ISLAMABAD: The government has decided to extend incentives provided to Special Economic Zones (SEZs) under the China-Pakistan Economic Corridor (CPEC) to all industrial estates and zones across the country.
This includes reforms to streamline electricity supply through a revised mechanism approved by the Cabinet Committee on Energy (CCOE).
Under the new mechanism, the regulatory barrier preventing power distribution companies (DISCOs) from selling electricity to other licensed suppliers has been removed. This allows DISCOs to enter bilateral agreements with SEZ developers holding supplier licences from the National Electric Power Regulatory Authority (Nepra).
The SEZ Act 2012 mandates federal and provincial governments to provide utilities, including electricity, to SEZs. However, challenges such as unreliable power supply, delays in infrastructure development, and regulatory ambiguities have hindered the full potential of SEZs.
After consultations with Chinese counterparts, it was agreed that CPEC SEZs would remain under the service jurisdiction of their respective DISCOs. Developers will sign operation and maintenance (O&M) agreements with DISCOs to handle infrastructure, electricity supply, billing, and collections without requiring additional licences.
Industrial consumers in SEZs will be charged a uniform tariff, and developers will receive an O&M fee approved by Nepra. CPEC SEZs will also sign power purchase agreements with DISCOs for electricity supply equivalent to their peak demand for five years.
Nepra’s recent regulatory amendments allow host DISCOs to sell electricity to SEZ developers under bilateral contracts. SEZs will apply for supplier of last resort and distribution licences under the Nepra Act 1997 for power procurement and infrastructure development.
The Ministry of Industries and Production proposed extending the incentive package to all SEZs to avoid disparities between CPEC and non-CPEC zones. The CCOE agreed, ensuring uniform benefits for industrial consumers across the country.
The revised mechanism aims to minimize DISCOs’ role in SEZs and industrial zones, introduce one-window facilities to address billing complaints, and reduce distribution costs. The revenue collected from electricity sales will be transferred to the Central Power Purchasing Agency-Guarantee (CPPA-G) through escrow accounts, after deducting distribution margins approved by Nepra.
Comprehensive O&M agreements have been developed by the Power Division to implement the changes. The energy committee emphasized that the revised system would promote efficiency, ensure equitable distribution of resources, and create a consistent framework for industrial development nationwide.
