NEPRA Grants Pakistan’s First Private Dual Electricity Distribution and Supply Licence to DHA City
In a landmark decision aimed at advancing Pakistan’s power sector reforms, the National Electric Power Regulatory Authority (Nepra) has granted DHA Energy Supply Company (Desco) the country’s first-ever dual licences to operate as both an electricity distribution company and a Supplier of Last Resort (SoLR). The licences, issued on Friday, are valid for 21 years and represent the first time a privately owned company has been authorised to perform both functions under Pakistan’s evolving Competitive Trading Bilateral Contract Market (CTBCM) framework. The approval marks another step towards opening Pakistan’s electricity market to greater private sector participation following regulatory reforms that ended the exclusive control previously enjoyed by traditional distribution utilities. Desco to Serve DHA City Karachi Under the licences, Desco will initially provide electricity distribution and supplier services exclusively within DHA City Karachi (DHACK), a large residential development located approximately 56 kilometres from Karachi on the M-9 Motorway in Malir district. According to its application submitted to NEPRA, DHA City is currently not connected directly to either the national transmission grid or K-Electric’s distribution infrastructure. To ensure electricity supply for the project, Desco informed the regulator that it had reached an agreement with Lucky Cement Limited to procure six megawatts (MW) of electricity. The power will be delivered to consumers within DHA City through K-Electric’s network until further infrastructure is developed. The electricity will be supplied to residential, commercial and other consumers located within the boundaries of DHA City Karachi. NEPRA Rejects Objections by KE, CPPA and Gepco The application faced opposition from several major power sector entities, including the Central Power Purchasing Agency (CPPA), K-Electric (KE) and the Gujranwala Electric Supply Company (Gepco). The objecting parties questioned Desco’s financial position, technical capability and lack of operational experience, arguing that the company did not yet have a proven track record in electricity distribution. However, NEPRA rejected those objections after reviewing the application. The regulator concluded that Desco had established sufficient grounds to qualify for both licences and approved them strictly for operations within DHA City Karachi. The authority also clarified that Desco would be permitted to charge consumers only those tariffs, system-use charges and connection fees approved by NEPRA. Decision Supports Power Sector Liberalisation In its detailed ruling, NEPRA said the amendments to the NEPRA Act were specifically designed to liberalise Pakistan’s electricity sector by encouraging competition and reducing exclusive control over different segments of the power supply chain. The regulator noted that recent reforms include: Liberalisation of electricity generation through de-licensing.Allowing provincial grid companies to participate in transmission.Separating electricity supply from the distribution (wire) business.Ending exclusive distribution rights previously held by electricity utilities. NEPRA said these reforms were intended to facilitate a competitive electricity market under the CTBCM model and encourage greater private investment across the sector. The approval of Desco’s licences is viewed as one of the first practical implementations of these market reforms. Financial Concerns Addressed Responding to concerns regarding Desco’s financial capacity, NEPRA acknowledged that the company was newly established and had not yet commenced commercial operations. However, the regulator said this should not prevent the company from receiving licences. NEPRA pointed out that Desco’s parent organisation, DHA Karachi, possesses strong financial credentials and would be able to provide financial support whenever required. The authority also observed that it is common corporate practice in Pakistan for companies to begin with the minimum paid-up capital required by the Securities and Exchange Commission of Pakistan (SECP) before increasing capital once commercial operations begin. According to the regulator, Desco’s financial position is expected to strengthen after the licences become operational and revenue generation begins. Licence Comes with Regulatory Obligations NEPRA emphasised that despite approving the licences, Desco would remain subject to all regulatory standards governing electricity distribution and supply. The authority said additional provisions would be incorporated into the standard terms and conditions of the distribution licence, making the company legally responsible for complying with technical, operational and consumer service standards applicable to licensed electricity distributors. The decision is expected to serve as an important precedent for future private-sector participation in Pakistan’s electricity market as the country gradually transitions towards a more competitive and diversified power sector.









