In 1992, the Government approved WAPDAs Strategic
Plan for the Privatization of the Pakistan Power
Sector. This Plan sought to meet three critical
Enhance capital formation,
Improve efficiency and rationalize prices, and
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
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 main responsibilities are to:
for generation, transmission and distribution of
enforce Standards to ensure quality and safety
of operation and
supply of electric power to
investment and power acquisition programs of the
utility companies; and
for generation, transmission and distribution of
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
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.