ISLAMABAD: The National Electric Regulatory Authority (Nepra) granted K-Electric Ltd (KEL) both a non-exclusive distribution license and a supplier-of-last-resort (SoLR) license for 20 years, valid until January 18, 2044.
The non-exclusive distribution license allows smaller private power distribution companies with Nepra licenses to enter the power distribution and sale business, particularly in housing societies and colonies. However, if these companies default or are unable to ensure power supply, the rights, responsibilities, and benefits of power supply would shift to KEL under the SoLR.
KEL’s previous 20-year distribution license expired in July 2023, and an interim license was granted by Nepra for six months. The extension of the distribution license and the award of SoLR for the next 20 years were granted after the majority of consumer groups in Karachi supported KEL’s request, citing the utility’s commitment to a future investment of Rs484 billion for continuity and improved service delivery.
Despite support, there were opposing voices from consumer groups alleging poor performance and expensive power due to old plants. Some suggested that the license term should be limited to 3-5 years, with extensions linked to performance targets. These critics highlighted KEL’s failure to enhance generation capacity, heavy dependence on the national grid, and skewed reliance on imported fuel.
Nepra acknowledged concerns about KEL’s performance not meeting international standards but also recognized it as one of the top-performing distribution companies in comparison to its peers. The regulator stated that, despite shortcomings, there was no alternative to KEL for the distribution business.
To address concerns, Nepra instructed KEL to adhere to the Nepra Act, rules, regulations, and applicable documents. The regulator emphasized the need for KEL to improve performance in service delivery, including achieving targets for reducing line losses, expediting new connections, and enhancing IT intervention for transparency and consumer-friendliness.
Nepra clarified that the distribution license could not be granted for a shorter term due to government rules stipulating a minimum term of 20 years. KEL is the sole vertically integrated electric supply company in the country, serving Karachi and its suburbs in Sindh and parts of Balochistan.
Nepra noted KEL’s commitments to meeting future power demand through increased interconnection capacity, local coal-based plants, and renewable projects. The regulator had previously granted SoLRs and non-exclusive distribution licenses to ex-Wapda distribution companies on similar grounds.
