In 1992, the Government approved WAPDAs Strategic Plan for the Privatization of the Pakistan Power Sector. This Plan sought to meet three critical goals:

1. Enhance capital formation,

2. Improve efficiency and rationalize prices, and

3. Move over time towards full competition by providing the greatest possible
    role for the private sector through privatization.

This major decision was taken to improve the viability of Pakistan's electric power sector which was characterized by extensive government involvement in management, political interference, and a tariff plagued by cross-subsidies. A critical element of the Strategic Plan was the creation and establishment of a Regulatory Authority to oversee the restructuring process and to regulate monopolistic services.


The existence of an independent and objective regulatory entity reduces the perception of ?risk? to investors in a market. Accordingly, an autonomous regulatory agency is essential for the immediate need and long-term stability of the sector.


Pakistan has been successful in attracting substantial foreign investment in the power sector, but the absence of a transparent regulatory regime led investors to secure their investment through long-term contracts. Consequently, a substantial part of the sector has been carved out for ?long term contract regulation? and the rest of the sector has to carry whatever risk arises from changing circumstances and realities. Pakistan has had to pay dearly for the absence of an acceptable and established regulatory environment for the commercial operation of the sector.

The December 16, 1997, issue of the Gazette of Pakistan proclaimed the enactment of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, which had become effective on 13 December 1997.

NEPRA has been created to introduce transparent and judicious economic regulation, based on sound commercial principals, to the electric power sector of Pakistan. NEPRA reflects the country's resolve to enter the new era as a nation committed to free enterprise and to meet its social objectives with the aim of improving the quality of life for its people and to offer them opportunities for growth and development.


Preparing for the Future

Pakistan is attempting to restructure the electric power sector to catch up and keep pace with the gigantic strides the power utility business has made during the 20th century. The World is moving towards an integrated electric power system. Electricity is produced, traded and sold across international boundaries in many parts of the World. Pakistan has to immediately start working towards creating an environment that will not only enable but also attract international trading in electricity. If we do not keep pace with the changing global environment, we will be isolated and left even further behind than where we found ourselves at the end of the previous century.


A first step to creating a climate conducive to investment and economic development is the need to enunciate a new regime to regulate the utility business of the future. NEPRA is one such name and it proposes to establish a new form of governance in Pakistan through its regulatory regime.


The NEPRA statute reflects the desire of the Government to establish an autonomous regulator body to improve the efficiency and availability of electric power services by protecting the interest of the investor, the operator and the consumers and to do so with a view to promoting competition and to deregulate power sector activities where there is competition.


NEPRA's Role

NEPRA's main responsibilities are to:

  1. Issue Licences for generation, transmission and distribution of electric power;

  2. Establish and enforce Standards to ensure quality and safety of operation and
    supply of electric power to consumers;

  3. Approve investment and power acquisition programs of the utility companies; and

  4. Determine Tariffs for generation, transmission and distribution of electric power.

NEPRA will regulate the electric power sector to promote a competitive structure for the industry and to ensure the co-ordinated, reliable and adequate supply of electric power in the future. By law, NEPRA is mandated to ensure that the interests of the investor and the customer are protected through judicious decisions based on transparent commercial principals and that the sector moves towards a competitive environment.


A primary challenge is to quickly create a track record of NEPRA's working such that it demonstrates its objectivity and impartiality. NEPRA has to demonstrate that its decisions are neither arbitrary nor influenced by individual and personal discretion. It is accordingly proposed that to introduce transparency and accountability in NEPRA, all regulatory decisions regarding licensees will be published and made public property.


Support for NEPRA

The Government is committed to and wishes to establish an independent, strong and judicious regulatory regime by virtue of the new enactment. The enactment of NEPRA clearly signifies the Government's desire and effort to change from public to private ownership; from political to commercial priority in economic decision making; and from subjective to objective decision making in utility operations.


The people of Pakistan are, individually, the guardians of the future of their children and they, collectively, are responsible for the future well being and prosperity of Pakistan. NEPRA will need their support in creating an appropriate regime to regulate the electric power sector and to set a new trend for governance in Pakistan for the new millennium.

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