In 1992, the Government approved WAPDAs Strategic Plan for the Privatization of the Pakistan Power Sector. This Plan sought to meet three critical goals:
1. Enhance capital formation,
2. Improve efficiency and rationalize prices, and
3. Move over time towards full competition by providing the greatest possible
role for the private sector through privatization.
This major decision was taken to improve the viability of Pakistan's electric power sector which was characterized by extensive government involvement in management, political interference, and a tariff plagued by cross-subsidies. A critical element of the Strategic Plan was the creation and establishment of a Regulatory Authority to oversee the restructuring process and to regulate monopolistic services.
The existence of an independent and objective regulatory entity reduces the perception of ?risk? to investors in a market. Accordingly, an autonomous regulatory agency is essential for the immediate need and long-term stability of the sector.
Pakistan has been successful in attracting substantial foreign investment in the power sector, but the absence of a transparent regulatory regime led investors to secure their investment through long-term contracts. Consequently, a substantial part of the sector has been carved out for ?long term contract regulation? and the rest of the sector has to carry whatever risk arises from changing circumstances and realities. Pakistan has had to pay dearly for the absence of an acceptable and established regulatory environment for the commercial operation of the sector.
The December 16, 1997, issue of the Gazette of Pakistan proclaimed the enactment of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, which had become effective on 13 December 1997.
NEPRA has been created to introduce transparent and judicious economic regulation, based on sound commercial principals, to the electric power sector of Pakistan. NEPRA reflects the country's resolve to enter the new era as a nation committed to free enterprise and to meet its social objectives with the aim of improving the quality of life for its people and to offer them opportunities for growth and development.
