ISLAMABAD: Pakistan’s power regulator has proposed a framework to allow federal and provincial governments to set up electricity systems outside the national and provincial grids in areas where conventional distribution networks are financially or operationally unviable.
Under the draft National Electric Power Regulatory Authority Standalone Electric Power System (Pilot Projects) Regulations, 2026, the government could sponsor self-contained generation and supply arrangements for selected areas suffering from persistently high losses, poor bill recovery, weak service quality or remoteness.
Nepra has released the draft for public consultation under Section 47(3) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, inviting comments to its registrar within 30 days of publication.
The framework would initially permit a sponsoring government to launch no more than two pilot projects for each distribution licensee. Nepra could approve additional projects if the government requested them.
A standalone electric power system would consist of self-contained generation facilities, with or without energy storage, and associated infrastructure to supply individual premises without any direct or indirect connection to the national or provincial grid.
The draft does not mandate a particular technology. Instead, each sponsoring government would have to submit technical details and an implementation plan, provided the proposed system meets regulatory, engineering and safety requirements.
How the scheme would work
The federal or a provincial government would act as the sponsoring government and prepare a scheme for a standalone system. The scheme could be notified with the consent of the host distribution licensee operating in the area.
Once notified, the specified territory would automatically be excluded from the licences of the host distribution company and the host supplier of last resort. The draft defines the host distribution licensee as the Nepra-licensed entity conducting distribution business in the area, and the host supplier of last resort as the licensed entity responsible for supply in its designated territory.
A host distribution licensee could de-energize an eligible consumer’s existing connection only after the standalone system has been installed, establishing that the alternative supply arrangement must be in place before disconnection.
Eligible areas
Pilot projects could be initiated only in areas with persistently high distribution losses, high recovery losses, poor service quality, remoteness, or where maintaining a conventional network is not economically justified.
Each notified scheme would need to identify the geographical area, feeders and premises covered; specify the technology, implementation timeline, implementing agency and cost-sharing mechanism; and demonstrate compliance with eligibility criteria. It would also have to outline expected public benefits, safety arrangements, consultation with affected consumers, ownership and maintenance responsibilities, and provisions for future consumers.[brecorder]
The regulations would require minimum service levels covering available capacity, energy availability, fault-repair and component-replacement timelines, and complaint handling. Schemes would also need engineering, procurement and construction arrangements, a cost-benefit analysis, and a plan for reconnecting an area to the conventional grid if the standalone project is discontinued.
Government funding
The sponsoring government would finance the system fully or partly through grants, subsidies or other financial resources. The draft states that the cost could not, under any circumstances, be included in a licensee’s revenue requirement for tariff determination.
If an area later returns to the conventional network, the sponsoring government would bear all restoration, reinstallation, augmentation or reconnection costs. Those costs could not be treated as prudent expenditure for tariff purposes or recovered from consumers through tariffs.
Obligations on licensees
Host distribution licensees would have to ensure that existing distribution systems and assets in a designated area are treated in line with the regulations, including decisions on de-energization, retention, redeployment, retirement or disposal. The framework would also cover the regulated asset base, depreciation and investments already made or included in approved investment programs.
Licensees would need to assess the impact of a proposed scheme on their distribution and supply businesses, including possible implications for future or pending privatization transactions. They would also have to submit proposed licence modifications within 30 days of the regulations taking effect.
Monitoring and safeguards
Implementing agencies would report to Nepra three months after a scheme is implemented on progress, consumer behavior and response, satisfaction, administrative feasibility and system reliability. Nepra would conduct a further assessment one year after implementation.
The draft sets no numerical targets for loss reduction, recovery improvements, reliability or consumer satisfaction, but requires reporting on those areas to inform future regulatory decisions.
Implementing agencies would have to design, install, operate and maintain systems according to applicable technical standards and safety laws, including provincial electrical inspection requirements. They could charge consumers only fees specified in the notified scheme, and both the implementing agency and relevant licensee would be required to protect consumer personal data collected for the pilot.
The regulations would take effect immediately upon formal adoption and notification. Until then, the proposal remains a draft for consultation, with any expansion beyond the initial pilots dependent on implementation experience and Nepra’s assessment of reliability, administrative feasibility and consumer response.
