ISLAMABAD: The Prime Minister’s Office (PMO) has requested an update from the Power Division on its proposed policy to legalize recovery-based load shedding, amid ongoing penalties imposed by the National Electric Power Regulatory Authority (Nepra) on Distribution Companies (Discos) and K-Electric for enforcing such practices in violation of regulations.
The move is part of a broader reform agenda tasked to the Power Division by Prime Minister Shehbaz Sharif, aimed at removing legal barriers to unscheduled power load shedding nationwide. The Prime Minister chaired several meetings in April 2024 directing the division to review and suggest amendments to current laws and policies.
Nepra Chairman Chaudhry Waseem Mukhtar confirmed at a public hearing last year that revenue-based load shedding is currently illegal, prompting penalties on utilities. He recommended the government legalize the practice if it intends to continue its implementation.
In response, the Power Division has drafted a proposal titled “Amendments in Legal Framework to Implement Economic Load Management in the Country,” which seeks to embed recovery-based and Aggregate Technical and Commercial (AT&C) loss-based load shedding into the legal and regulatory framework. A committee comprising representatives from the Private Power and Infrastructure Board (PPIB), Central Power Purchasing Agency (CPPA), Law Division, Nepra, and independent legal experts is advancing the initiative.
The draft proposal has been circulated for feedback from relevant ministries before submission to the Economic Coordination Committee (ECC), Cabinet Committee on Energy (CCoE), or federal cabinet for approval.
However, the Ministry of Finance (MoF) has expressed reservations, arguing that while load shedding may reduce electricity costs in low-recovery areas, the government still bears capacity payments on unused power, questioning the economic rationale behind the policy. The Finance Ministry also noted the draft lacks empirical data to substantiate claimed benefits and urged a detailed comparative analysis of economic trade-offs.
The Power Division maintains that Discos are forced to implement load shedding in high-loss areas due to rising electricity costs from the central power pool and poor recovery rates, making continuous supply financially unsustainable. It argues that a legally sanctioned, structured load shedding mechanism is critical for the sector’s financial viability.
Sources indicate Nepra remains opposed to the proposed amendments and has raised significant objections. The Finance Division reiterated the need for clearer justification of the policy’s advantages, particularly in cost avoidance and system sustainability, before the cabinet proceeds with approval.
