The National Electric Power Regulatory Authority awarded DHA City two parallel licences for electricity distribution and supplier of last resort on Friday, marking a regulatory shift under the competitive trading bilateral contract market regime. According to Dawn, the 21-year licences were granted to the privately owned DHA Energy Supply Company for the housing development situated along the M-9 motorway.
Licensing Scope and Initial Procurement
The distribution jurisdiction covers DHA City Karachi, located roughly 56 kilometers from Karachi proper in district Malir. In its regulatory filings, the company reported that no existing infrastructure connects the development to the national grid or the K-Electric network. The primary power source involves an arrangement with Lucky Cement Limited to procure six megawatts of electricity for residential and commercial consumers, delivered through K-Electric lines.
State-owned entities and utility operators opposed the application during regulatory proceedings. The Central Power Purchasing Agency, the Gujranwala Electric Supply Company, and K-Electric raised formal objections regarding the applicant’s financial health, technical capabilities, and operational track record. K-Electric noted that it holds distribution and supplier of last resort licences for the entirety of Karachi through June 2044, though its exclusive monopoly status ended in 2023.
Regulatory Rationale and Financial Requirements
The regulator overruled the objections from the state and private utilities, determining that amendments to its Act support market liberalization. These reforms permit the de-licensing of power generation, allow provincial grid companies to enter transmission, carve out the supply segment from wire distribution, and eliminate geographic exclusivity.
Addressing concerns about corporate capitalization, the regulator stated that while the new special purpose vehicle lacks operational history, its parent organization, DHA Karachi, possesses strong financial credentials to backstop the venture. The regulator noted that corporate formation typically utilizes the minimum capital requirement set by the Securities and Exchange Commission of Pakistan, with paid-up capital scaled up once commercial operations begin.
Under the terms of the authorization, the supplier will charge consumers strictly according to tariffs approved by the regulator, incorporating use-of-system and connection charges. The entity faces a strict legal obligation to comply with performance standards enforced through specialized provisions added to its standard licence conditions.
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