ISLAMABAD: The government has decided to expand incentives offered to Special Economic Zones (SEZs) under the China-Pakistan Economic Corridor (CPEC) to all real estate and industrial zones across the country.
This includes reforms to streamline electricity supply through a revised mechanism approved by the Cabinet Committee on Energy (CCOE).
Under the new mechanism, the regulatory barrier preventing energy distribution companies (DISCOS) from selling electricity to other licensed suppliers has been removed. This allows Discos to enter into bilateral agreements with SEZ developers who hold supplier licenses from the National Electric Power Regulatory Authority (NEPRA).
The 2012 SEZ Law requires federal and local governments to provide utilities, including electricity, to SEZs. However, challenges such as unreliable power supply, delays in infrastructure development, and regulatory ambiguity have hindered the full potential of the SEZ architecture.
After consultations with their Chinese counterparts, it was agreed that the CPEC SEZs would remain under the service jurisdiction of their respective disco. Developers will sign operations and maintenance (O&M) agreements with Discos to handle infrastructure, electricity supply, billing and collections without the need for additional licences.
Industrial consumers in SEZs will be charged a fee, and developers will receive a NEPRA-approved O&M fee. The CPEC SEZs will also sign power purchase agreements with Discos to supply electricity equivalent to peak demand for a period of five years.
Recent regulatory amendments allow NEPRA DISCOS to sell electricity to SEZ developers under bilateral contracts. The SEZs will apply for a supplier last resort and distribution license under the 1997 NEPRA Energy Procurement and Infrastructure Development Act.
The Ministry of Industries and Production has proposed extending the incentive package to all SEZs to avoid disparities between CPEC and non-CPEC zones. CCOE approved, ensuring uniform benefits for industrial consumers across the country.
The revised mechanism aims to reduce the role of Discos in SEZs and industrial zones, introduce Single Window facilities for handling billing complaints, and reduce distribution costs. The revenue collected from electricity sales will be transferred to the Central Power Procurement Agency (CPPA-G) through escrow accounts, after deducting distribution margins approved by NEPRA.
O&M Comprehensive Agreements were developed by the Department of Energy to implement the changes. The Energy Commission emphasized that the revised system will enhance efficiency, ensure equitable distribution of resources, and create a consistent framework for industrial development nationwide.
