The Government is moving forward with plans to redefine electricity load shedding by amending the Nepra Act and Performance Standards, paving the way to legally sanction revenue-based load shedding across the nation. This change, cloaked under the term Aggregate Technical and Commercial (AT&C) losses, aligns with a long-held ambition of the Power Division. However, it may strip the poorest communities of their fundamental right to electricity.
According to the Power Division, efforts are ongoing to tackle the numerous challenges plaguing the country’s power sector. One of the most pressing issues is the increasing trend of circular debt, which threatens the financial viability of both the power sector and the broader economy. The Power Division attributes this rising debt to significant line losses, poor recovery rates, and rampant electricity theft. In response, Distribution Companies (Discos) have resorted to revenue-based load shedding in areas with high line losses. Additionally, the sharp rise in electricity prices from the central pool often makes it economically imprudent to purchase such costly power for consumer distribution.
The Power Division asserts that in light of these economic pressures, a structured load shedding approach remains the only feasible solution to ensure the viability of the power sector. Legal bodies like Nepra and other forums have debated economic load shedding policies and implementation, emphasizing the need to enshrine economic or revenue-based load shedding within a legal framework. They have recommended amending the Regulation of Generation, Transmission, and Distribution of Electric Power Act, 1997 (the “Nepra Act”) to establish a robust regulatory structure.
Prime Minister’s directives, issued during meetings on April 15, 18, and 25, 2024, tasked the Power Division with reviewing and proposing changes to the existing legal and policy frameworks regarding Policy and AT&C-based load management.
In response, the Power Division formed a committee comprising members from PPIB, CPPA, Law Division, Nepra, and independent legal and regulatory experts. The committee thoroughly reviewed existing laws, constitutional provisions, and the technical, economic, and commercial aspects of economic load shedding. Their examination covered Section 34 of the Nepra Act, definitions under 4(f) of the Performance Standards Rules of 2005, distribution license terms, superior court rulings, the National Electricity Policy 2021, and strategic directives.
The committee finalized its report on July 31, 2024, proposing amendments to the Nepra Act and Performance Standards (Distribution) Rules 2005. These amendments include a new definition of load shedding and a revision of Section 34 of the Nepra Act to accommodate economic load shedding policies. The Power Division has endorsed these recommendations, viewing them as crucial for the sector’s stability, and has urged immediate implementation.
The Cabinet Committee on Disposal of Legislative Cases (CCLC) has been requested to review and recommend these amendments for Cabinet approval before they are presented to Parliament. If passed, the amendments will provide a legal framework for revenue-based load shedding, potentially altering the landscape of electricity distribution in Pakistan.
Finance Division has also requested input from Nepra and NTDC on the proposed amendments, seeking to ensure that all stakeholders are aligned with the new legal framework.
