PAKISTAN Law and Practice Contributed by: Nadir Altaf and Muhammad Fahim Khan, RIAA Barker Gillette
1. Structure and Ownership of the Power Industry 1.1 Law Governing the Structure and Ownership of the Power Industry Electricity Sector Regulatory Regime The principal law regulating the power indus- try of Pakistan is the Regulation of Generation, Transmission and Distribution of Electric Power Act 1997, as amended from time to time (the “NEPRA Act”). The National Electric Power Regulatory Authority (NEPRA) was established pursuant to the NEPRA Act as an independent regulator of the power sector. On 2 May 2018, the Regulation of Generation, Transmission and Distribution of Electric Power Act (Amendment) Act 2018 (the “2018 Amendment Act”) was enacted. The 2018 Amendment Act significantly amended the NEPRA Act and reformed the elec- tricity market by introducing provisions to foster greater competition. NEPRA’s main functions include the issuance of licences for undertaking specified regulated activities (ie, generation, transmission, distribu- tion, supply business, and the determination of tariffs for the sale of electric power). Licensees include: • companies that transmit electric power, including the national grid company (National Transmission and Despatch Company Limited (NTDC)) and the provincial grid companies (PGCs); • companies that distribute electric power to end consumers (“suppliers of last resort”/dis- tribution companies); • the company responsible for administering system operation and dispatch (ie, Independ- ent System and Market Operator of Pakistan (Guarantee) Limited (ISMO) which has recent-
ly been separated from NTDC as a separate company); • the company responsible for the organisation and administration of trade in electricity and payment settlements between generators and consumers (currently, Central Power Purchas- ing Agency (Guarantee) Limited (CPPAG))*; • electric power suppliers that act as supply- aggregators for electric power generated by generation companies and suppliers of last resort; • electric power traders that act as demand- aggregators for consumers and other licen- sees; and • companies that generate electric power for sale to other licensees and consumers (gen- eration companies). Through the 2018 Amendment Act, Section 14 (B) was incorporated in the NEPRA Act to, inter alia, regulate the issuance of generation licenc- es under NEPRA’s licensing regime, subject to subsection (5) of Section 14 (B) thereof. Under this subsection, the federal government – in consultation with NEPRA – was entitled to plan the gradual phase-out of licences for different types of generation companies. This plan for phasing out licences had to be completed within five years following the enactment of the 2018 Amendment Act (ie, by 30 April 2023). Now that the planned period for the gradual cessation of generation licences has ended, any generation company can set up and operate a generation facility without needing a “generation licence”. Notwithstanding the foregoing, a company that intends to set up a generation facility must ensure compliance with NEPRA-issued technical stand- ards and also obtain NEPRA’s “concurrence”. While NEPRA has not specified the terms and conditions for concurrence, generation compa- nies must submit the documentation previously required under the former generation licensing
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