ISLAMABAD: In a landmark development for Pakistan’s power sector, the National Electric Power Regulatory Authority (NEPRA) has granted DHA Energy Supply Company (DESCO) two parallel licences—Electricity Distribution and Supplier of Last Resort (SoLR)—for a period of 21 years, making DHA City Karachi (DHACK) the first privately developed housing project in the country to operate its own licensed electricity distribution network.
The licences, issued under NEPRA’s revised regulatory framework for the Competitive Trading Bilateral Contract Market (CTBCM), mark the first time a private entity has been authorized to perform both electricity distribution and supplier-of-last-resort functions outside the traditional public utilities and legacy distribution companies.
Initially, DESCO’s licensed service area will cover DHA City Karachi, located on the M-9 Motorway, approximately 56 kilometres from Karachi in District Malir.
According to its application, DESCO informed the regulator that the housing project currently has no direct connection to either the national grid or K-Electric’s infrastructure. To meet its initial electricity requirements, the company has entered into an arrangement with Lucky Cement Limited to procure 6 megawatts (MW) of electricity, which will be supplied to residential, commercial and other consumers within DHA City through the K-Electric network.
The licensing process faced objections from the Central Power Purchasing Agency (CPPA), Gujranwala Electric Supply Company (GEPCO) and K-Electric, which questioned DESCO’s financial strength, technical capabilities and operational experience. However, NEPRA dismissed the objections, concluding that the applicant met the legal requirements for the grant of both licences.
The regulator clarified that the licences are strictly limited to facilities located within DHA City Karachi and that DESCO will be permitted to charge consumers only those tariffs, system-use charges and connection fees approved by NEPRA.
In its determination, NEPRA emphasized that recent amendments to the NEPRA Act are aimed at liberalizing Pakistan’s electricity market by promoting competition across the power supply chain. The reforms include separating electricity supply from distribution, reducing monopoly control and enabling new private-sector participants under the CTBCM framework.
Addressing concerns regarding DESCO’s financial standing, NEPRA acknowledged that the company is a newly established special purpose vehicle and has yet to commence commercial operations. However, it noted that its parent organization, DHA Karachi, possesses strong financial credentials and is capable of supporting the company whenever required.
The regulator further observed that it is common corporate practice for newly incorporated companies to begin with minimum paid-up capital and increase their capitalization as operations expand. NEPRA added that DESCO’s financial position is expected to strengthen once it begins commercial operations under the newly granted licences.
With the approval, DESCO will now be required to comply with all regulatory, technical and service standards prescribed by NEPRA, paving the way for a new era of private participation in Pakistan’s electricity distribution sector.
Story by Khaleeq Kiani
