ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has granted a provisional 6-month extension in K-Electric’s distribution licence, which was scheduled to expire on July 20, 2023.
The decision, taken by NEPRA during its regulatory meeting on July 17, 2023, aims to provide interim relief to K-Electric and ensure the uninterrupted supply of power to consumers in Karachi. However, this extension comes with several strict conditions that the private utility company must adhere to during the renewal process.
K-Electric had submitted an application for the renewal/extension of its 20-year distribution licence — No. 09/DL/2023 — dated July 21, 2003, on December 01, 2022. The regulator had initially granted K-Electric exclusivity in providing distribution services, electric power sales, and other incidental activities within its service and concessional territories on a non-discriminatory basis.
The renewal process is currently underway, and NEPRA anticipates that it will require three to six months to reach a final determination. To ensure that consumers do not suffer during this period, NEPRA has decided to allow a provisional extension in K-Electric’s licence.
However, the extension comes with strict conditions to promote consumer benefit, competition, and a level playing field within the power industry. The conditions introduced by NEPRA are as follows:
- End of exclusivity: K-Electric will no longer have exclusivity in providing distribution and electric power supply services within its service and concessional territories. This decision is in line with Section 21 of the amended NEPRA Act, which does not permit exclusive operations.
- Access for bulk power consumers (BPCs): K-Electric must allow bulk power consumers (BPCs) the freedom to choose their electricity supplier. BPCs will be permitted to obtain their power supply from any generation company, as stipulated in Section 22 of the amended NEPRA Act. This measure aims to enhance competition and empower consumers to select the most suitable power provider.
- Obligation to follow existing distribution licence: While the licence extension is in effect, K-Electric must strictly adhere to the terms outlined in its existing Distribution License No. 09/DL/2003, dated July 21, 2003. This ensures that the company continues to meet regulatory requirements and maintain quality service to consumers.
- Use of system by third parties: K-Electric will be obligated to allow the use of its distribution system by any third party for supplying or wheeling electric power to any Bulk Power Consumer, in accordance with Article 9 of its existing distribution licence. This step aims to promote competition and encourage collaboration between industry players.
The conditions introduced by NEPRA seek to strike a balance between the interests of K-Electric, the power industry, and consumers. By ending exclusivity and encouraging competition, NEPRA aims to create a competitive market that benefits consumers with better services and competitive pricing.
It should be noted that while the extension has been granted provisionally, K-Electric will be expected to comply with all relevant determinations and directions issued by NEPRA during this period. The authority will closely monitor K-Electric’s compliance with the specified conditions to ensure that consumers’ interests remain protected.
With the licence extension in place, consumers in Karachi can be assured of uninterrupted power supply as the regulatory process for licence renewal progresses. NEPRA will continue to prioritise consumer welfare and industry development as it reviews K-Electric’s licence renewal application, the regulator said.Â
