Karachi’s economic power undermined by decades of institutional neglect

Pakistan’s largest city has become “orphaned” because successive federal and provincial governments, political parties and institutions benefited from Karachi’s economic output without taking full responsibility for its development, Kamran Khan said in his latest On My Radar program.

“Whether it is the Pakistan Peoples Party, Muttahida Qaumi Movement, Sindh government, federal government or courts, everyone treated Pakistan’s largest city as a goose that laid golden eggs, collected the eggs and moved on,” Khan said. “But no one accepted responsibility for Karachi.”

Khan described Karachi as Pakistan’s economic heart, saying it provides the country with a seaport, industry, exports, an entry point for imports and jobs for millions of people while contributing a major share of federal tax revenue. He cited a United Nations-linked urban study estimating that Karachi provides about 55% of Pakistan’s federal tax revenue, while some business and political estimates put the figure at 60% or higher.

He said Karachi Port handled more than 55 million tons of cargo and about 2.75 million containers during the 2025-26 fiscal year, arguing that Pakistan’s economic lifeline runs through the city.

Yet, Khan said, Karachi remains poorly connected to the country’s motorway network. The M-9 motorway links Karachi with Hyderabad, but the approximately 306-kilometer M-6 project between Hyderabad and Sukkur, which would connect Karachi and its ports to the motorway network leading to Punjab, Islamabad, Khyber Pakhtunkhwa and northern Pakistan, has still not been completed.

Khan said the gap affects businesses whose containers travel from Karachi to Punjab, factories receiving raw materials through the port and exporters shipping goods through the city. He also criticized the lack of dedicated freight corridors, rail links, bypasses and logistics routes to move heavy port traffic away from Karachi’s urban roads.

He contrasted Karachi’s public transport development with Lahore’s Orange Line metro, a 27-kilometer system with 26 stations that cost $1.6 billion and began operating in October 2020. Karachi’s Circular Railway, despite being approved at the federal level in 2017 and again discussed in 2022 as a project modeled on Lahore’s Orange Line, remains incomplete, he said.

Khan also criticized Karachi’s Green Line, saying the system initially stopped short of the city’s commercial and historic center. Work is now underway to extend it from Numaish to Tower, while MA Jinnah Road has remained disrupted by construction and traffic problems for about a year and a half, he said.

He said similar delays affected industrial development. While the Allama Iqbal Industrial City in Faisalabad and Rashakai Economic Zone in Khyber Pakhtunkhwa moved forward, the Dhabeji Special Economic Zone near Karachi, whose groundbreaking took place in 2023, remains under development, according to Khan.

Khan also pointed to Pakistan Steel Mills, saying repeated plans for privatization, revival, Russian cooperation, a new steel mill and an industrial park on its land failed to restore the facility.

Water supply, he said, is another example of Karachi’s institutional problems. The K-IV water project, first envisioned about 25 years ago, was intended to provide nearly 650 million gallons of water a day, with 260 million gallons planned in its first phase. Khan said the project has been delayed for about 20 years and its estimated cost has risen 975% to 172 billion rupees.

He acknowledged that responsibility is divided, noting that the federal government and WAPDA oversee K-IV while the Sindh government is responsible for the distribution network inside Karachi.

Khan also cited the failed DHA cogeneration and desalination project, which began in 2003-04 with an investment of about $110 million and was designed to produce about 94 megawatts of electricity and desalinate 3 million gallons of seawater daily. Commercial operations began in 2008, but technical problems repeatedly shut the plant down before it stopped operating in May 2010. He said later proposals required another $51.5 million for rehabilitation, including money for old debts and liabilities.

On electricity, Khan said the privatization of KESC in 2005 was followed by ownership, dues and regulatory disputes. He said Shanghai Electric agreed in 2016 to acquire a 66.4% controlling stake in K-Electric for about $1.77 billion and proposed $9 billion in investment by 2030, but government clearances and disputes over dues and circular debt dragged on for about nine years. Shanghai Electric ended the acquisition plan in September 2025, he said, and the matter has since moved to international arbitration.

Khan also raised concerns about K-Electric’s current tariff dispute, saying the company claims a lower multiyear tariff approved by the National Electric Power Regulatory Authority could increase load-shedding risks. He said K-Electric estimates more than 8 million people could face increased outages and about 150,000 consumers could be at risk of permanent disconnection.

Khan said the federal government cannot be held solely responsible. He noted that the PPP has governed Sindh for about 18 years and that water, sewage, roads, waste management, building control, urban planning, local government and parts of mass transit fall under provincial responsibility.

Citing the 2026 Global Liveability Index, he said Karachi ranked 170th among 173 cities.

“The real question is not who destroyed Karachi?” Khan said. “The real question is: Who owns Karachi?”

He argued that Karachi should receive greater financial, administrative and political authority in line with its contribution to Pakistan’s economy.

“Karachi is not a provincial issue,” Khan said. “Karachi is Pakistan’s economic issue.”

He concluded that Karachi would remain “orphaned” as long as its resources are controlled elsewhere and decisions about its future are made outside the city.