1

Energy Regulations Energy Regulations in Pakistan: Recent in Pakistan: Recent

DevelopmentsDevelopments

“Energy: Sustainable Access for All”“Energy: Sustainable Access for All” World Consumer Rights Day-March 2006World Consumer Rights Day-March 2006

Muhammad Aftab AlamMuhammad Aftab AlamConsumer Rights Commission of Consumer Rights Commission of

PakistanPakistan

2

Energy Regulations-An Energy Regulations-An Introduction Introduction

Consumers and Energy Sector Consumers and Energy Sector Regulation Regulation

Past: Public Sector Monopolies like Past: Public Sector Monopolies like WAPDA, KESC, SNGPL, and SSGCLWAPDA, KESC, SNGPL, and SSGCL

Legal and Infrastructural Reforms in Legal and Infrastructural Reforms in Power Sector during 1990sPower Sector during 1990s

Inclusion of Independent Power Inclusion of Independent Power Producers (IPPs)Producers (IPPs)

Unbundling of big state-owned Unbundling of big state-owned monopoliesmonopolies

3

Energy Regulations-New Energy Regulations-New Regime Regime

National Electric Power National Electric Power Regulatory Regulatory Authority (NEPRA) Authority (NEPRA) 19971997

Natural Gas Regulatory Natural Gas Regulatory Authority Authority (NGRA), (NGRA), 20012001

Oil and Gas Regulatory Oil and Gas Regulatory Authority Authority (OGRA), (OGRA), 20022002

De-regulation of Petroleum De-regulation of Petroleum PricesPrices

4

NEPRANEPRA Mission StatementMission Statement……ensures the provision of safe, reliable, ensures the provision of safe, reliable,

efficient and affordable electric power efficient and affordable electric power to the electricity consumers of to the electricity consumers of Pakistan…Pakistan…

Section 7 (6) of the NEPRA Act, Section 7 (6) of the NEPRA Act, 19971997

…the Authority shall, as far as practicable, protect the interests of consumers …

5

OGRAOGRA Mission StatementMission Statement……Protect the Public interest while Protect the Public interest while

respecting Individual Rights by ensuring respecting Individual Rights by ensuring Effective, Efficient and Equitable Effective, Efficient and Equitable Regulatory Environment. Regulatory Environment.

Section 6 (2Q) of OGRA Ordinance, Section 6 (2Q) of OGRA Ordinance, 20022002

……Protect the Public interest while Protect the Public interest while respecting Individual Rights by ensuring respecting Individual Rights by ensuring Effective, Efficient and Equitable Effective, Efficient and Equitable Regulatory Environment.Regulatory Environment.

6

Functions of RegulatorsFunctions of Regulators

Licensing Licensing Tariff DeterminationTariff Determination

Performance Standards of Utilities Performance Standards of Utilities

Complaints against the UtilitiesComplaints against the Utilities

Public HearingPublic Hearing

Transparency and OpennessTransparency and Openness

7

Issues in RegulationsIssues in Regulations

Autonomous and Independent Autonomous and Independent RegulatorsRegulators

Internal Issues: Lack of Internal Issues: Lack of ownership by the sectorownership by the sector

External Issues: Pressure from External Issues: Pressure from the investors for weak the investors for weak regulationsregulations

Government InterventionsGovernment Interventions Policy Guidelines or Policy Policy Guidelines or Policy

DirectivesDirectives

8

Policy Guidelines for Policy Guidelines for RegulatorsRegulators

Guidelines of Federal Government: NEPRA

Section 7: Powers and functions of the Authority

(6) In performing its functions under this Act, the Authority shall, as far as practicable, protect the interests of consumers and companies providing electric power services in accordance with guidelines, not inconsistent with the provisions of this Act, laid down by the Federal Government.

9

Policy Guidelines for RegulatorsPolicy Guidelines for Regulators (Contd.)(Contd.)

Guidelines of Federal Government: OGRA

Section 21: Power of Federal Government to Issue Policy Guidelines

The Federal Government may issue policy guidelines on the matters of policy not inconsistent with the provision of this Ordinance

10

Recent Developments: Recent Developments: NEPRANEPRA

New IPPs Regime: 47 new power generation New IPPs Regime: 47 new power generation companiescompanies

Guidelines for Determination of Tariff for IPPs Guidelines for Determination of Tariff for IPPs (November 2005, Ministry of Water and (November 2005, Ministry of Water and Power)Power)

1.2 (a) NEPRA should now determine an up-1.2 (a) NEPRA should now determine an up-front tarifffront tariff [for IIPs without any public [for IIPs without any public consultation]consultation]

Proposed NEPRA Amendments without Public Proposed NEPRA Amendments without Public Consultation-proposed draft not made publicConsultation-proposed draft not made public

11

Recent Developments: Recent Developments: OGRAOGRA

Amendments in OGRA Ordinance [no Amendments in OGRA Ordinance [no public consultation]public consultation]

Recent Cabinet Decision on Recent Cabinet Decision on Determination of Petroleum PricesDetermination of Petroleum Prices

Issues Issues Preparation of Regulations/Rules to Preparation of Regulations/Rules to

determine the Petroleum Prices [after determine the Petroleum Prices [after consulting all stakeholders] consulting all stakeholders]

Public representation/participation in Public representation/participation in prices determinationprices determination

Transparency and openness Transparency and openness

12

ThanksThanks