NEPRA Functions and Activities g Briefing

toUSEA

Mission Statement
To develop and pursue a Regulatory Framework, which ensures the provision of safe, reliable, efficient and d affordable ff d bl electric l t i power to t the th electricity l t i it consumers of Pakistan; shall facilitate the transition from a protected monopoly service structure to a competitive environment where several power sector entities function in an efficiency y oriented or market driven environment and shall maintain a balance between the interests of the consumers and service providers in unison with the broad economic and social policy objectives of the Government of Pakistan Pakistan.
2

ESTABLISHMENT OF NEPRA
In order to reform the Pakistan power sector a strategic plan for restructuring, reforming and privatization of WAPDA was developed by Government of Pakistan in 1992.The 1992 The strategic plan was approved by the Council of Common Interests (CCI) in 1993. The strategic plan recommended corporatisation and privatization of WAPDA i into t separate t Generation G ti and d Distribution Di t ib ti Companies. C i The Prime Minister directed the implementation of the strategic plan for WAPDA as approved by the CCI through P.Ms directive dated 24-101998. The directive of the P.M included the following. Develop the outline of a competitive, competitive modern and dynamic power sector, which meets the requirements of the consumers in the cheapest and the most efficient manner. Ensure that the restructuring and reform of WAPDAs WAPDA s Power Wing leads to such a vision.

ESTABLISHMENT OF NEPRA
The strategic Plan included the creation of an Independent regulatory Authority to provide a level playing field to all the stake holders and to assure prospective investors that an independent agency would be objectively deciding on regulatory matters of power sector without extraneous influence. NEPRA was established by the Government of Pakistan in January 1995 through a Presidential Ordinance. NEPRA was formally notified through promulgation of the Regulation of generation, Transmission and Distribution of Electric Power, as Act No. XL of 1997 on 13th December 1997.

Constitution of the Authority

The Authority comprises of a Chairman, appointed by the Federal Government, and four members b also l appointed i t d by b the th Federal F d l Government on the recommendations of the Four Provincial Governments. Governments The Chairman and the members are appointed for a tenure of four years and are eligible for a similar term provided that a member other than the Chairman shall not be appointed if he has already attained the age of sixty five years. (Section 3 of the NEPRA Act) ( )
5

Organogram of NEPRA
Chairman

Member Standards

Member Licensing

Member Tariff

Member Privatization

R it Registrar

Licensing Wing

Tariff & IT Wing

Consumer Standards Privatiza Administra Affairs, Coord Wing Tion/Wing tion & HR & Legal

Powers and functions of NEPRA under the Act

a) ) b) c) d) e) Grant licenses li to Generation, i Transmission i i or Distribution i ib i services. Determine tariff, tariff rates, rates charges and other terms and conditions. conditions Prescribe and enforce performance and investment standards. Prescribe fees and fines. fines Ensure continuous, efficient and affordable supply of electric power services to the consumers.

Act/Rules/Procedures (Framed by NEPRA) Regulation of Generation, Generation Transmission and Distribution of Electric Power Act (XL of 1997). Enacted by Parliament in December 1997. Tariff Standards and Procedure Rules, 1998. Licensing Application & Modification Procedure Regulations1999, Licensing, Regulations1999 Licensing (Distribution) Rules, 1999. Licensing (Generation) Rules, 2000. Fees and Fines Rules, 2002. Consumer Eligibility Criteria (Regulations), 2003. Resolution of Disputes p between IPPs & other Licensees,2003 , Performance Standards Distribution Rules 2005 Performance Standards Transmission Rules 2005 Interim Power Procurement (Procedure & Standards ) regulations 2005 Grid Code, Distribution code 2005 C Consumer Service S i Manual M l 2007
8

Players in the Power Sector

Utility Companies Government, Government Privatization Commission

Public Bodies, Representatives,

Regulator

Consumers , Chambers of Commerce & Industry.

IFIs

Un-electrified Un electrified Area residents

9

Present Status
a) Formation of Rules, Regulations, Procedures b) Grant Licenses c) Tariff-----MYT( KESC, FESCO), IPPs , GENCOs, Wind. d) Upfront U f tariff.----iff F Thermal For Th l & Wind Wi d IPPs IPP e) Standards ---- Monitoring of Standards f) Consumer Interests. Interests Complaints-Hearings Complaints Hearings g) Tribunals h) Exchange Programs. Programs SAFIR, SARI, USAID, World Bank, USEA, PURC, , NARUC, , Ofgem, g , TERI/CERC, , South Africa, China
10

PAKISTAN Power System

MARDAN WARSAK (240) GAZI BAROTHA (1450)

TARBELA (3408) I.S.P.R NEW RAWAT MANGLA (1000)

BURHAN BANNU DAUDKHEL CHEP (184) GATTI CHASNUPP (310) SABA (132)

GAKHAR SAHOWALA K S KAKU K.S.KAKU

ROUSCH (355) QUETTA SIBI KAPCO (1348) AES (695) UCH (548) M.GARH

HCPC (140)

RAVI BUND RD: JAPAN (132) N.ABAD K.LAKHPAT SEPCOL (117) K.ADDU S:ROAD KEL (131) MULTAN YOUSAF WALA VEHARI FKPC(157) (1350) N.G.P.S (195)

LAHORE

GUDDU GUDDU (1655)

500 kV Grid Station

LIBERTY (229) ( )

500/220 kV Grid Station 220 kV Grid Station Hydel Power Station

DADU

(1200) HUBCO

KOTRI (174)

HALA RD: LAKHRA (150) (850)

Thermal Power Station IPPs Power Station 500 kV Power Station 220 kV

TAPAL G.AHMAD KDA-33 (KESC)

Power Station 132 kV 500 kV T/LINE 220 kV T/LINE

11

Overall Country System Installed Capacity and Units generated (FY 2005 2005-06)
Installed Capacity C ( (19450 MW) )
(KESC) Thermal 1756 9%

G Generation ti (93629 GWh)

(KESC) Thermal 9066 11% (Wapda) Hydro Electric 30862 34%

(KESC) Available from IPPs & Nuclear 462 2%

(Wapda) Hydro Electric 6499 34%

(KESC) ( ) Available from IPPs & Nuclear 1876 2%

(WAPDA) Availabe from IPPs & Nuclear 5833 30%

(Wapda) Available from IPPs & Nuclear 31090 27%

(Wapda) Thermal 4900 25%

(Wapda) Thermal 22508 26%

12

HYDEL THERMAL MIX

Oil 6497 MW (34%) Hydel 6499 MW (34%)

Total 19450 MW

Gas 5815 MW (30%)

Coal 150 50 MW (1%)

Nuclear 452 MW (2%)

13

WAPDAs RESTRUCTURING
NTDC
(1)

WAPDA HYDEL (1)

POWER WING

GENCOs
(4)

DISCOs
(9)

GENERATION Thermal Power Stations

TRANSMISSION
Grid Station/Trans. Lines Operation & Maintenance

DISTRIBUTION

Distribution Companies

14

Generation Business in Pakistan

a) b) c) d) e) f) g) h) Ex WAPDA GENCOS--- 4 Nos All Licensed WAPDA Hydel ----- 1 Comprehensive License IPPs Pursuant to 1994 P.P ---- 16 Nos all Licensed IPPs Pursuant to 2002 P.P----- 5 Nos all Licensed (COD not yet) KESC generation ------ Licensed SPP SPP----------35 35 Nos N all ll Licensed Li d Distributed generation---------- 7 Nos all Licensed Wind Energy --------------------4Nos (3 Licensed)

15

Transmission Business in Pakistan

a) NTDC------Licensed

a) ) KESC Transmission----License in Process

16

Distribution Business in Pakistan

a) DISCOs-------- 8 Nos all Licensed with Individual tariffs. a) PPP b) Distribution Margin c) Average Sale Rate d) Consumer end tariff KESC----------KESC Distribution License a) PPP--- KESC own Generation, NTDC, IPPs b) Distribution Margin c) ) A Average S l Rate Sale R t d) Consumer End Tariff SPPs-----------34 Nos Out of this only 9 Nos qualify for the grant of a distribution license. a) ) Licence g granted. b) Consumer End Tariffs notified

b)

c)

17

Distribution Business in Pakistan

a) ) BPC operative i at the h time i of f Distt Di Lice-----Li All Such cases being identified and notices being g issued. 1st hearing g of its kind held in May 2007 for grant of distribution License to Bahria Town Housing Colony (an Inset H/S within the geographical boundaries of IESCO). IESCO) a) Separate distribution License Prepared b) Will have a separate tariff c) ) Will be b required i d to meet all ll Standards/ S d d/ Codes Policy y on the Eligibility g y Criteria for such INSET entities being developed. a) This will include the Principle of Eligibility for such INSET applications.

b) )

18

Corporatization/Privatization of Distribution Companies O Originally i i ll WAPDA A A and d KESC SC two virtually i ll integrated i d companies i feeding about 15M and 2Million consumers respectively. Through the Strategic Plan WAPDA Corporatized into Eight Di t ib ti Companies Distribution C i Vertically KESC Integrated KESC un bundled into KESC Generation transmission and Distribution with Separate Licensees but under the same management. t REASONS
High Losses DISCOs 26%( all combined- Ranging from 10% to 36%) KESC 40% I efficiencies In ffi i i Bad Management Poor Consumer Response y to be p paid by y the Government annually y to run these entities A lot of subsidy

19

Post Privatized DISCOs/KESC WAPDA A AC Carporatized i d i into EIGHT G Discos i ( i ib i Companies) (Distribution C i )
One Disco (FESCO) offered for privatization Individual Tariffs for each Disco notified in 2007 after three years of delay With tariffs notified each Disco financially independent Can now plan their own development plans and sign loan agreements. Have the power to sing bi-lateral with any GENCO for meeting its excess capacity

KESC Privatized in 2005 (taken over by the new management)

KESC Distribution separate licensed Has its own Consumer end tariff The total tariff including Generation plus Transmission and Distribution is a Multi Year Tariff for a control period of Seven Years. The salient features of the MYT are
Control Period 7 years As per the mechanism KESC DISCO break even after three years with losses down from 40% to 25% Forth year ownward KESC Disco will earn profit Privatized KESC will invest around US$ 500M in KESC Distribution only Any un notified amount above Consumer end tariff will be paid by the Govt 20 as subsidy

Consumer Class Wise Rates Cents/kWh (Previous )

Up to 50 Units (Residential) 1-100 00 U Units ts ( (Residential) es de t a ) 101-300 Units (Residential) 301-1000 Units (Residential) Above 1000 Units (Residential) Commercial Industrial Bulk Agricultral Tubewells KESC &WAPDA Average Sale Rate Average Sale Rate KESC WAPDA 7 7

KESC

WAPDA

2
KESC &WAPDA 7 7 Agricultral Tubew ells 8 7

4
Bulk 11 10

6
Industrial 9 9 Commercial 13 12

10

12

14

Above 1000 301-1000 101-300 Up to 50 1-100 Units Units Units Units Units (Residential) (Residential) (Residential) (Residential) (Residential) 13 12 10 10 6 6 4 4 2 2

21

ELECTRICITY TARIFF COMPARISON US cents/KWh

16 14 12 10 8 6 4 2 0
Indonesia FRANCE INDIA Pakistan Turkey United States U.K

Residential Industrial

LOSSES DISCOs/KESC Total Consumers Served 17.5Million

S/N S/No
DISCO

Losses 2000--% 22 9.5 12.7 10.5 13.7 34 39 22 36

1 2 3 4 5 6 7 8 9

PESCO IESCO GEPCO LESCO FESCO MEPCO HESCO QESCO KESC

Losses 2005 28 10.4 11 10.2 12.8 20 39.5 15.3 34 23

Year Wise Progress (TARIFF)

Y Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total D Determination i i
(WAPDA/KESC/GENCOS/NTDC/DISCO s)

Others Total
------01 ---01 01 03 04 01 15 26 07 04 03 13 07 08 33 24 05 46 196

04 04 02 13 06 09 29 47 25 31 170

24

Year Wise Progress (LICENCING)

Year SPP s DISCOs NTDC GENCOs & KESC CHAS IPPs/ NUPP/ Wind kannup WAPD TOTAL A HYDEL

---2001 09 2002 05 2003 ---2004 13 2005 04 2006 2007 Total 31

2000

---01 07 01 --------

------01 ----------

------04 ------01

---------01 ---01

09

01

05

02

---------12 04 03 07 4 30

------------01 ----

01

---10 17 14 18 09 07 4 25 79

Safeguarding interests of Consumers

Unrestricted self Generation & Bilateral Contracts. Affordable tariff for all categories. Life line consumers Redressal of Complaints: i) Utility services obligation ii) Provincial offices of inspection established by the Provinces iii) Consumer Affair Division at NEPRA attended/rectified over 1800 Nos complaints since inception. iv) Court of Law Representation through Consumer/human rights Education/Information through g media/website.

26

Complaints Handling Year Complaints Recieved Complaints Addressed through Provincial Offices of Inspection/DISCOs Complaints redressed through NEPRA Consumer Affairs Division under Complaint Redressal mechanism/ POI

2001 2002 2003 2004 2005 2006

76 187 237 354 1098 548

76 151 172 238 851 355

Complaints Redressed through DISCOs 36 65- Attock Cement Vs KESC 116- Iftekhar Ahmed Vs IESCO, PWD H/s Vs IESCO, D.s Textile Mills Vs LESCO c 217- PACE Lahore, Civilian Coop H/s 193- Tayyab textile mills Vs FESCO, HDIP Vs IESCO, IESCO Saima trade towers Vs KESC KESC Vs NTDC 95-

2007

357

241

All the four Provinces have since established Provincial Offices of Inspection and are functioning pursuant to Sec 38 of the NEPRA Act
27

Consumption Pattern (2005-06)

Units billed 67603 GWh Losses 24.9%
Ex-WAPDA Nos Million 12.74 2.42 0.21 0.004 KESC Nos Million 1.35 .40 0.02 0.001 Total % of Consumer 83% 15% 1.5% .5%

Total Number of Consumers including KESC-17.24 M

Catagory % of Consumptio n 45.4% 7% 29.3% 17.3%

Domestic Commercial Industrial Bulk& others

14.09M 2.82M 0.23M 0.005M

Total

15.42M

1.82M

17.24M

100%
28

Projected Shortages Electricity Growth rate assumed to be 9% Year 2005 2006 2007 2008 2009 2030 Installed Capacity p y 19226/16000 19226/16000 19226/16000 19500/16400 19500+ Peak demand 14000 15200 16500 18000 19500 60000+ Surplus/deficit 3000 800 (500) (1600) (2100)
29

Pricing Mechanism
a)
b)
Generation---- New IPPs--- Cost Plus return on Equity, Tariff Comprises of CPP&EPP with Provision of adjustments for currency fluctuations and inflation. E i i IPPs Existing IPP governed d under d 1994 P.P. P P Not N determined d i d by b NEPRA. NEPRA Transmission--- Cost plus debt service plus Return on Equity.( Only transmission charge for transporting Electricity) Cost ( (CPP Plus EPP) ) PLUS T. Charge g transferred to Discos p passed on the prescribed formula. Charging of CPP-------- on the basis of Max demand recorded by a DSICO during the month Charging of EPP--------EPP as per price per unit delivered of the basket rate Discos Tariff --- Distribution Margin----cost plus return on assets (weighted average cost of capital ). Consumer end tariff is determined on the basis of CPP,EPP charged to a DISCO plus distribution margin with the provision of Cross subsidization within the various consumer classes.

c)

30

Future Potential on indigenous resources

No 1 Fuel/tech H d l Hydel Expected Potential 41000MW

Coal

20000MW

R Renewable bl

10000MW

4 5

N l Nuclear Mini/Micro hydel y

8800MW 700MW
31

32