priorities.

The paradox of Financial Growth

Ironically, NEPRA’s financial metrics exhibit formidable improvement. The surplus ratio ascended from 21.92 percent in FY2020-21 to 25.97 percent in FY2024-25, while return on assets (ROA) ballooned from 18.25 percent to 42.81 percent. Return on capital employed (ROCE) skyrocketed from 51.42 percent to 217.15 percent.

During FY2024-25, surplus before tax leaped by 93.5 percent to Rs2.52 billion, driven by a 40.3 percent augmentation in total income. Yet, the audit accentuated that such financial affluence has not transmuted into improved compliance or institutional discipline.

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