Legal Advice on the Power Sector in Pakistan

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Do you need Legal Advice on the Power Sector in Pakistan?
Do you need help with NEPRA Licensing and NEPRA Tariff Petitions?

We also advise extensively on  Water and Power laws in Pakistan and Setting Up Independent Power Projects in Pakistan

We are a Top Legal500 Law Firm, which has been making positive efforts to guide foreign firms in investing in Pakistan’s Power Sector. The Pakistani Power Sector is an active player in the economic field. As of 2016 there is a positive inflow of investment in this sector due to demand and supply gap calls for immediate steps to avoid chaos in near future on account of overloading and consequently load shedding or tripping of the system.Based on this, a lawyer’s role becomes indispensable in having issues settled between power companies and the NEPRA when it comes to licensing and Tariff in the Pakistan Power Sector.

Pakistan’s Power Sector is Ready For Investments in:

  • Generation
  • Transmission through wheeling
  • Transmission Lines
  • Distribution – through Privatisation
  • Equipment and Materials

Our Clients are not only current power producers but also potential power producers and investors looking for a Valid Generation License Certificate(s).

As a legal team , well versed with the technicalities of acquiring power licences and appealing for fairer tariffs, we routinely advise on :

  1. Inflated Monthly Fuel Charges Adjustment Of Discos
  1. Claims For Partial Loading Adjustment Charges
  1. Advise On Provision Of Power Purchase Agreement Where Plants Are Being Operated On Partial Load Due To Less Demand In The System And Transmission/Distribution Network Constraints.
  1. Procurement of /Appeal for Certificates For Fuel Adjustment In The Consumer-End Tariff based on the Pakistan Power Policies (Hubco & Kapco Inclusive)
  1. Due Diligence of Verifiable Documentary Evidence and or Deviation/Variation as per the NEPRA Act, and related Rules & Regulations

For incoming foreign investors in the Pakistan Power Sector, we advise on the following Types and aspects of procedures involving Power Licences in Pakistan :

  • Generation Licences
  • Small Power Producers (SPPs) Isolated Generation Companies (ICGs) Independent Power Producers (IPPs) Generation Companies
  • Generation License to SHYDO
  • Licence requirements after mergers of Power Companies,
  • Distribution og Licenses to SPPs
  • Interim Power Procurement (Procedures and Standards) Regulations-2005
  • Transitional Arrangement Order (TAO)

 

We advise on the legal aspects of problems related to the following types of Tariffs

  • Automatic Tariff Adjustment (ATA)
  • Structural Adjustment of Tariff
  • Defence Housing Authority Cogeneration Limited
  • Star Power Generation Company Limited
  • Orient Power Company Limited
  • Ex-WAPDA Generation Company(s)
  • Nuclear Power Plants
  • Benchmark for Furnace Oil Prices
  • Tariff Adjustment of JPCL for Variation in CPI & Exchange Rate Determinations in Respect of Power Purchase Agreements Filing of New Tariff Petitions

We also advise on the Following Aspects of the NEPRA Standards & Codes Standards:

  • Performance Standards
  • Generation
  • Transmission
  • Distribution
  • Environmental Standards
  • Procedures and Standards for Investment Programme Codes
  • Grid Code Distribution Code Safety Code
  • Aspects of Privatization
  • Consumer Affairs Consumer Service Manual Complaints

History of Pakistan’s Power Sector

At the time of Pakistan’s independence in 1947, the country began a power generation capacity that reached sixty megawatts. The power sector then was under the management of two integrated utilities such as the Karachi Electric Supply Company (KESCO) and the Water and Power Development Authority (WAPDA). Not until the mid-1980s when the performance of these two utilities went unsatisfactory. Certain constraints in capital availability have led to inadequacy in generation capacity and deterioration of the infrastructure of distribution and transmission.

Law in Pakistan

Moreover, there was insufficiency in the increase of electricity supply leading to its inability to catch up with increased electricity demand during that period. Consequently, this grew about nine to ten percent annually. In fact, in the earlier part of the 1990s, the supply of power has lagged behind the demand. For this reason, they have experienced shortage in electricity, particularly commercial and industrial consumers.

Reasons for Restructuring the Power Sector

  • Undue political interference
  • Limited capital resources management corruption
  • Bureaucratic delays and over-staffing in handling routines
  • Costly and inappropriate investments
  • Quality of services is poor
  • System losses are high
  • Collection of bills is inadequate

The Council of Common Interest and the Government of Pakistan has approved the 1992 strategic plan for the restructuring the Pakistan Power Sector. Later it was followed by the approval of the Power Policies in 1994-2002.

Initiatives in the Implementation of Competitive Power Market

 

  • Restructure and privatize the existing generation of thermal power, transmission, and distribution functions as well as assets of public sector utilities such as the KESCO and the WAPDA.
  • Creation of the National Electric Power Regulatory Authority (NEPRA), which is an autonomous regulatory authority.

The initiatives were intended to promote competition, as well as improve the financial, operational, and management in all of WAPDA’s tiers. This will eventually offer reasonably priced electricity for the customers.

The varying issues that concern the government of Pakistan had led to the restructuring of different policies. For this matter, there are several points that are intended for the Power Sector to be implemented.

Power Sector Power Policy

  • The power policy requires development in relation to the structure of the power market as mentioned in the license of the National Transmission and Dispatch Company (NTDC) by the NEPRA.
  • Possibility for the review or revision of the power market structure intended for the power sector. This is due when required to do so with stakeholder involvement. Nevertheless, the regulatory framework and the power policy need to be in line with one another.
  • Accelerate new thermal plants completion including the existing XWAPDA generation plants mentioned already.
  • Reviewing of the gas allocation rationalization towards the power sector so that it can provide improvement in the generations mix.

Reviewing Structure of the Power Market

  • Review of the structure of the power market is essential so that it can move to the following level of power sector reforms.
  • All additional capacity for new generation should be included in the system according to the power market structure so that it can meet the demands of the specific markets.
  • Review is important for all regulatory timelines together with the stakeholders in order to take necessary steps prerequisite in the implementation of advancements, interventions or power market structures.

Legal advice

If you require legal advice on any aspect of the power sector in Pakistan, you need to hire a law firm with the knowledge and competence to advise you on a comprehensive range of services including:

  • Corporate consultancy
  • Legal advice and opinions
  • Drafting and negotiating various agreements including power purchase agreements, water use agreement, joint bidding agreements, shareholding agreements etc.
  • Drafting service and employment contracts
  • Advice on corporate governance and its legal aspects
  • Advice on Legislative drafting
  • Legal and financial document vetting
  • And preparing due diligence reports.

Josh and Mak International can provide you with a successful legal partnership to guide your company through the laws and legislation governing the Pakistani Power Market. Contact our office now: +92-51-844 2922 or +92-51-844 1622, you can also email jmclientcarecentre@joshandmak.com

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