ISLAMABAD, July 5: The National Electric Power Regulatory Authority (Nepra) on Friday granted generation licences to three power generation companies of Wapda of 3,885 mw power generation capacity.

With this, a major milestone of power sector reforms and Wapda restructuring has been achieved under $1 billion package of the World Bank and the Asian Development Bank.

The generation companies, which have been granted licences include Northern Power Generation Company Limited (NPGCL), Central Power Generation Company Limited (CPGCL) and Jamshoro Power Generation Company Limited (JPGCL).

The NPGCL has three power stations located at Muzzafargarh, Faisalabad and Multan with a total capacity of 1,350 mw. CPGCL has only one thermal power station of 1,655 mw generation capacity while JPGCL has two thermal stations at Jamshoro and Kotri having a total capacity of 880 mw.

The generation licences, granted in pursuant to section 15 of the regulation of generation, transmission and distribution of generation act 1997, empower these companies to carry out generation business for a period ranging from 15 to 25 years depending on their life.

Under the licence, the companies would have to comply with the terms and conditions including performance standards and competitive trading arrangements expected to be introduced as and when required.

This would enable the power distribution companies and the big consumers to purchase electricity from any generation companies that offered the lowest tariff and maximum reliability of power supply.

For this purpose, the national transmission and dispatch company (NTDC) would be given a transmission licence by end of this year, which would act as an electricity exchange like that of the stock exchanges where electricity would be traded as a commodity.

The three companies have already been registered with the Securities and Exchange Commission of Pakistan (SECP) as separate generation companies under the companies ordinance of 1984.

The generation companies would also have to comply with the environmental standards as prescribed by the provincial governments and environmental protection agency (EPA).

The Nepra has already granted distribution licences to eight distribution companies carved out of the distribution wing of Wapda.

The process of grant of distribution licence to Karachi Electric Supply Corporation (KESC) is in the final stages. The separation of the generation and distribution business through individual licences shall pave the way for complete restructuring and eventual privatization of the entire power sector in Pakistan.