NEPRA awards 10-Year Licence to PPIB to run power auctions in Pakistan

ISLAMABAD: The National Power Regulatory Authority (NEPRA) has granted a 10-year licence to the Private Power & Infrastructure Board (PPIB) to act as an independent auction administrator (IAA) in the country’s power sector.

The licence will allow PPIB to implement a competitive market regime, known as the Competitive Trading Bilateral Contract Market (CTBCM), to procure electricity through transparent and efficient bidding.

PPIB will be intended to facilitate state-run ex-Wapad distribution companies (XW-DlSCOs)/Suppliers of Last Resorts (SoLR) in meeting their capacity obligations by procuring new capacity and energy to fulfill their load requirements.

The licence is for ten-year period expiring on 11 Jan 2034. Notably, the legislature, through amendments to the Regulation of Generation, Transmission, and Distribution of Electric Power Act, 1997 (the "NEPRA Act"), envisioned the establishment of a competitive electric power market in the country.

This was achieved by introducing new categories of licenses and facilitating the registration of additional market participants and service providers.

Subsequently, the Authority, in its determinations dated December 05, 2019, and November 12, 2020, respectively, endorsed the high-level design and detailed design of the

Competitive Trading Bilateral Contract Market (CTBCM).

The detailed design of CTBCM envisions the establishment of a registered entity to serve as an Independent Auction Administrator (IAA).

This entity is intended to facilitate XW-DlSCOs/Suppliers of Last Resorts (SoLR) in meeting their capacity obligations by procuring new capacity and energy to fulfill their load requirements.

In alignment with the comprehensive design of the competitive market, the Private Power & Infrastructure Board (PPlB) has formally approached the Authority seeking registration as an IAA.

Under Section 25A of the NEPRA Act, PPIB applied on October 11, 2021, seeking Registration as an Independent Auction Administrator (IAA). The purpose of this application is to facilitate the implementation of the competitive market/CTBCM.

NEPRA said that on March 05-06, 2022, a public consultation was conducted to solicit comments from the general public, interested parties, and affected individuals on the matter. Subsequently, on March 08, 2022, separate letters were dispatched to various stakeholders, requesting their input to assist the Authority in its deliberations.

In response to the aforementioned, the Authority received comments from five (05) stakeholders, namely K-Electric Limited (KEL), Lahore Electric Supply Company Limited (LESCO), Punjab Power Development Board (PPDB), Gujranwala Electric Power Company Limited (GEPCO), and Pakhtunkhwa Energy Development Organization (PEDO).

The Authority after examining PPIB's application, stakeholder comments, and relevant documents took the decision.

Notably, the Authority notes that PPIB, established in 1994, serves as a federal entity to facilitate private investments in the power sector on behalf of the Government of Pakistan (GoP). In 2012, the PPIB became a statutory organization through the Private Power and Infrastructure Board Act 2012 (the "PPIB Act").

Subsequently, in November 2015, the GoP extended PPIB's role to include the facilitation of public sector power and related infrastructure projects in IPP mode, leading to amendments in the PPIB Act. —