This op-ed examines the legal aspects of the National Electric Power Regulatory Authority (NEPRA or the Authority) Determination issued on May 31, 2022 concerning the unlawful granting of a Market Operator (MO) license to the Central Power Purchasing Agency (CPPA-G).
Under Section 23A of the NEPRA Act, 1997 (hereafter, the Act), the NEPRA may issue an MO license to a person (association, company, firm or undertaking, authority or body corporate set up or controlled by the Federal Government or, as the case may be, by the Provincial Government).
The “Market Operator,” as defined under the Act, means a person responsible for organization and administration of trade in electricity and payment settlements among generator licensees and consumers. Under Section 1(3) of the Act, along with other three sections, 23A would only be effective through Federal Government notification, which has not yet been issued.
Moreover, an MO license is issued subject to the Rules and Regulations, which have yet to be notified. However, NEPRA has erred in issuing the MO license to the CPPA-G, first in the absence of the required legal framework and secondly, because the CPPA-G is currently the power-purchasing agency against the clear requirements of the Act and the approved Competitive Trading through Bilateral Contract Market (CTBCM) detailed design and implementation roadmap by NEPRA on 12th November 2020. One of the actions in the approved CTBCM design is the separation of the CPPA-G into Market Operator and Special Purpose Trader, which is yet to be complied with. Furthermore, the draft Commercial Code, which is section 23A, requirement submitted by the CPPA-G along with its application has yet to be finalized as per the statement of the CPPA-G recorded in the said Determination.
Under the Act, before awarding an MO license, the Authority has to consider the following: (1) the Eligibility criteria Rules, which have yet to be issued by the Federal Government) and (2) the Regulations, which should be consistent with the Rules, setting out the terms and conditions for the Licensee.
By issuing a “Trial” MO license to the CPPA-G (a permit) in the absence of the required legal framework against which the applicant for an MO license has to be assessed, NEPRA has clearly violated its own past determinations, namely, the CTBCM design and its own law. The NEPRA Chairman is calling it a landmark judgment. Surely, it is a landmark decision of issuing permits to the entity on a “trial” basis, with no legal effect. One has to question the legality and the overall working of the Power Sector Regulator of issuing licences on an arbitrary basis.
Considering the subject matter, it is highly recommended to regulate the regulator and appoint an independent-minded person to lead the Authority before it is too late to curtail the “illegal” mess the Authority has been creating, while ticking its checklist in the hope of any tenure extensions!
Copyright Business Recorder, 2022
The writer is a lawyer based in Islamabad. She has an LL.M. from Cornell Law School. She can be reached at [email protected]
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