Govt extends SEZ incentives to all industrial zones to improve electricity supply and foster equitable growth.
The government has decided to expand the incentives available to Special Economic Zones (SEZs) under the China-Pakistan Economic Corridor (CPEC) to all industrial estates and zones across Pakistan. This initiative includes reforms aimed at improving the electricity supply through a revised mechanism, which was approved by the Cabinet Committee on Energy (CCOE).
The new framework removes regulatory barriers that previously prevented power distribution companies (DISCOs) from selling electricity to other licensed suppliers. This change allows DISCOs to establish bilateral agreements with SEZ developers who hold supplier licenses from the National Electric Power Regulatory Authority (Nepra). The SEZ Act 2012 requires that federal and provincial governments provide essential utilities like electricity to SEZs, but challenges such as inconsistent power supply, delays in infrastructure development, and regulatory confusion have limited the zones’ effectiveness.
After discussions with Chinese partners, it was agreed that CPEC SEZs would remain under the service jurisdiction of their respective DISCOs. Developers will sign operation and maintenance (O&M) agreements with DISCOs to manage infrastructure, electricity supply, billing, and collections without needing additional licenses.
Industrial consumers within SEZs will be charged a standardized tariff, and developers will receive an O&M fee approved by Nepra. Additionally, CPEC SEZs will enter power purchase agreements with DISCOs to secure electricity equivalent to their peak demand for the next five years.
Recent amendments by Nepra now permit host DISCOs to sell electricity to SEZ developers through bilateral contracts. SEZs will also apply for supplier of last resort and distribution licenses under the Nepra Act of 1997 to manage power procurement and infrastructure development.
To avoid discrepancies between CPEC and non-CPEC zones, the Ministry of Industries and Production proposed extending the incentive package to all SEZs. The CCOE approved this plan, ensuring equal benefits for industrial consumers throughout the country.
The revised mechanism aims to reduce the role of DISCOs in SEZs and industrial zones, introduce one-window services for handling billing issues, and decrease distribution costs. Revenue from electricity sales will be transferred to the Central Power Purchasing Agency-Guarantee (CPPA-G) through escrow accounts, after deducting approved distribution margins. Comprehensive O&M agreements have been designed by the Power Division to ensure the changes are implemented effectively. The energy committee highlighted that these changes would promote efficiency, fair resource distribution, and a consistent framework for industrial development across Pakistan.
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