Nepra allows K-Electric exclusive right till expiry of license

April 23, 2021

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The National Electricity Power and Regulatory Authority (NEPRA) has retained the exclusive rights of the Karachi Electric Power Company (KE) until its distribution license expires on July 2, 2023, with certain conditions.

In accordance with directives from the Pakistani Supreme Court, Application and Modification Procedure (APM) procedures have been resumed to remove the exclusivity of the KEL distribution license. APM was submitted to KEL on September 3, 2020 pursuant to Rule 10 (1) (a) of the Licensing Regulations under Section 26 of the Nepra Act.

Pursuant to Section 10 (1) (a) of the NEPRA Licensing Regulations (Application and Amendment Procedures), along with Section 26 of the NEPRA Act 1999, Authority Proposed Modification (APM) was transferred to Licensee / KEL on November 23, 2018 where proposed amendment to Section 7 of the KEL Distribution License for sent for comments and feedback. The proposed amendment was made to remove the exclusivity of the distribution license for KEL and to combine the core license granted by KEL with the “sale / supply” under the new section 23E of the amended Nepar Act.

In its response, KEL disagreed with APM in a letter dated December 7, 2018, and indicated that this would negatively impact their operations and commitment to service. In addition, KEL also emphasized that the provisions of the May 2, 2018 amendments to the Nebra Law are not retroactive and, therefore, the terms of the distribution license cannot be changed.

Later, in connection with pending overload / discharge and electric shock cases in Karachi, the Pakistani Supreme Court initiated suo moto litigation and ordered Nepra to act in accordance with Section 26 of the NEPRA Act.

Pursuant to Section 10 (6) of the Licensing Regulation, the Authority decided to hold a public hearing in Karachi on September 21, 2020.

NEPRA reviewed requests and performed due diligence on the pros and cons of removing exclusive content. In this regard, NEPRA felt that there are good reasons for eliminating exclusivity, and at the same time, there are strong reasons to keep it, due to the potential implications for future investments in KEL, as well as the lack of an immediate alternative in Karachi.

NEPRA has also stated that K-Electric cannot claim one sided right to exclusivity when it has failed to fulfill its legal obligations to the consumers.