In a recent move that has stirred both support and criticism, Nepra has granted K-Electric Ltd (KEL) a non-exclusive distribution licence and a supplier-of-last-resort (SoLR) licence for the next two decades. Contrary to expectations, this decision has the potential to inadvertently solidify KEL’s position in Karachi’s power landscape. Instead, what the city needs is a robust framework that welcomes other distribution companies and fosters healthy competition.
While the renewed licence for KEL has faced criticism for past performance issues, it gives the company an opportunity to address its shortcomings, embrace innovation, invest in infrastructure and adopt best practices to meet Karachi’s growing energy needs. While the 20-year renewal of KEL’s licence has been justified by Nepra in the interest of continuity and future investments, it is essential to explore avenues that promote a diverse and competitive market. Nepra should actively encourage the entry of other distribution companies into Karachi, creating an environment where multiple players engage in healthy competition to provide quality services at affordable prices. The emphasis should not solely be on KEL but rather on enhancing the competition among various distribution companies. Nepra’s role should be to facilitate an open market where these companies compete based on efficiency and consumer-centric practices. This approach would naturally drive down prices and improve service quality. Moreover, the introduction of smaller private power distribution companies, as suggested by Nepra, should be more than a theoretical inclusion. Regulatory bodies must actively seek out and incentivise new entrants, ensuring a level-playing field for all participants.
Karachi’s power sector needs a paradigm shift towards pluralism, where multiple distributors actively vie for consumer satisfaction and offer competitive pricing. The true turning point lies in Nepra’s ability to craft policies that stimulate this kind of healthy competition.
Published in The Express Tribune, January 23rd, 2024.
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