Islamabad    -   National Electric Power Electric Authority (NEPRA) is likely to change the terms and condition of K-Electric’s power distribution licence and has invited comments from the stakeholders regarding the Authority Proposed Modification (APM). 

In order to encourage competition for provision of electric power services in Karachi to enhance efficiency, to ensure better price, quality of service, choice for consumers and to regularise resale/distribution of electric power business, it is in the public interest to modify the terms of distribution licence of K-E, said NEPRA.

In this regard Section-26 of the NEPRA Act, It empowers the authority to amend or vary the conditions of any licence issued under the NEPRA Act in the public interest. The Authority in terms of Section 21 of the regulation of generation, transmission and distribution of Electric Power Act 1997 (the ‘NEPRA Act‘) had granted a distribution Iicence No. OQ/DU2003 dated July 21, 2003 to K-Electric Limited (K-E) along distribution services, make sale of electric power, make schemes and engage in incidental activities in its service territory as stipulated in the Article 7 of its distribution licence.

Pursuant to amendments in the NEPRA Act, the exclusive right to provide distribution services by a licensee has been omitted as stipulated in Section 21 of the NEPRA Act. Further a new provision i.e. Section 23E has been inserted, which provides electric power supplier licence to make sale/supply of electric power to a consumer. The holder of a distribution licence on the date of coming into effect of the NEPRA amendment act are deemed suppliers under Section 23E for a period of five (5) years. The Authority has noticed that K-E has not expanded/upgraded its distribution network and is not fulfilling its obligations to supply electric power to all consumers in its service territory as per terms and condition of existing distribution licence. In view of the said, the consumers of K-E are facing the excessive toad shedding, safety hazards, excessive billing and other issues. 

Further, the Authority has also taken notice that several housing societies, industrial estates, shopping plazas/complexes and high rise buildings have set up their own distribution system in the service territory of K-E. The K-E is supplying electric power to such entities at one point to further delivery/resale to their residents/occupants. Such an arrangement between these entities and K-E tantamount to exclusion/surrender of such areas from the service territory of K-E. 

In this regard, the authority pursuant to Section 26 of the NEPRA Act and sub-regulation (a) of regulation 10 of the regulations, communicated to K-E on November 23, 2018 for comments on the text of APM of relevant article of the distribution license of K-E.

The Article 7 describes, duties and responsibilities of the Licensee and bound, the Licencee to make sales of electric power, make schemes and engage in incidental activities in the service territory as a deemed supplier in terms of Section 23F of the Act. In response to the above, K-E vide its letter dated December 7 2018, did not agree to the above APM and challenged the same before the Sindh High Court through a writ petition and got a restraining order against the APM proceedings. 

Now, the honourable Supreme Court of Pakistan (SCP) in its order dated September 1 2020 in its suo moto proceedings on excessive load shedding and electrocution cases in Karachi has directed the authority to proceed under Section 26 of the NEPRA Act with respect to exclusive rights given to K-E under its distribution licence and make its determination within four (4) weeks. All stakeholders are asked to provide their comments regarding APM for excluding the ‘exclusively’ from the distribution and provide their comments by Wednesday (within 3 days). 

It is worth to mention here that Federal Minister for Planning and Development Asad Umar on Saturday said, a decision will be made regarding whether K-Electric (K-E) should remain privatised or be handed over to the federal government. The federal minister said, a meeting was held with K-Electric officials to discuss the situation in Karachi, adding that questions and concerns raised by the Supreme Court (SC) were discussed. He further maintained that in the existing system, the regulator is not subject to the government. However, K-Electric’s licence can be changed as per the order of the apex court, he added.