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FUNCTIONING OF NEPRA AS AN EFFECTIVE POWER REGULATOR OF PAKISTAN
By
Muhammad Rizwan Saeed
MA Islamic Studies, University of the Punjab, 2000 MBA, Al-Khair University AJK, 2002
A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF SCIENCES
In Business Administration
To
FACULTY OF ADVANCED INTEGRATED STUDIES AND RESEARCH
(MS BA)
NATIONAL UNIVERSITY OF MODERN LANGUAGES, ISLAMABAD
December 2009
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NATIONAL UNIVERSITY OF MODERN LANGUAGES FACULTY OF ADVANCED INTEGRATED STUDIES & RESEARCH
THESIS/DISSERTATION AND DEFENSE APPROVAL FORM
The undersigned certify that they have read the following thesis, examined the defence, are satisfied with the overall exam performance, and recommend the thesis to the Faculty of Advanced Integrated Studies & Research for acceptance: Thesis/ Dissertation Title: Efficiency of NEPRA as an Effective Power Regulator of Pakistan Submitted By: Muhammad Rizwan Saeed Registration #: 001-MSBA/2007 (Jan) Name of Student
Master of Sciences Degree Name in Full (e.g Master of Philosophy, Doctor of Philosophy)
Business Administration Name of Discipline Prof. Dr. Shahab Alam ______________________________ Name of Research Supervisor Signature of Research Supervisor Prof. Dr. Shazra Munnawer ______________________________ Name of Dean (FAISR) Signature of Dean (FAISR) Prof. Dr. Aziz Ahmad Khan ______________________________ Name of Rector Signature of Rector
_______________________ Date
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CANDIDATE DECLARATION FORM I _______Muhammad Rizwan Saeed _______________________ Daughter/ Son of ___Qazi Muhammad Saeed (Late) ___________ Registration # _____001-MSBA/2007 (Jan)__________________ Discipline ________Business Administration_________________ Candidate of ____Master of Sciences___________________ at the National University of
Modern Languages do hereby declare that the thesis (Title) __Functioning of NEPRA as an
Effective Power Regulator of Pakistan __________________________________________
submitted by me in partial fulfillment of MS degree, is my original work, and has not been submitted or published earlier. I also solemnly declare that it shall not, in future, be submitted by me for obtaining any other degree from this or any other university or institution. I also understand that if evidence of plagiarism is found in my thesis/dissertation at any stage, even after the award of a degree, the work may be cancelled and the degree revoked. ____________________________ ______________ Signature of Candidate Date ___Muhammad Rizwan Saeed____ Name of Candidate
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ABSTRACT Thesis Title: Functioning of NEPRA as an Effective Power Regulator of Pakistan
The effectiveness of a regulatory agency is outcome of the quality of its management,
whereas a strong infrastructure i.e., fulfillment of institutional requirements and autonomy of
functions are the basic requirements of an autonomous regulatory system, besides the
environmental factors that can also influence the effectiveness of a regulatory body.
NEPRA, the National Electric Power Regulatory Authority was established in 1997 to
ensure transparent and judicious regulation in the power sector, after restructuring of power
sector. Earlier the government was the operator as well as the regulator for both power
services providing companies i.e., WAPDA and KESC. The power sector restructuring and
other reforms in the energy sector were the efforts to avert the risk of any future energy crisis,
but they could not be proved to be fruitful.
This research work is based on evaluation of the efficiency of NEPRA as an effective
electric power regulator in Pakistan, considering the above stated four main factors. The
scientific research method, consisting of hypotheses testing and the formulation of regression
model was used in the research work. It has been concluded that NEPRA is working in a nice
manner. There are three stakeholders of NEPRA, i.e., government, electric power companies
and the electricity consumers. Out of which government and most of the electric power
companies are satisfied with the performance of NEPRA, but the electricity consumers are
less satisfied. Availability of trained manpower and implementation of regulations have been
pointed out as the areas of special attention to improve the performance of NEPRA. Some
steps are also suggested in this regard.
This study is an attempt to improve the effectiveness of NEPRA by exploring the
influence of different factors upon it. The research work has contributed towards increasing
the ability of NEPRA to overcome the present power crisis of Pakistan and to address the
grievances of electricity consumers.
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TABLE OF CONTENTS
Chapter Page
THESIS/DISSERTATION AND DEFENSE APPROVAL FORM ...…… ii
CANDIDATE DECLARATION FORM .…………………………………. iii
ABSTRACT ………………………………………………………………… iv
TABLE OF CONTENTS ...………………………………………………… v
LIST OF TABLES .….……………………………………………………… ix
LIST OF FIGURES ………………………………………………………… x
LIST OF APPENDICES …………………………………………………… xi
LIST OF ABBREVIATIONS ……………………………………………… xii
ACKNOWLEDGEMENTS ...……………………………………………… xiii
1. INTRODUCTION ..………………………………………………………… 1
1.1 Background of the Study ..……………………………………………… 1
1.2 Context of the study …………………………………………………… 1
1.3 Rationale of the study .………………………………………………… 3
1.4 Problem statement ..…………………………………………………… 5
1.5 Significance of the study ……………………………………………… 6
2. REVIEW OF LITERATURE ……………………………………………. 7
2.1 Quality of Regulation ………………………………………………… 7
2.2 Regulatory Effectiveness ……………………………………………… 7
2.2.1 Modeling Regulatory Effectiveness …………………………… 8
2.2.2 Need for Continuous Improvement …………………………… 10
2.3 Regulatory Experience in Developing Countries ..…………………… 11
2.4 Power Regulatory Structure in Pakistan ……………………………… 11
2.4.1 History of Power Regulation .………………………………… 11
2.4.2 Power Regulation as a Provincial Matter .…………………… 12
2.4.3 Problems with Power Regulatory Structure .………………… 12
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2.5 The Energy Crisis ..…………………………………………………… 13
2.5.1 Reasons of Energy Crisis in South Asia ……………………… 13
2.5.2 Background of Power Crisis of Pakistan ……………………… 14
2.5.3 Considering the Environment Issues ..………………………… 15
2.6 Energy Sector of Pakistan ...…………………………………………… 15
2.6.1 Energy Sector Policy Objectives ……………………………… 15
2.6.2 Present Energy Supplies ……………………………………… 16
2.6.3 Present Energy Consumption .………………………………… 17
2.6.4 Pakistan Energy Infrastructure Map 2009 ..…………………… 18
2.6.5 Projected Energy Demand/ Supply and Deficit ……………… 20
2.7 History of Electric Power Services in Pakistan .……………………… 21
2.7.1 Electric Power Supply and Consumption in Pakistan ………… 23
2.7.2 Present Structure of Power Sector in Pakistan ………………… 25
2.7.3 Role of Other Government Agencies ..………………………… 27
2.8 Power Sector Reforms ………………………………………………… 28
2.8.1 Elements of a Structure Reform Program ..…………………… 28
2.8.2 Progress with Sector Reform ..………………………………… 31
2.8.3 History of Power Sector Reform ……………………………… 33
2.8.4 Lessons from Sector Reforms ………………………………… 34
2.9 Pakistan’s Power Sector Reforms and Regulatory Structure .………… 35
2.9.1 Reforms in the Power Sector ………………………………… 35
2.9.2 IPPs in Pakistan ..……………………………………………… 36
2.9.3 Reforms to Meet the Country’s Electric Power Requirements .. 37
2.9.4 Power Regulatory Framework ..……………………………… 38
2.9.5 Powers and Functions of Regulatory Authority ……………… 40
2.9.6 Licenses (Entry and Exit Requirement) ..…………………… 41
3. METHODOLOGY ………………………………………………………… 43
3.1 Objectives of study .…………………………………………………… 43
3.2 Research questions …………………………………………………… 43
3.3 Theoretical framework (EPRE Model) ..……………………………… 44
3.4 Statistics Used for Analyze Data ……………………………………… 46
3.4.1 Use of SPSS ..………………………………………………… 46
3.4.2 Data Reliability Test ..………………………………………… 46
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3.4.3 Frequency Distribution and Bar Charts ..……………………… 46
3.4.4 Pearson’s Correlation Coefficient ..…………………………… 46
3.4.5 Regression Analysis …………………………………………… 47
3.5 Research Design ..……………………………………………………… 47
3.5.1 Data Collection ..……………………………………………… 47
3.5.2 Sampling Design ……………………………………………… 49
3.5.3 Measuring Scales ..… ………………………………………… 50
3.5.4 Variables ……………………………………………………… 50
3.5.5 Hypotheses Testing …………………………………………… 51
3.6 Data Collection Tools .………………………………………………… 52
3.6.1 Autonomy of Functions ..……………………………………… 52
3.6.2 Institutional Requirements ..…………………………………… 52
3.6.3 Management Expertise ..……………………………………… 53
3.6.4 Environmental Factors ………………………………………… 54
4. DATA ANALYSIS ..…………………………………………...…………… 55
4.1 Reliability Statistics Cronbach’s Alpha ..……………………………… 55
4.2 Comparison of Response .……………………………………………… 56
4.3 Inter-Item Correlations for Different Data Sources .…………………… 58
4.3.1 NEPRA and Electric Power Companies ..……………………… 58
4.3.2 NEPRA and Electricity Consumers .…………………………… 61
4.4 Correlations Among Independent Variables …………………………… 62
4.5 Correlations Between Dependent Variables …………………………… 63
4.6 The Regression Model .………………………………………………… 63
4.6.1 Regression Analysis with respect to Power Companies ..……… 63
4.6.2 Regression Analysis with respect to Electricity Consumers ...… 67
4.7 Hypothesis Testing .…………………………………………………… 70
4.7.1 Hypothesis-1 …………………………………………………… 71
4.7.2 Hypothesis-2 …………………………………………………… 71
4.7.3 Hypothesis-3 …………………………………………………… 72
4.7.4 Hypothesis-4 …………………………………………………… 72
4.7.5 Hypothesis-5 …………………………………………………… 73
4.7.6 Hypothesis-6 …………………………………………………… 73
4.7.7 Hypothesis-7 …………………………………………………… 74
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4.7.8 Hypothesis-8 …………………………………………………… 74
4.8 Factors Affecting Regulatory Effectiveness ..….……………………… 75
4.8.1 Autonomy of Functions ………………………………………… 75
4.8.2 Institutional Requirements ...…………………………………… 75
4.8.3 Management Expertise ………………………………………… 77
4.8.4 Avoidance of Environmental Factors ..………………………… 78
5. RESULTS AND DISCUSSION .…………………………………………… 79
5.1 Response of NEPRA Management .…………………………………… 79
5.2 Response of Electric Power Companies ..……………………………… 110
5.3 Response of Electricity Consumers .…………………………………… 132
5.4 Results of Data Analysis .……………………………………………… 143
6. CONCLUSION AND RECOMMENDATIONS ………………………… 145
6.1 Outcomes of the Study ..……………………………………………… 145
6.2 Regulatory Effectiveness ..……………………………………………… 146
6.3 Recommendations .……………………………………………………… 149
BIBLIOGRAPHY ...………………………………………………………………… 151
APPENDICES ….…………………………………………………………………… 155
A to G
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LIST OF TABLES Table Page
2.1 Primary Energy Supplies (2007-08) ..……………………………………… 16
2.2 Net Energy Consumption in Pakistan by Sector …………………………… 17
2.3 Net Energy Consumption in Pakistan by Source …………………………… 17
2.4 Projected Energy Demand of the Country .………………………………… 20
2.5 Projected Indigenous Energy Supply and Deficit ………………………… 20
2.6 Electricity Supply and Consumption in Pakistan …………………………… 23
2.7 Electricity Consumption in Pakistan by Sector……………………………… 24
2.8 Electricity Generation and Import in Pakistan ……………………………… 25
2.9 Electric Power Share by Operator (Year 2008) …………………………… 26
2.10 Number of countries achieving power-sector liberalization by 1998 ……… 32
2.11 Number of countries taking key reform steps in the power sector ..………… 33
2.12 Progress in the Issuance of Licenses ……..………………………………… 42
4.1 – 4.20 Statistical Data Tables - Data Analysis ..………………………… 55 - 69
5 Frequency Tables - Results & Discussion
N1 – N30 Response of NEPRA Management ..…………………… 80 – 109
P1 – P22 Response of Electric Power Companies ..….…………… 110 – 131
C1 – C11 Response of Electricity Consumers ..…………………… 132 - 142
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LIST OF FIGURES Figure Page
2.1 Building a quality system for regulatory authority ………………………… 9
2.2 Steps towards continuous improvement …………………………………… 10
2.3 Pie Graph - Energy Consumption 2007-08 (39.4 Million TOE) ..………… 18
2.4 Pie Graph - Energy Consumption 2002-03 (26.3 Million TOE) …..……… 18
2.5 Pakistan Energy Infrastructure Map 2009 …………………….……..…… 19
2.6 Pie Graph - Electricity Consumption 2007-08 (73400 GWh) ………..…… 24
2.7 Pie Graph - Electricity Generation Share by Operator ……………..……… 26
3.1 EPRE Model ..……………………………………………………………… 45
5 Bar Graphs - Results & Discussion
N1 – N30 Response of NEPRA Management ..…………………… 80 – 109
P1 – P22 Response of Electric Power Companies ..….…………… 110 – 131
C1 – C11 Response of Electricity Consumers ..…………………… 132 - 142
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LIST OF APPENDICES Appendix Page
A Structure of Pakistan Electric Power Company (PEPCO) ………………… 155
B Details of Independent Power Produces (IPPs) …………………..………… 156
C Status of Generation Projects Under Process .……………………………… 157
D Category-wise Number of Consumers (Year 2008) .……………..………… 158
E Questionnaire to be filled by officials/ representatives of NEPRA ………… 159
F Questionnaire to be filled by Electricity Producers/ Transmitters/
Distributors …………………………..…………………………………….. 161
G Questionnaire to be filled by members/ representatives of Chambers
of Commerce and Industry ………………………………………………… 163
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LIST OF ABBREVIATIONS
AEDB Alternative Energy Development Board AJK Azad Jammu & Kashmir ATA Automatic Tariff Adjustment CHASHNUPP Chashma Nuclear Power Plant CNG Compressed Natural Gas CO2 Carbon Dioxide CPPA Central Power Purchase Agency DISCOs Distribution Companies EPRE Electric Power Regulatory Effectiveness FESCO Faisalabad Electric Supply Company FPCCI Federation of Chambers of Commerce & Industry GENCOs Generation Companies GEPCO Gujranwala Electric Power Company GWh Giga Watt Hour HESCO Hyderabad Electric Supply Company HSFO High Speed Furnace Oil IESCO Islamabad Electric Supply Company ICB International Competitive Bidding IPPs Independent Power Producers KANUPP Karachi Nuclear Power Plant KESC Karachi Electric Supply Corporation LESCO Lahore Electric Supply Company MEPCO Multan Electric Power Company MW Mega Watt NEPRA National Electric Power Regulatory Authority NTDC National Transmission & Dispatch Company PEPCO Pakistan Electric Power Company PESCO Peshawar Electric Supply Company PPAs Power Purchasing Agreements PPIB Private Power and Infrastructure Board QESCO Quetta Electric Supply Company SPPs Small Power Producers TESCO Tribal Electric Supply Company TOE Tons of Oil Equivalent WAPDA Water and Power Development Authority
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ACKNOWLEDGEMENTS I am very thankful to Almighty Allah for His guidance and help throughout this
research study.
I acknowledge the generous assistance, guidance and time given by my respected
teacher and supervisor, Dr. Shahab Alam, throughout the study.
I am deeply grateful to Dr. Shazra Munnawer, Dean of the “Faculty of Advanced
Integrity Studies & Research” and other faculty members, especially Dr. Rashid Ahmed
Khan and Dr. Faqir Muhammad who provided guidance.
My heartiest appreciation goes to my parents, without their blessings this research
would not be possible. I am also grateful to my wife and children, who remained the source
of love, affection, care and encouragement throughout this laborious task.
My gratitude also goes to the officials of NEPRA, WAPDA and IPPs as well as the
members of FPCCI and the local Chambers of Commerce & Industry throughout the country,
who took part in the survey and filled the questionnaires.
I am also thankful to my friends Dr. Sajid Hussain Awan and Mr. Ghulam Rasool for
their kind help and intellectual guidance.
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CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
National Electric Power Regulatory Authority (NEPRA) was established by the
Government of Pakistan under NEPRA Act No. XL of 1997. It was set up with the purpose to
provide the regulation of generation, transmission and distribution of electric power. Basically
the effectiveness of a regulatory agency is the consequence of the quality of its management.
This research work is based on the idea to evaluate the efficiency of NEPRA as an effective
power regulator in Pakistan. The purpose of this study is to suggest the improvement in the
quality of management at NEPRA, which will result in enhancing its ability to overcome the
present power crisis of Pakistan and to address the grievances of electricity consumers.
1.2 CONTEXT OF THE STUDY
WAPDA was created in 1958 for coordinating and providing same direction to the
schemes of Water and Power development. The same task was formerly being done the
respective Provincial Electricity and Irrigation Departments.
KESC, the Karachi Electric Supply Company Limited has been working since 1913.
KESC was responsible for electric power generation, transmission and distribution to
residential, commercial, industrial and agricultural consumers within its licensed areas (6000
square kilometers) i.e., entire Karachi and its outskirts in Sindh and Baluchistan. KESC was
privatized in 2005 with the transfer of 73% shares to the private sector, whereas 27% shares
rest with Government of Pakistan. (Malik, 2007)
As stated earlier, the electric supply in Pakistan was the responsibility of two vertically
coordinated entities WAPDA and KESC after 1958. Government was acting as operator and
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regulator for both entities. Their performance remained satisfactory until early 1980s, later on
the situation started deteriorating. After huge losses in WAPDA and KESC the need was felt to
restructure them. It was also recognized that the efficient power generation and transmission
capacity expansion could only be attained through the involvement of the private sector.
(Malik, 2007)
In 1992, government planned to privatize the power sector and prepared a strategic plan
for the same. It was decided in 1993-94 to go for thermal power generation through the
independent power producers (IPPs). NEPRA, the National Electric Power Regulatory
Authority was established in 1997 as an independent regulatory agency, in order to introduce
transparent and wise cost-effective regulation in the power sector. Formation of regulatory
authorities was also the demand of multilateral lenders and they provided funds for the creation
and restructuring of public sector utilities including NEPRA (Kazmi, 2000).
In 1998 WAPDA’s Power Wing was vertically integrated into separate generation,
transmission, and distribution companies, according to NEPRA Act-1997 and WAPDA Act-
1998. WAPDA has now been re-organized into four thermal power generation companies
(GENCOs), nine power distribution companies (DISCOs) and one National Transmission and
Dispatch Company (NTDC). The hydroelectric power development and operation functions
remained with WAPDA. (Malik, 2007)
In October 2007, WAPDA was bifurcated into two separate bodies i.e., WAPDA and
Pakistan Electric Power Company (PEPCO), out of which WAPDA is made responsible for the
development of water sector and Hydel Power projects whereas PEPCO (formerly WAPDA
Power Wing) is vested with the responsibility of thermal power generation, transmission,
distribution and billing. There is an independent Chairman and MD (PEPCO) replacing
Chairman WAPDA and Member (Power), who were previously holding these additional
charges.
PEPCO has been fully empowered for the supervision of the affairs of nine Distribution
Companies (DISCOs), four Generation Companies (GENCOs) and a National Transmission &
Dispatch Company (NTDC). These companies are working under independent Board of
Directors (Chairman and some Directors are from Private Sectors).
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Central Power Purchasing Agency (CPPA) has been established under the coverage of
NTDC for payments from DISCOs to IPPs, GENCOs and NTDC. Ultimately, it will function
independently under Federal Govt. and all forthcoming Independent Power Producers (IPPs)
will be under CPPA.
The power sector restructuring and other reforms in the energy sector were the efforts
to avert the risk of any future energy crisis. In spite of all these preventive measures and
remedial actions, the energy crisis has been emerged in the form of acute deficiency of electric
power in Pakistan. Presently both domestic and commercial users of electricity are facing its
acute shortage these days, which has badly hampered the routine activities. Pakistani industry
is a major victim of power outage along with the troubled citizens. The question arises in a
competitive global economy how a country's industry can compete by loosing 25% of
productivity on daily basis, especially when we are the neighbours to China and India, two of
the world fastest growing economies (Aliji, 2008).
NEPRA, the official regulatory body for the power sector, does not have the autonomy
it needs to impose a rational price structure. With hydro-electric projects held-up due to a lack
of political will and consensus, and thermal projects unable to start due to bureaucratic
hesitation and lack of private-sector interest, a bigger crisis becomes visible on the horizon. As
the KESC privatisation has just demonstrated, the private sector does not have a ready answer
for all our problems. There must be a sound plan based on political consensus that involves all
the stake-holders (Qamar, 2008).
The reorganization of power sector and reformation of power regulatory structure of
Pakistan are the steps towards country’s self-adequacy in meeting its electricity needs. But
there is still space for improvement. This research study is an effort to fill the gaps in the
present power regulatory structure of Pakistan.
1.3 RATIONALE OF THE STUDY
On request of WAPDA, Automatic Tariff Adjustment (ATA) mechanism for fuel cost
variations was formulated by the end of 1999 (Rizvi, 2000). Since March 2001, ATA was
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adopted, and was being applied every three months, i.e., adjusting the tariffs of the distribution
companies according to the variations in fuel prices (Malik, 2007).
Recently Government of Pakistan (GoP) has decided to authorise the National Electric
Power Regulatory Authority (NEPRA) to readjust electricity prices monthly, in accordance
with fluctuating oil prices, in a move to end the subsidy for electricity consumers (Bhutta,
2008). With this mandate, all the slabs in the tariff have been abolished and unified rate is set
for the consumers. The decision has badly affected the small domestic consumers and the
domestic and commercial electricity bills have become doubled. The situation has become as
worse that the consumers denied to pay the bills until the justified settlement of tariff (Aliji,
2008), provided the 7 to 16 hours load-shedding per day is already in practice (Khan, 2008).
Up till now not only the government could do as much efforts to solve the problem of
electricity shortage, but the tendency of rapid rise in electricity prices seems to be continued.
Certainly tough decisions will have to be taken, and implemented with commitment. In fact it
is the competence and foresight of leadership to have top think at least 25 years for a nation's
existence in the competitive world (Bacon & Besant-Jones, 2002). Unluckily it could not be
possible during the past 60 year history of Pakistan.
In May, 2008 the federal cabinet approved invitation for fast track electric power
generation schemes by means of International Competitive Bidding (ICB). In fact government
plans to inject an additional 1500 MW thermal power in WAPDA and KESC systems on a fast
track basis and has hit snags as tariff offered by most of the companies is on the higher side.
During negotiation with the qualified companies, only a few companies agreed to reduce the
tariff; the others remained reluctant (Ghumman, 2008).
With the persistent and considerable increase in crude oil price, furnace oil has also
become expensive. Furnace oil is a major fuel used in power generation in Pakistan, as about
25 per cent of the thermal power generation capacity of WAPDA and almost entire power
generation of KESC depends on furnace oil. As an interim measure, WAPDA was allowed to
raise 13 paisa per unit but KESC was denied for the same. (Kazmi, 2000)
KESC has increased per unit charge in October, 2008 accepting NEPRA’s offer,
whereas the commercial and domestic consumers suffered major electricity problems facing
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power cut and load-shedding as a routine activity. The consequences of this crisis resulted in
the shape of the riots in Karachi by where the suffering citizens finally lost their temper and
came to the streets to protest the unending power cuts. Actually Pakistan’s chronic power
shortage is now assuming critical proportions, but the worse thing than the unending electricity
breakdowns is lack of any planning to rectify the situation. Apart from discomfort of
consumers, there is a direct monetary cost of growing gap between demand and supply of
electric power (Qamar, 2008).
The exorbitant load shedding with the addition of high electricity tariffs have multiplied
the miseries of common people. The present pitiable condition of common man has urged the
researcher to do research on this topic.
1.4 PROBLEM STATEMENT
Pakistan is facing acute shortage of electric power these days. Domestic users of large
cities are observing a minimum of 7 hours load-shedding, whereas this duration dilates to 16
hours per day in rural areas. In addition to this, the tariffs are on increasing trend and now
NEPRA has given consent by the government to revise the tariffs every month, earlier it was
given the permission for such changes after every three months, according to ATA formula
(Rizvi, 2000). This situation has not appeared overnight. The prevalent crisis is an outcome of
unwise energy policies of past thirty years.
The present situation has now raised questions for the performance of NEPRA which is
the regulatory authority for power generation, transmission and distribution throughout the
country, and is responsible to protect the interests of consumers as well as the interests of
power generation/transmission/distribution companies. But it seems that NEPRA could neither
adequately protect the interests of consumers nor that of electric power companies, which is a
deviation from its primary responsibilities. What is the solution of this problem? To answer
this question, there is requirement of a research to study the effectiveness of NEPRA. This
research has highlighted the strengths and weaknesses of this regulatory authority and may be a
step to make it as much effective to get rid of the current power crisis.
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1.5 SIGNIFICANCE OF THE STUDY
The earlier researches have targeted only one or two aspects to check the effectiveness
of NEPRA. This research work has been based on the Article 7 of NEPRA Act-1997 to
evaluate the effectiveness of NEPRA, with special reference to management attributes of the
consumers’ satisfaction.
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CHAPTER 2
REVIEW OF LITERATURE 2.1 QUALITY OF REGULATION
A power regulatory authority with good management is mandatory for improvement of
overall performance of Power Sector of Pakistan, as the quality of regulation determines the
rules for investment finance and private participation. A regulatory authority requires a well-
designed industry and market structure for provision of quality regulatory services. The electric
power industry of Pakistan itself requires an efficient governance framework. (Malik, 2007)
2.2 REGULATORY EFFECTIVENESS
Harbison (2001) presented a generic definition of regulatory effectiveness: “Provided
the required authority and resources as prerequisites, the regulatory body is effective when it:
• ensures that an acceptable level of safety is being maintained by the regulated
operating organizations,
• develops and maintains an adequate level of competence,
• takes appropriate actions to prevent degradation of safety and to promote safety
improvements,
• performs its regulatory functions in a timely and cost-effective manner as well as in
a manner that ensures the confidence of the operating organizations, the general
public, and the government, and
• strives for continuous improvements in its performance.”
Regulatory effectiveness means “to do the right work” whereas Regulatory efficiency
means “to do the work right” (Harbison, 2001). It means that the effectiveness is to be
analyzed first, based on well defined mission objectives of the regulatory body. After that the
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work can be done for improvement of efficiency which can be followed-up by means of setting
achievable goals.
A regulatory system has two basic dimensions i.e., regulatory governance and
regulatory substance. Regulatory governance includes the institutional & legal design of the
system through which is required for decision making whereas the regulatory substance means
the contents of regulation, that is, the regulatory functions including price setting, quality-of-
service, and entry-exit rules etc. (Malik, 2007). Therefore, the regulatory effectiveness mainly
depends upon the quality of governance.
Cook, Kirkpatrick, Minogue and Parker (2004) identified five attributes of good
regulation namely transparency, accountability, targeting, proportionality, and
consistency. This refers to their argument that state regulation is not likely to get authority
until society accepts it for its decisions and behaviours.
Cordova-Novion and Hanlon (2003) observed some of the issues related to the
institutional framework for economic regulation, particularly regulatory accountability in terms
of its balancing effect on independence; and institutional coherence in the shape of the
regulatory framework. Stern and Cubbin (2005) also emphasised on the importance of an
independent regulatory institution, with a clearly defined legal framework for the continuous
output growth and efficiency in the utility services.
Levy and Spiller (1994), Smith (1997), Stern and Holder (1999), Stern (2000) and
Jacobs (2004) identified several governance characteristics for effective utility regulation
which include regulatory autonomy, clarity of functions, accountability, transparency,
predictability and participation.
2.2.1 Modeling Regulatory Effectiveness
Many countries of the world are currently developing effectiveness models. Similarly a
model is helpful for assessment and measurement of regulatory efficiency and effectiveness.
According to Harbison (2001) a model, in this regard, should be based primarily on managing
9
the safety of installations those would be used for electric power generation and distribution.
The quality of the regulatory body can be described through Figure-2.1 which contains
conventional management wisdom and modern business practices carried out at public sector
organizations (Harbison, 2001).
Figure 2.1 Quality System Model for a Regulatory Authority
Source: ‘Improving nuclear Regulatory effectiveness’, Nuclear Energy Agency, Organization
for Economic Co-operation and Development, France.
Mission
Core Activities
Prerequisites
Assessment
What is the task?
How to fulfill it?
Are we fulfilling it?
• The mission, as given by the government. • Core values, as developed by the regulatory authority.
• Core activities (processes or tools) of the regulatory authority (i.e. rule making, inspection, assessment, information, enforcement) = effectiveness.
• Necessary prerequisites and support (support processes, resources, competencies, etc.).
• Assessment of outcomes in relation to the mission and the need to assess the mechanism (i.e. audit, self-assessments, external assessments, indicators) = efficiency.
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2.2.2 Need for Continuous Improvement
The need for continuous improvement in performance needs to be stressed particularly,
among all the dynamics of an organization. The concept of “learning organization” provides
the basis for continuous improvement in an organization which includes the steps: setting the
strategic direction (identifying issues and setting objectives to solve the issues), determining
resources and work activities (solution designing and implementation), measuring and
monitoring performance (observation and supervision), assessing performance (evaluation
of the effectiveness), and the feedback (tracking success); repeating the process as an endless
loop. Figure-2.2 shows the continuous improvement process.
Figure 2.2 Steps Towards Continuous Improvement
Source: ‘Improving nuclear Regulatory effectiveness’, Nuclear Energy Agency, Organization
for Economic Co-operation and Development, France.
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2.3 REGULATORY EXPERIENCE IN DEVELOPING COUNTRIES
Economic reforms have not been not very encouragingly experienced in the developing
countries of Latin America, South-East Europe, Sub-Saharan Africa, South Asia and South-
East Asia. Recent studies on the economics of regulation highlighted the issues related to
independent utility regulators.
Most of the studies on effectiveness of regulations have emphasized the importance of
strong regulatory autonomy (Stern, 2000) and regulatory quality (Cubbin & Stern, 2004).
Reasons for poor regulatory performance in the developing countries are mentioned as the
weak legislations and poor implementation of rules and regulations (Tsaplin, 2001),
insufficient resource allocation for regulatory process; poor access to information (Malik,
2007), and limited government capacity to enforce regulatory rules (Cook, 1999), probably due
to lack of planning and co-ordination by the governments.
Malik (2007) reflected two dimensions of regulations i.e., the strong institutional base
and the quick and well-planned transition, while studying the Power regulatory reforms in
Pakistan.
2.4 POWER REGULATORY STRUCTURE IN PAKISTAN
2.4.1 History of Power Regulation
According to NEPRA Act-1997 and WAPDA Act-1998, the responsibility of thermal
power generation, transmission and distribution has been shifted from WAPDA to PEPCO;
former WAPDA Power Wing which was comprising of three generation companies, one
transmission company and nine distribution companies. Thus the distribution companies
(DISCOs) are the competent entities who could demand adjustment in tariff. According to
Companies Ordinance 1984, all DISCOs are independent entities and each of them has to file a
separate petition for tariff adjustment. The jurisdiction of NEPRA Act has been extended to
Tribal Area of Pakistan with the establishment of and a new distribution company TESCO. In
12
this scenario there is a clear difference in the tariffs of ten different distribution companies
including LESCO, MEPCO, GEPCO, IESCO, FESCO, PESCO, HESCO, QESCO, TESCO,
and the KESC.
2.4.2 Power Regulation as a Provincial Matter
In Pakistan, Electric Power has been a provincial instead of a central government
subject, consequently NEPRA comprises of nominees from all the four provincial
governments, having required qualification and experience in power sector, however most of
the time such suitable persons had not been the members and even the chairmen. Formerly an
ex-military person had been the chairman of NEPRA while most of the members had not the
required professional background and relevant experience of power sector regulations instead
they were mostly retired bureaucrats who were supposed to work for a short time at NEPRA
(Malik, 2007). Earlier various retired persons from WAPDA had taken over the key posts at
NEPRA who could not justifiably discharge their new responsibilities due to their affiliations
with WAPDA, although they had required qualifications and technical competence. They had
often accepted WAPDA's point of view, overlooking its mismanagement and inefficiencies.
2.4.3 Problems with Power Regulatory Structure (Management Weakness)
(i) Incomplete chain of command
Long delays have been observed in the process during selection of new regulators i.e.,
chairman and members of NEPRA. The delays in selection process resulted in the absence of
chairman or members, as observed in 2002-03 and 2005 respectively. Every newly selected
regulator takes a considerable time for getting awareness of the complexities of power sector
and often his tenure is over when he becomes competent. This situation depicts incomplete
chain of command and factors badly influence the effective functioning of the authority (Bari,
2006).
13
(ii) Incomplete privatization of WAPDA Power Wing
As the WAPDA Power Wing has not yet fully privatized. There are some ambiguities
in the minds of WAPDA about the mandate of NEPRA, which should be necessarily clarified.
Stern and Holder (1999) and Jacob (2004) highlighted the clarity in the mission and roles of
the regulator with reference to efficient regulatory mechanism. In the case of Asian regulators
Jacob (2004), observed many conflicting public policy missions.
(iii) Lack of competent professionals
In fact it is hard to find skillful persons to run organizations such as regulatory
institutions, for running new companies, as well as provision of policy capacity in the relevant
ministries, in developing countries such as Pakistan (Stern, 2000). The appointment of
competent professionals at NEPRA is obligatory for its better management and effectiveness,
but it could not be done adequately.
It was observed that ex-WAPDA employees generously accepted WAPDA’s point of
view and often ignore the practices of inefficiency, mismanagement and corruption existing in
WAPDA. NEPRA is not likely to take a firm stand against pressure from WAPDA. (Kazmi,
2000)
2.5 THE ENERGY CRISIS
2.5.1 Reasons of Energy Crisis in South Asia
Pachauri (2001) studied the regulatory arrangements in South Asian countries and
concluded that there are much bigger and complex challenges. Most of these countries
experienced colonial rule, so the independent regulatory authorities are hardly observed.
Insufficient regulatory resources lead to ineffective decision-making (Stern & Cubbin, 2005).
The key requirements for an autonomous regulatory system are the independent decisions-
making and resistance towards improper pressure or incentives which are the virtues of
individual characteristics of regulators.
14
Tsaplin (2001) concluded that imperfect and inappropriate conditions of legislative
framework in regulatory institutions and lack of coordination between legislation and
administration towards regulatory reform are the major deficiencies of a regulatory system.
According to previous researches, it has been concluded that in Asian developing
countries the ineffective regulators often have inadequate and inaccurate technical and
financial information. Moreover, the regulators and the staff of regulatory body are likely to be
drawn from government service, that’s why creative thinking and freedom from government
practices is not observed, resulting in delays in the implementation of desired changes (Malik,
2007).
2.5.2 Background of Power Crisis of Pakistan
At present Pakistan imports approximately 4.5 million tons of Furnace oil priced at
roughly $ 500 per ton the amount spent on the import of the quantity of oil comes to US $ 2.25
billion. It is further estimated that approximately 4 million tons of oil are produced locally thus
the current use of Furnace oil comes to 8.5 million tons is estimated that most of this oil is
consumed in the Electrical Power Generation. (Jafri, 2006)
The current shortage of Electrical Power, by most estimates, KESC and PEPCO put
together stands at 3,500 MW. There are estimates that this figure would be increasing at a rate
of approximately 1,000 MW per year at least for the next 5 years. Therefore the current
shortfall would just about be met by the proposed power plants, leaving the net shortage (i.e.,
3,500 MW) more or less un-altered over the years. (Jafri, 2006)
Keeping in view these large additions and allowing for gradual diversion of gas from
Power Generation to CNG stations, domestic and industrial/commercial usage and/or fertilizer
or similar factories, a gradual rise in furnace oil consumption of 15% per annum can be
considered possible. So in coming five years the use of HSFO shall have risen to over 22
million tons; assuming 5 million tons production locally, the imported oil portion would be 17
15
million tons, based on current price of $ 500 per tons the import would cost a staggering sum
of US $ 8.5 billion. It could be over US $ 10 billion if the current trend of rise of oil prices in
the international Market continues to persist (Jafri, 2006).
With the increase in Furnace oil Based Power Generation, the emission of CO2 which is
currently estimated at 24 million tons, would easily cross 70 million tons per annum in next
five years, a very high figure indeed.
2.5.3 Considering the Environment Issues
It is recognized all around the world that the way of the future is those of alternative
energy sources; i.e., the wind and the sun. For the wind there is considerable awakening all
over the world and the whole of the western world is going on this way. There is an example of
US investor Mr. Boone Pickins, who made his billions in the oil Industry, has now converted
his investment to the “Clean Power”. He made investment of US $ 10 billion to put up a 4000
MW Wind Power Farm in Texas with the expectation that the project would be producing
power in 3 years (Jafri, 2006). On the other hand 3 years is an average period of time required
for getting allotment of land, tariff determination and all related approvals for only a 50 Mw
Wind Project in Pakistan. A considerable time is still required for installation of power plant
and making it fully operational.
2.6 ENERGY SECTOR OF PAKISTAN
2.6.1 Energy Sector Policy Objectives
Ahmed (2007) indicated that the objectives of Energy Sector Policy to Pakistan include
sufficient and affordable energy supplies for a growing economy, balanced energy blend,
utmost utilization of local resources, proper distribution of responsibilities (policy making,
regulation & administration), rational industry structure (Government’s ‘strategic’ presence,
public-private partnership, exclusive private ownership) and maintainable pricing system (cost-
of-service, transparent & subsidies).
16
To meet these objectives, there is a requirement to adopt such approaches through
which energy development plans can be implemented, speed up development of in-country
traditional energy resources, encourage the development of renewable energy resources
especially in rural/ remote areas, explore the possibility of cross-border energy transactions,
and to make favorable environment for mobilization of private sector investment.
2.6.2 Present Energy Supplies The final energy use for the year 2007-08 was 39.413 Million TOE after
transformations, diversions and distribution losses, whereas the net primary energy supplies
were 65.010 Million TOE out of which 21.879 Million TOE (34%) were imports, as indicated
in Table 2.1. In this way Pakistan is presently fulfilling only 66% of energy requirements from
its indigenous resources. This percentage is likely to be increased further, in case we would not
be able to develop our energy resources and will keep on relying on imports.
Table 2.1 Primary Energy Supplies (2007-08)
Million TOE
Indigenous Imports
Source Amount Source Amount Crude Oil 3.435 Crude Oil 8.708 Gas 29.873 Petroleum Products 9.158 LPG 0.393 LPG 0.026 Coal 1.845 Coal 3.939 Hydro Electricity 6.852 Electricity 0.048 Nuclear Electricity 0.734 --- - Total 43.132 21.879 Gross Energy Supply 65.010 (Less) Exports, Bunkers & Stock Exchanges (2.095) Net Primary Energy Supply 62.915 (Less) Transmission, Distribution Losses & Non-Energy Uses 23.502 Net Energy Supply 39.413
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute of Pakistan, Islamabad.
17
2.6.3 Present Energy Consumption Table 2.2 shows the sector-wise final energy consumption in Pakistan for the last five
years, whereas Table 2.3 shows the source-wise final energy consumption in Pakistan for the
last five years. The analysis of given data clearly indicates the increasing trend of energy
consumption in Pakistan like other countries of the world (Figures 2.3 & 2.4). However,
indigenous production is not increasing with the same ratio, hence the excess energy
requirements are being fulfilled through imports of energy resources especially the fossil fuel.
Table 2.2 Net Energy Consumption in Pakistan by Sector
Million TOE
Sector 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Domestic 6.092 6.279 6.813 7.055 7.605 8.046 Commercial 0.852 0.928 1.080 1.248 1.377 1.456 Industrial 9.313 11.099 12.760 14.654 15.792 16.804 Agriculture 0.694 0.734 0.717 0.733 0.767 0.804 Transport 8.771 9.281 10.071 9.494 9.721 11.567 Other Govt. 0.584 0.658 0.663 0.762 0.742 0.736 Total 26.308 28.979 32.104 33.946 36.005 39.413
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute of Pakistan, Islamabad.
Table 2.3 Net Energy Consumption in Pakistan by Source
Million TOE
Source 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Oil Products 10.866 11.145 11.711 10.878 10.575 11.529 Gas 9.110 10.067 11.638 13.325 14.701 15.882 LPG 0.353 0.380 0.450 0.626 0.658 0.620 Coal 1.691 2.704 3.310 3.611 4.149 5.405 Electricity 4.288 4.682 4.995 5.506 5.922 5.977 Total 26.308 28.978 32.104 33.946 36.005 39.413
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute of Pakistan, Islamabad.
18
Figure 2.3
Energy Consumption 2007-08 (39.4 Million TOE)
Domestic 20.4%
Commercial 3.7%
Industrial 42.6%
Agriculture 2.0%
Transport 29.3%
Other Govt. 1.9%
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute
of Pakistan, Islamabad. Figure 2.4
Energy Consumption 2002-03 (26.3 Million TOE)
Domestic 23.2%
Commercial 3.2%
Industrial 35.4%
Agriculture 2.6%
Transport 33.3%
Other Govt. 2.2%
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute
of Pakistan, Islamabad.
19
2.6.4 Pakistan Energy Infrastructure Map 2009 The present energy resources (indigenous & imports) and the sector-wise consumption
conditions for the year 2009 are given in “Pakistan Energy Infrastructure Map” as given in
Figure 2.5. It gives useful information which refers to the fact that our country has to develop
indigenous energy resources especially fossil fuel to get rid of heavy imports in this area.
Figure 2.5
Pakistan Energy Infrastructure Map 2009
Source: Pakistan Petroleum Information Service, LMK Resources Pakistan (Pvt) Ltd.,
Islamabad, Pakistan.
20
2.6.5 Projected Energy Demand/ Supply and Deficit The projected energy demand, supply and deficit are given in Tables 2.4 and 2.5
respectively. The data shown in these tables not only indicate the expected rise in energy
demand but also points out some facts about future energy supply, i.e., the depletion of
resources of oil and gas in Pakistan. It means Pakistan will have to depend more upon coal,
hydel and renewable energy resources to meet its energy demands future, instead of relying on
imports. (Ahmed, 2007)
Table 2.4
Projected Energy Demand of the Country
Million TOE Million TOE % Share
FY08 FY15 FY25 FY06 FY15 FY25 Oil 19 31 53 30 27 25 Gas 30 57 99 48 50 47 Coal 6 9 17 9 8 8 Hydel 7 13 29 11 12 14 Renewables - 1 5 0 1 2 Nuclear 1 2 8 2 2 4 Total 63 114 211 100 100 100
Source: Medium-Term Development Framework: 2005-10, Planning Commission, Government of Pakistan.
Table 2.5
Projected Indigenous Energy Supply and Deficit
Million TOE
FY08 FY15 FY25 Oil 3 4 2 Gas 30 34 19 Coal 2 5 13 Hydel 7 13 29 Renewable and Nuclear 1 3 12 Total Indigenous Supply 43 59 75 Total Energy Requirement 63 114 211 Deficit 20 55 136 Deficit as % of Energy Requirement 32% 48% 64%
Source: Medium-Term Development Framework: 2005-10, Planning Commission, Government of Pakistan.
21
2.7 HISTORY OF ELECTRIC POWER SERVICES IN PAKISTAN
From the creation of Pakistan till 1958, development of schemes in Water and Power
Sectors was the responsibility of Electricity and Irrigation departments of the provinces. The
electricity generation, transmission and distribution had been carrying out by different
companies at regional level under the supervision of provincial governments. After 1958, the
electric supply in Pakistan became the responsibility of WAPDA and KESC, the semi-
autonomous bodies. WAPDA was made responsible for generation, transmission and
distribution of electric power throughout the country except Karachi and the surrounding areas
in Sindh and Baluchistan where KESC was already providing the same services. Government
was playing the dual role of operator and regulator for both entities. (WAPDA Website, 2009)
In 1959, WAPDA was created to undertake the task of studying, planning and carrying
out schemes for irrigation, drainage, prevention of water logging and recovery of saline land. It
was made responsible for integrated development of water and power resources of Pakistan.
The organization was also entrusted with the work of implementing Indus Basin Settlement
Plan, which was signed between India and Pakistan in 1960, for management of river water
and irrigation system (WAPDA Water Wing Website, 2008). WAPDA comprised of two major
operational wings called ‘Water Wing’ and ‘Power Wing’.
Member (Water) was to control the water Sector in the entire country divided into
north, central and south zones, for execution of water development projects. Chief Engineers
and Project Directors implement projects falling under regions within the zone. In addition, the
Water Wing has to coordinate and monitor the construction and operation of dams and all other
projects. (WAPDA Website, 2009)
Power Wing was headed by Member (Power). Power Wing of WAPDA, comprising of
generation, transmission and distribution, has been restructured into fourteen (14) public
limited companies including four (4) Thermal Power Generation Companies (GENCOs), one
(1) National Transmission & Power Dispatch Company (NTDC) and nine (9) Distribution
Companies (DISCOs). (Appendix-A)
22
In October 2007, a part of WAPDA Power Wing was detached and started working as
an autonomous body namely Pakistan Electric Power Company (PEPCO) with a Chairman and
MD replacing Chairman WAPDA and Member (Power). WAPDA is now responsible for water
and hydropower development whereas PEPCO has the responsibility of thermal power
generation, transmission, distribution and billing. (WAPDA Website, 2009)
WAPDA is now fully responsible for the development of Hydel Power and Water
Sector Projects whereas PEPCO has the responsibility to manage all the affairs of nine
DISCOs, four GENCOs and one NTDC. These companies are working under independent
Board of Directors (Chairman and some Directors are from Private Sectors). These Companies
are administratively autonomous and leading to financial autonomy by restructuring their
balance sheets by bringing their equity position to at least 20 percent, required to meet the
prudential regulations and to facilitate financing from commercial sector. All Entities have the
physical possessions of all their operational assets (WAPDA Website, 2009).
On 24th Feb. 2007 Ministry of Water & Power notified NEPRA approved Tariff for all
Distribution Companies replacing unified WAPDA Tariff. Regulatory instruments like Grid
Code, Distribution Code and Performance Standard, for Distribution and Transmission
Companies, were drafted and got approved from NEPRA in 2007 (WAPDA Website, 2009).
All major lenders gave their consent for transfer of their loan from WAPDA to
Corporate Entities, thus 326 loan assumption agreements were signed amongst respective
Companies, WAPDA and EAD (Economic Affairs Division) GOP. CPPA was established
under the coverage of NTDC for payments from DISCOs to IPPs, GENCOs and NTDC
(WAPDA Website, 2009). Ultimately, it will function independently under Federal Govt. and
all forthcoming IPPs will be under CPPA.
On the other hand, Karachi Electric Supply Company Limited (KESC) has been
rendering electric power generation, transmission and distribution services to Karachi and its
outskirts in Sindh and Baluchistan, covering nearly 6000 square kilometers area. KESC was
23
privatized in 2005 with 73% shares of private sector and rest of the shares with Government of
Pakistan (Malik, 2007).
2.7.1 Electric Power Supply and Consumption in Pakistan
Table 2.6 shows the electricity supply and consumption in Pakistan for the last five
years i.e., from 2002-03 to 2007-08. The details of total electricity generation, the auxiliary
consumption, T&D losses and net consumption are given in Table 2.6. In year 2007-08 the
total generation was 95,661 GWh and 199 GWh electricity was imported, after auxiliary
consumption and T&D losses, the electricity left for final consumption was 73,400 GWh.
Table 2.6 Electricity Supply and Consumption in Pakistan
Unit: GWh
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Total Generation 75,682 80,827 85,629 93,629 98,213 95,661 (+) Imported 0 73 109 146 171 199 (–) Auxiliary Consumption 2,984 3,038 3,373 3,666 3,760 3,718
Net Supply 72,699 77,862 82,365 90,109 94,623 92,142 (–) T&D Losses 20,043 20,371 21,037 22,506 21,912 18742 Consumption 52,655 57,491 61,328 67,603 72,712 73,400
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute of Pakistan, Government of Pakistan.
Table 2.7 shows the sector wise electricity consumption in Pakistan for the last five
years i.e., from 2002-03 to 2007-08. The analysis of given data clearly indicates the increasing
trend of electricity consumption in Pakistan. Electricity consumption of 2007-08 is separately
represented graphically (Figure 2.6).
24
Table 2.7 Electricity Consumption in Pakistan by Sector Unit: GWh
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Domestic 23,624 25,846 27,601 30,720 33,335 33,704 Commercial 3,218 3,689 4,080 4,730 5,363 5,572 Industrial 16,181 17,366 18,591 19,803 21,066 20,729 Agriculture 6,016 6,669 6,988 7,949 8,176 8,472 Bulk Supplies 3,318 3,603 3,700 3,985 4,246 4,342 Street Light & Other Govt. 298 318 368 416 526 581
Total 52,655 57,491 61,328 67,603 72,712 73,400
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute of Pakistan, Government of Pakistan.
Figure 2.6 Electricity Consumption 2007-08 (73400 GWh)
Domestic 45.9%
Commercial 7.6%
Street Light & Other Govt. 0.8%
Industrial 28.2%
Agriculture 11.5%
Bulk Supplies 5.9%
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute of Pakistan,
Government of Pakistan.
25
In Table 2.8, last five years data of electricity generation and imports is given. A slight
difference was observed in the thermal power generation capacity of WAPDA and KESC,
however, the prominent increase was observed in the power generation capacity of WAPDA
Hydel, PAEC Nuclear and IPPs Thermal, during the period of last five years. IPPs rely mostly
on imported furnace oil which causes in continuous increase in the electricity generation costs
and consequently electricity tariffs for domestic and industrial consumers.
Table 2.8 Electricity Generation and Import in Pakistan
Unit: GWh
Source 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 WAPDA Hydel 22,351 26,944 25,671 30,862 31,953 28,707 WAPDA Thermal 19,574 20,972 22,189 22,508 21,597 20,427 KESC Thermal 8,808 9,724 9,304 9,130 8,169 8,219 IPPs Thermal 23,209 21,426 25,669 28,645 34,206 35,231 Nuclear 1,740 1,760 2,795 2,484 2,288 3,077 Total Generation 75,682 80,827 85,629 93,629 98,213 95,661 Imported 0.36 73 109 146 171 199 Total 75,682 80,900 85,738 93,774 98,384 95,860
Source: Pakistan Energy Yearbook: 2008, Hydrocarbon Development Institute of Pakistan, Government of Pakistan.
2.7.2 Present Structure of Power Sector in Pakistan The power sector of Pakistan mainly includes a blend of hydel and thermal units
dominated by WAPDA and KESC, with the addition of two nuclear power plants (KANUPP
and CHASHNUPP). A number of independent power producers (IPPs) and small power
producers (SPPs) are the part of power-generating sector since 1994. Total installed capacity of
power generation in Pakistan was 19420 MW in 2007-08. Table 2.9 indicates the share-wise
details of electricity generation. Percentage share of Electricity Generation is given in
graphically presented in Figure 2.7.
26
Table 2.9 Electric Power Share by Operator (Year 2008)
Entity Type Share in Total Capacity Capacity (MW)**
WAPDA * Hydel 33.4% 6,480 PEPCO/ GENCOs Thermal 25.2% 4,900 KESC Thermal 9 % 1,756 IPPs Thermal 30 % 5,822 Nuclear (PAEC) Thermal 2.4% 462
Total 19,420
* Including a fractional amount from AJK Hydro Electric Board.
** Installed Capacity of Electricity Generation as on 30th June, 2008
Source: Energy Year Book 2008, Hydrocarbon Development Institute of Pakistan, Government of Pakistan.
Figure 2.7 Electricity Generation Share by Operator (Installed Capacity = 19,420 MW)
WAPDA Hydel 33.4%
PEPCO/ GENCOs 25.2%
KESC 9.0%
IPPs 30.0%
Nuclear (PAEC) 2.4%
Source: Energy Year Book 2008, Hydrocarbon Development Institute of Pakistan,
Government of Pakistan.
27
2.7.3 Role of Other Government Agencies
Besides these entities, there are five central government agencies which have their
responsibilities to promote power sector projects and to provide regulation in this regard. These
entities include Ministry of Water and Power, NEPRA, PPIB, Privatization Commission and
AEDB. Provincial governments are responsible for hydropower projects of up to 50MW.
Alternate Energy Development Board (AEDB) has been established in 2003.
Government of Pakistan initially set the target for the board to ensure 5% of total national
power generation capacity to be shifted to renewable energy technologies before year 2030
(AEDB, 2008). Although there are many alternate energy technologies being used world-wide,
but AEDB is mainly focusing on solar and wind energies for electric power generation in
addition to small hydro-power projects. AEDB has set its goals to support the development of
alternative energy resources like small hydel, wind power and other off grid generation
plants (Malik, 2007).
Ministry of Water and Power is to take care of the affairs of Water and Power Sectors
as well as to manage the issues of Energy Policy. It has to coordinate with different entities
to organize their efforts regarding promotion of hydel and thermal power projects (Malik,
2007). NEPRA works as the electric power regulator, ensuring the fair competition among
services providers and protection of consumers’ interest. Private Power Infrastructure Board
(PPIB) has the responsibility to facilitate private investors in the power sector, to provide
guarantees on behalf of government, to assist the regulatory authority in determining and
approving tariffs, and to implement power policy. Privatization Commission plays a central
part for privatization of public entities dealing with all relevant issues.
28
2.8 POWER SECTOR REFORMS
2.8.1 Elements of a Structure Reform Program
Reforms of the power sector in many of the developing countries starts from a market
structure which is dominated by a state-owned national power utility, having a monopolistic
position in the sector, covering the power generation, transmission, distribution, and customer
services. Such utilities are observed in developing countries of Asia, Middle East, and Africa.
A reason for adopting this regulatory structure is to minimize the cost of coordination between
different functions, to finance the development of power systems. The pre-reform structure in
South American countries places the power generation and transmission with national
companies, whereas the distribution and customer services are provided by local companies
which are separate from the national companies (Bacon & Besant-Jones, 2002).
Power reforms are designed to set up competitive environment in the production and
supply functions and to use economic regulation of power markets to encourage competition
and protect consumer interests (Bacon & Besant-Jones, 2002).
The necessity of the power market regulation was revealed from the experience of New
Zealand. The approach of regulation without the amount of regulation could not qualified,
although the separation of generation, transmission, and distribution was mandatory. The
experience proved that competition was not sufficient to control pricing in the presence of the
transmission and distribution natural monopolies, therefore, the New Zealand government
imposed price-control on power suppliers (IEA, 1999).
Bacon & Besant-Jones (2002) indicated in their research that a full-scale power reform
program generally consisted of the following main elements:-
(i) Obligation to Commercial Principles:
Accommodating electricity enterprises to operate according to commercial
principles. These principles require that enterprises pay taxes and market-based interest
rates, earn commercially competitive returns on equity capital, and have the autonomy
to manage their own budgets, borrowing, procurement, and labor employment. This
29
obligation is to be extended to state-owned entities that undertake one or more of the
basic functions in the power supply chain such as generation, transmission, system
control, distribution, and supply services to users of electricity. The supply services
function includes the sale of electricity procured on the wholesale electricity market to
electricity users and the associated customer services of billing, collection, and
maintenance.
(ii) Competition:
Introduction of competition in order to improve sector performance in terms of
efficiency, customer responsiveness, innovation, and feasibility. Competition can be
developed in the generation and supply service segments but in most cases is not
feasible in the network segments i.e., transmission, distribution, and system control.
Supply of services to large electricity users is an essentially competitive segment
because the cost of competing for their business is small as compared to the potential
profits. Supply services to all but large electricity users, however, has usually been a
non-competitive in practice because the profit per customer is too small to stimulate
competition.
(iii) Restructuring of power supply chain:
Restructuring of the electric power supply chain to enable the introduction of
competition. This involves disintegration of the existing power utility into multiple
generators and distributors of power that trade with each other in a competitive
wholesale power market. To prevent the acquisition of anticompetitive amounts of
vertical market power by any generators or distributors, transmission, and system
control are placed with independent companies (or they may be combined) with
restrictions on ownership or on control (through governance arrangements) of such
companies by generators and distributors. Independent electricity suppliers should be
allowed to compete with distributors for the custom of large users (this could be
delayed in those countries where distribution and supply systems are so dilapidated at
the time of privatization that new owners need a period of assured revenues to remedy
the worst deficiencies before having to compete for the business of their largest
customers), and supply licenses can be granted to generators as well as to firms that
specialize in energy trading.
30
(iv) Privatization of Power Sector Entities:
Privatization of the unbundled electricity generators and distributors under
dispersed ownership, because competition is unlikely to develop properly between
entities that are under common ownership—whether state or private. In developing
countries, furthermore, private investors and operators are expected to bring in financial
resources and technical and managerial expertise that will rectify the prevailing low
standard of electricity supply by state-owned power utilities.
(v) Development of financial regulations:
Development of financial regulations of the power sector that is applied
transparently by an agency that operates independently from influence by government,
electricity suppliers, or consumers. The focus on financial regulations is to prevent
anticompetitive conditions of large-scale/ commercial users. In case of small/ domestic
users, the focus of regulation should be on balancing the interests of suppliers with the
interests of the customers.
(vi) The Role of Government:
Government's role is to be focused on policy formation and execution and to
give up the roles of operator and investor minimizing the state ownership in generation
and distribution.
Hence the process of a full reform program consists of the following four main stages
and those are:
• formation and approval of a power policy by government that provides the broad
guidelines for the reform program and the heavy political commitment needed to
sustain the reform process, followed by the necessary legislation for implementing
this policy;
• development of a transparent regulatory framework for the electricity market;
• unbundling of the integrated structure of the power supply and establishing a
market in which electricity is traded at arm's length; and
• cessation of the state's ownership at least in most of the electricity generation and
distribution segments of the market.
31
The regulatory reform programs for electricity sectors must be built according to these
basic elements, however the complete design of a program should be according to country’s
specific circumstances and its electricity sector. In this way, actual reform programs show a
variety of designs, especially in terms of market structure, level of private involvement, and
order of reform stages.
2.8.2 Progress with Sector Reform Electricity-sector reform has been supported by the World Energy Council and the
international lending agencies like World Bank since early 1990s. They also conducted
analyses of the steps taken by their member nations for evaluation in this regard.
The movement of power sector reforms generally spreads across the developing world
with a similar rate to that in the developing countries. Some of the developing countries have
almost completed their reforms, many have started the reforms and remaining countries are
either planning or seriously considering similar reforms. The pioneering reforms to power
sectors in Chile, England and Wales, and Norway during the 1980s have motivated numerous
industrialized and developing countries to follow them during the 1990s (Bacon and Besant-
Jones, 2002).
The power pool design of Chile, and the independent transmission and system
operation of England and Wales have been widely adopted in South American countries such
as Argentina, Brazil, Bolivia, Colombia, and Peru, and afterward in some European countries
like Georgia, Hungary, and Moldova. Some of them made bilateral contracts between power
producers and suppliers. Some countries, such as Ecuador, Armenia, Bulgaria, and Romania,
have completed the initial restructuring with other regulatory steps and stepping forward to
privatization of their generation and distribution entities (Bacon and Besant-Jones, 2002).
A study by the World Energy Council (in 1998) gave an assessment of power-sector
reforms for all its member countries (both developed and developing) having the energy
industries. Table 2.10 shows the number of countries assessed to have made considerable
progress towards sector liberalization, to be underway to sector reform, or to have made no
steps toward sector reform.
32
Table 2.10 Number of countries achieving substantial power-sector liberalization by 1998
Region Considerable Liberalization
Liberalization Planned/Under Way
No Liberalization
Western Europe 5 12 2 Cent. & Eastern Europe/ CIS * 4 8 15
Africa/Middle East 0 17 46 Asia/Australia 2 12 13 South America 4 3 5 North America 0 3 0
Total 15 55 81 * CIS, Commonwealth of Independent States.
Source: World Energy Council (1998) criteria; excluding Central America and the Caribbean, for which full details were not given.
As shown in Table 2.10, only 15 countries actually carried out considerable reforms of
formerly public-sector energy industries, out of which about half of the countries were high-
income industrialized countries. 55 countries had planned for liberalization, out of these about
one third were high-income industrialized countries. Some 81 countries had not made any
progress towards power sector reforms out of which several countries were less-developed or
developing.
An study was conducted by Energy Sector Management Assistance Programme
(ESMAP) in 1998 for power-sector reforms in 115 non-industrialized countries. The survey
was based on a questionnaire inquiring about the issues like: the existence of energy laws,
existence of separate energy regulatory authority, existence of private investment (the presence
of IPPs), restructuring of the state-owned utility, privatization of power generation and
distribution, and whether the energy sector is commercialized & corporatized (ESMAP, 1999).
The results are mentioned in Table 2.11.
33
Table 2.11 Number of countries taking key reform steps in the power sector as of 1998
Privatization Corporate Law Regulator IPPs Restructure
Generation Distribution
51 38 33 46 40 24 21 (44%) (33%) (29%) (40%) (35%) (21%) (18%)
Source: Energy Sector Management Assistance Programme data. [ESMAP (1999)], Global Energy Sector Reform in Developing Countries: A Scorecard; The World Bank, Washington D.C.
Out of 115 countries, some countries took all the six steps for power-sector reforms
whereas some of them had not taken a single step. Corporatization and commercialization was
the most common step (more than 44%) while privatization of assets was the least common step
(about 20%) taken in this regard. (Bacon and Besant-Jones, 2002)
2.8.3 History of Power Sector Reform
Some of the countries have taken up power-sector reforms through major privatization
of the sector to promote competition while others have made partial progress through inviting
private sector for power generation (i.e., IPP route). Many countries have others have not done
significant progress.
The obligation of power purchase through IPP agreements may lead to serious
financial risks, as took place in many Asian countries during 1998 financial crisis, when the
currencies were devalued but retail power tariffs could not be increased (Gray and Schuster,
1998). The higher risks cause greater barriers in the way of power-sector reforms.
Bacon and Besant-Jones (2002) assessed the following five types of exposure that are
experienced due to power-purchase agreements with IPPs, although some Asian countries
(Indonesia, Malaysia, Philippines, and Thailand) were much less exposed to risks beyond their
control.
34
• exchange rate exposure through origin of fuel supply as imported fuels often have
high prices;
• exchange rate exposure through currency of wholesale tariffs; high tariffs in case of
wholesale tariffs in a hard currency like US dollars;
• exchange rate exposure through foreign debt for project financing, especially in
case of project financing over 50% of total project cost;
• market risk exposure through proportion of country’s electric power requirements
fulfilled by IPPs, risk becomes high in case the proportion is more than 50%; and
• exposure to off-taker payment problems through margin of retail tariffs over
wholesale prices, the risk is high when this margin is less than 3 cents (US) per
kilowatt-hour to cover the expenses of transmission, distribution, customer services
along with power system losses, line losses and theft.
The results showed a large difference in risk exposure among aforementioned four
countries. Philippines had the greatest overall exposure due to higher risk-rating for all the five
indicators, which is creating huge problems. Pakistan has the problems like that of Philippines,
with a single-buyer approach (by means of Central Power Purchase Authority to contract with
IPPs for power-purchase). In Pakistan, the problem arose with the arrears in payments by
government agencies to the IPPs due to low collection of payments from power consumers. To
keep the utility's risk exposure within manageable proportions, only a few such power purchase
agreements (PPAs) should be signed before the power market is reformed.
2.8.4 Lessons from Sector Reforms
Experience of designing and implementing power-sector reforms has resulted in several
lessons (Besant-Jones, 1996). Major restructuring of an integrated power supply chain of
functions is feasible. Power generation, transmission and distribution functions can be
separated from one another.
Private financing of power investments is feasible in a perfect business environment,
and commercial lenders are willing to provide medium-term financing (10–15 years) for
35
investments in well-functioning reformed power sectors that are abiding by the regulatory
principles. On the other hand, the countries with little record of good regulation and fair
dealing for businesses, commercial lenders lend only on short maturities (under 3 years). The
governments have to carry an excessively high proportion of investment risks through
performance and payment guarantees, in the presence of multilateral financial participation, in
order to attract large private investments to the power sector.
Governments must sustain an attractive business environment and sound sector
regulation to attract the required amount of investment in power capacity on competitive terms
(Bacon & Besant-Jones, 2002).
2.9 PAKISTAN’S POWER SECTOR REFORMS AND REGULATORY
STRUCTURE
2.9.1 Reforms in the Power Sector
It was in 1986, GOP promoted private sector on built-own-operate basis but the
response was not encouraging, probably due to the political instability.
In 1992, the responsibility of transmission and distribution of electric power vested
with the public sector. The government of Pakistan decided to bring reforms in the electric
power sector through its restructuring. It was understood that power generation and
transmission capacity expansion and efficiency could not be achieved without the
involvement of private sector. The revised power policy was formulated in 1994 and
consequently government invited private sector to invest in the power generation projects.
36
2.9.2 IPPs in Pakistan
Initially 18 IPPS started their operations in Pakistan with the heavy foreign
investment installing the thermal power plants of about 6000 MW capacity. They were
consented to sell their electricity to WAPDA as well as KESC according to their power
purchasing agreements (PPAs). The main thing appealing to the IPPs was the government
incentives in the shape of bountiful tariffs. HUBCO was the first IPP that started its
functioning in 1993 with the power generation capacity of about 1292 MW (WAPDA
Website, 2009).
From 1998 onwards, Pakistan had surplus capacity of power generation WAPDA and
KESC were compelled to buy expensive IPPs electricity though their own plants were
under-utilized. Financial problems, instead of improving, deteriorated even further. IPPs
got involved in disputes and court cases with the government over the tariffs set in their
PPAs with WAPDA. IPPs insisted reduction in fuel prices, in reply of the Government’s
demand for provision of electricity on reduced tariffs. The government then resolved
the IPP issue with the involvement of international donors and within the framework of
contractual agreements (Malik, 2007). Government then in 1994 announced a
comprehensive policy package which had many drawbacks (Shah, 2002). The structural
adjustment programme under the supervision of World Bank and IMF afterward enhanced
this policy shift.
Here are some of the steps that had been taken during the power regulatory reform
process:
• Establishment of Private Power and Infrastructure Board (PPIB) in 1994, to
facilitate private investors.
• Establishment of National Electric Power Regulatory Authority (NEPRA), an
autonomous regulatory agency, to introduce transparent and well-judged
economic regulation in the power sector of Pakistan. NEPRA was created under
37
the NEPRA Act 1997 to ensure fair competition and to protect the interests of
electric power consumer, producer and seller.
• Unbundling of WAPDA’s vertically integrated Power Wing into separate
generation, transmission, and distribution companies in 1998 (as per NEPRA Act-
1997 and the WAPDA Act-1998). WAPDA has now been reorganised into four
thermal generation companies called GENCOs, nine distribution companies called
DISCOs, and one National Transmission and Dispatch Company (NTDC). The
hydroelectric power development and operation functions remained with WAPDA.
• Pakistan Electric Power Company Private Limited (PEPCO) was established as
a separate agency within WAPDA. PEPCO was made responsible for the
restructuring and preparation for privatisation for the generation and distribution
companies in due course through the Privatisation Commission. Private sector
participation is being encouraged to promote competition in the generation and
distribution parts of the industry, while NTDC would remain under state control
and be responsible for national dispatch, transmission, and system planning as a
‘single buyer’.
• Responsibility for the energy sector policy remains with the government.
2.9.3 Reforms to Meet the Country’s Electric Power Requirements
The power demand was projected to grow at 7.9 % (Ghumman, 2006) during the period
of 2005-10 and would increase from 15500 MW to about 21500 MW during this period. To
meet the future electric power requirements during 2005-10 government was promoted
investment in hydel and renewable energy projects to enhance power generation capacity with
other institutional reforms in power sectors. Government was supporting the fast track power
projects and NEPRA has been assisting the potential IPPs through quick processing of the
license applications accurately and appropriately. NEPRA also established the upfront tariff for
various technologies including Wind farms licensing and tariffs for independent power
producers (Ghumman, 2006).
38
To meet total energy requirements, it would be mandatory to explore the possibility of
regional collaboration in this regard. The plans to import of electric power from Iran and
Central Asian states are under consideration.
In year 2006-07, NEPRA issued licenses to several IPPs of 1630 MWs using Thermal,
Wind or Hydel technologies. The Grid Code has established a framework making ease for
operation, maintenance, development and planning of economic and reliable national grid.
NEPRA started monitoring of performance standards of power generation, distribution and
transmission companies. NEPRA also issued several regulations having long-term implication
during 2006-07 considering the demands of accountability, transparency and professionalism.
2.9.4 Power Regulatory Framework
The objective behind the creation of NEPRA (formed under NEPRA Act No. XL of
1997) was to have an independent regulatory body for improvement of efficiency and
availability of electric power services while equally protecting the interests of consumers,
investors and operators, and to promote competition and deregulate power sector activities
for healthy competition.
Initially NEPRA was established as an independent body without any administrative
control from the government. However, for the sake of interaction with Federal and
Provincial Governments it was initially attached to the Ministry of Water and Power. Later
it was linked with the government through the Ministry of Law and Justice. However, in
June 2000 NEPRA was directly attached with the Cabinet Division. Presently, NEPRA is
working in an extremely centralized manner. All the decisions regarding tariffs and
standards required to be approved by federal government. NEPRA consists of a Chairman
and four members (one from each province), all of them are appointed by the government.
NEPRA was initially funded through federal government grant amounting to Rs
100.5 Million. Additionally NEPRA meets its expenses from licensing fees on constant basis
and filling fees for tariff applications etc.
39
Like other regulatory systems, the most important regulatory functions of NEPRA are
grouped in the following five main categories [details may be seen in item 2.9.5]:
• Determination of tariff rates and terms and conditions ;
• Grant of licenses, approval of power acquisition programmes;
• Setting and enforcement of quality-of-service standards, approval of
operating codes and investment standards;
• Industry structure/ privatisation including the transition towards a competitive
market where feasible; and
• Consumer rights and obligations, complaint redress.
NEPRA’s broad policy guidelines for power sector reforms revolve around the
following:
• Tariff structure to ensure sufficient resources to cover costs and investment in
the short term;
• Encourage generation, transmission and distribution capacities on a non-
discriminatory basis to meet the existing needs and growing demand in the long
run; and
• Quality of service to the consumers as well as ensuring network efficiency
including reliability and voltage disturbances.
• Planning criteria for safety, reliability and cost effectiveness of generation,
transmission and distribution facilities.
40
2.9.5 Powers and Functions of Regulatory Authority
The powers and functions of NEPRA are described in the Article 7 of NEPRA Act (Act
No. XL of 1997). According to which:
(1) The Authority shall be exclusively responsible for regulating the provision of electric
power services.
(2) In particular and without prejudice to the generality of the foregoing power, only the
Authority, but subject to the provisions of sub-section (4), shall —
(a) grant licenses for generation, transmission and distribution of electric power;
(b) prescribe procedures and standards for investment programmes by generation,
transmission and distribution companies;
(c) prescribe and enforce performance standards for generation, transmission and
distribution companies;
(d) establish a uniform system of accounts by generation, transmission and
distribution companies;
(e) prescribe fees including fees for grant of licenses and renewal thereof;
(f) prescribe fines for contravention of the provisions of this Act; and
(g) perform any other function which is incidental or consequential to any of the
aforesaid functions.
(3) Notwithstanding the provisions of sub-section (2) and without prejudice to the
generality of the power conferred by sub-section (1) the Authority shall—
(a) determine tariff, rates, charges and other terms and conditions for supply of
electric power services by the generation, transmission and distribution companies and
recommend to the Federal Government for notification;
(b) review organizational affairs of generation, transmission and distribution
companies to avoid any adverse effect on the operation of electric power services and
for continues and efficient supply of such services;
41
(c) encourage uniform industry standards and code of conduct for generation,
transmission and distribution companies;
(d) tender advice to public sector projects;
(e) submit reports to the Federal Government in respect of activities of generation,
transmission and distribution companies; and
(f) perform any other function which is incidental or consequential to any of the
aforesaid function.
(4) Notwithstanding anything contained in this Act, the Government of a Province may
construct power houses and grid stations and lay transmission lines for use within the Province
and determine the tariff for distribution of electricity within the Province.
(5) Before approving the tariff for the supply of electric power by generation companies
using hydro-electric plants, the Authority shall consider the recommendations of the
Government of the Province in which such generation facility is located.
(6) In performing its functions under this Act, the Authority shall, if practicable, protect the
interests of consumers and companies providing electric power services in line with guidelines
laid down by the federal government, not contradictory to the provisions of this Act.
2.9.6 Licenses (Entry and Exit Requirement)
The license provides a plan for the various intermediary phases for the ultimate goal
of an open electric power market structure. No company is allowed to do business of
generation, transmission and distribution without getting a license from NEPRA. License is
an instrument for checking the development of capacity more than required; evaluating the
professional ability of an operator for execution of project; and financial feasibility of the
project. The process involves a public hearing. The progress on issuance of licenses is
given in Table 2.12.
42
Table 2.12 Progress in the Issuance of Licenses
Type of Company Number Capacity
Small Power Producers (SPPs) 25 400 MW
Isolated Generation Companies (IGCs) 6 52 MW
Independent Power Producers (IPPs) 18 4774 MW *
Distribution Licenses ** 9 –
KANUPP and CHANUPP (nuclear) All
KESC and WAPDA Generation Companies All
Transmission License (NTDC) 1
* HUBCO being at the top with the capacity of 1292 MW. ** All successor distribution companies namely, HESCO, QESCO, MEPCO, FESCO,
LESCO, GEPCO, JESCO, PESCO and KESC.
Source: “Effectiveness of Regulatory Structure in the Power Sector of Pakistan (2007)” by Dr. Afia Malik.
43
CHAPTER 3
METHODOLOGY
3.1 OBJECTIVES OF THE STUDY
This research work is based on the idea to contribute towards the solution of the power
crisis of Pakistan through evaluating the effectiveness of NEPRA. The purpose of this study is
to highlight the strengths and weaknesses of NEPRA in order to make it as much effective that
it will be able to overcome the power crisis of Pakistan. Following objectives will be
achieved:-
(i) To find out the level of stake-holders’ satisfaction about the functioning of
NEPRA.
(ii) To find out the level of consumers’ satisfaction with the efficiency of NEPRA.
(iii) To evaluate the effectiveness of NEPRA with reference to satisfaction of
consumers and other stake-holders.
(iv) To find out the hurdles in the way of efficient and effective functioning of
NEPRA.
(v) To analyze the management functions of NEPRA, and finding out the ways and
means for their betterment.
(vi) To make suggestions for increasing the effectiveness of NEPRA, so that it will
be able to solve the power crisis of Pakistan.
3.2 RESEARCH QUESTIONS
This research has been focused on answering three basic questions associated with
power crises of Pakistan.
44
(i) To what extent NEPRA is carrying out its responsibilities?
(ii) What are the hurdles in the way of efficient and effective functioning of
NEPRA?
(iii) How the electricity deficit can be overcome in a short period?
3.3 THEORETICAL FRAMEWORK (EPRE MODEL)
As a model represents a system, as identified by Cooper and Emory (1995), accordingly
the researcher developed EPRE Model based on the four independent variables which affect
two dependent variables. The independent variables include Autonomy of Functions,
Institutional Requirements, Management Expertise and External Factors. The dependent
variables include “Satisfaction of Electric Power Producers, Transmitters & Distributors” and
“Satisfaction of Electric Power Consumers”. Both dependent variables provide collateral for
“Effectiveness of Electric Power Regulatory Authority”. The detail of independent variables is
given below:-
(i) Autonomy of Functions: Regulatory Autonomy, Financial Resources,
Independence for Legislation.
(ii) Fulfillment of Institutional Requirements: Legal Design, Sufficient
Manpower, Clarity of Roles, Transparency, Accountability.
(iii) Management Expertise: Proportionality (Qualification), Proficiency,
Predictability (Reliability), Targeting (Objectivity), Participation.
(iv) Avoidance of Environmental Forces: The environmental forces include
Federal Govt Influence, Provincial Resources & Support, Influence by
Customers, Influence by Electric Power Companies.
45
The EPRE Model:
Following is the Electric Power Regulatory Effectiveness (EPRE) Model which has
been designed to study the effectiveness of regulatory structure in Pakistan (Figure 3.1).
Figure 3.1 EPRE Model
Autonomy of Functions
Fulfillment of Institutional
Requirements
Avoidance of Environmental
Forces
Effectiveness of NEPRA with respect to Electric
Power Companies
Effectiveness of NEPRA
with respect to Electricity Consumers
Management Expertise
Effectiveness of Electric Power
Regulatory Authority
Independent Variables Dependent Variables
46
3.4 STATISTICS USED TO ANALYZE DATA
3.4.1 Use of SPSS SPSS software was used for all statistical tests. Initially SPSS sheet was prepared by
feeding all the data collected through survey questionnaires. Afterward required statistical tests
were applied and the results were used for data analysis.
3.4.2 Data Reliability Test Before applying Multiple Regression on EPRE Model and other statistical tools on
collected data, the researcher applied Reliability Test Cronbach’s Alpha. The purpose of
checking the reliability of data was to get proper results from the data collected for research.
There were many functions related to the regulatory effectiveness, however four variables were
finally extracted from the collected data. In this way many items have been reduced to more
manageable number of items those belonged together having characteristics of overlapping
measurement.
Cronbach’s Alpha was calculated for the whole questionnaires and for each group of
questions related to a variable. In each case, Cronbach’s Alpha was equal or above 0.7 which
showed the reliability of questionnaires and the grouping of questions for different variables.
3.4.3 Frequency Distribution and Bar Charts Frequency Distribution Tables and the related Bar Charts were prepared for all
questions of all the three questionnaires. Then the results were discussed for each frequency
table.
3.4.4 Pearson’s Correlation Coefficient Pearson’s Correlation Coefficient test was used to find out the relationship between the
same type of items from different data sources as well as among the inter-variable correlation
for all the four independent variables.
47
3.4.5 Regression Analysis
Regression analysis was used for developing EPRE Model whereas the
t-values were used for testing of hypotheses.
3.5 RESEARCH DESIGN
After developing the theoretical framework, the next step is to plan a research design
for collection of data, analysis of data and interpretation of results. Survey through
questionnaires is the best technique for conducting a research, as mentioned by Cooper and
Emory (1995).
The researcher conducted the research by means of a survey for answering the
questions. Following is the research design which was outlined to get the research objectives.
3.5.1 Data Collection
To determine the effectiveness of an organization, it is appropriate to consider the top
management as the basic element of study.
Following three categories of the questionnaires were selected:-
(i) NEPRA Management.
(ii) Representatives of Electric Power Companies.
(iii) Representatives of Electricity Consumers.
First questionnaire was formulated for the NEPRA management (Appendix ‘E’). The
researcher selected high ranking officials of National Electric Power Regulatory Authority
(NEPRA) as the primary source of data. The researcher had conducted unstructured interviews
48
with the higher management of NEPRA. Besides these unstructured interviews, a questionnaire
was used for data collection, containing the closed-ended questions.
Second questionnaire comprised of closed-ended questionnaire (Appendix ‘F’). It was
developed for the Chief Executives or the representatives of the electric power service
providing companies i.e., Producers, Distributors, and Transmitters. Electric Power Producers
include four (4) Generation Companies (GENCOs) which are working under the control of
Pakistan Electric Power Company (PEPCO) as well as eighteen (18) prominent Independent
Power Producers (IPPs). The distributors include nine (9) Distribution Companies (DISCOs),
working under the control of PEPCO namely IESCO, LESCO, GEPCO, FESCO, MEPCO,
PESCO, TESCO, QESCO and HESCO. Transmitters include the National Transmission &
Power Dispatch Company (NTDC). Details are mentioned at Appendices ‘A’, ‘B’ and ‘C’.
Besides these companies, Karachi Electric Supply Company (KESC) is carrying out all the
three functions of production, distribution and transmission of electric power to its jurisdiction
i.e., Karachi and the nearby areas of Balochistan including Hub.
The third closed-ended questionnaire was designed for the electric power consumers
mostly the industrial (Appendix ‘G’). The elements of this population were the presidents or
the senior members of thirty three (33) Chambers of Commerce and Industries throughout
Pakistan as well as the members of Federation of Pakistan Chambers of Commerce and
industry (FPCCI). The reason behind this selection was that the members of chambers of
commerce and industries are invited in NEPRA meeting held for determination and review of
tariffs for power distribution companies. They represent industrial consumers of electric power.
Although the number of domestic consumers are much more than the industrial consumers, but
the industrial consumption of electricity is much more than its domestic use (Appendix ‘D’).
Additionally, there are no prominent organization exists that protects the rights of consumers
of electric power and other utility services. In this situation, the above mentioned population
can also be assumed to represent industrial domestic consumers of electric power as well.
49
3.5.2 Sampling Design
Sekaran (2003) suggested that the sample size larger than 30 and less than 500 was
appropriate for most researches. Cooper and Emory (1995) suggested identification of the
target population and selection of the sample at the design stage. Oliver (2003) has suggested
that the setting of criteria for selection and non-selection of participants.
In this study, due to the small size of population the sample size was smaller
accordingly. Despite the small population size, the researcher has taken into account the lower-
limit of sample size i.e., 30. The sample was taken from three segments (strata) for three
different surveys, i.e., NEPRA officials, electric power companies and the industrial
consumers. Sample size for each segment was different. There was a big variation in
population sizes for the three strata, ranging from 50 to 109.
As the proportionate sampling for each segment was neither meaningful nor could be
helpful in getting appropriate results, the researcher selected the method of Disproportionate
Stratified Sampling. An appropriate sample size was taken for each segment. It also made an
ease for handling of data and calculations of results.
The first questionnaire was to be filled in by NEPRA officials. The population was
consisting on the high ranking officials i.e., chairman, members, directors, deputy directors and
the assistant directors, the persons who were the initiators for any change in policies and
responsible for the implementation of the same. In this case the strata was containing of about
50 NEPRA officials, out of which 36 participants (72%) were available to give their response.
Therefore, the sample of size was 36 for this survey.
The second questionnaire was related to the power service providing companies,
consisting of 33 companies. This include four (4) Generation Companies (GENCOs), eighteen
(18) Independent Power Producers (IPPs), nine (9) Distribution Companies (DISCOs), one (1)
Transmission Company (NTDC), one (1) multi-service company i.e., KESC which has been
carrying out all the three functions of power generation, transmission and distribution within its
jurisdiction i.e., Karachi and the nearby areas of Balochistan including Hub. The questionnaire
regarding efficiency of NEPRA was filled by one responsible high ranking official from each
of above said electric power companies; hence the sample size was 33.
50
The third questionnaire was related to the electric power consumers. The population
consisted of the representatives of member trade bodies affiliated with Federation of Pakistan
Chambers of Commerce and industry (FPCCI) including thirty three (33) Chambers of
Commerce and Industries as well as seventy six (76) Associations of Trade and Industry
throughout the country. In the way the population size comes to 109, out of which 30% i.e. 33
have been taken as sample by the researcher.
3.5.3 Measuring Scales
The researcher used five-point Likert Scale for survey questions seeking the opinion of
the respondents regarding survey questions/ statements ranging from 5 = Strongly Agree to 1 =
Strongly Disagree. The scale was described in detail in the questionnaire for convenience of
the respondents as: Strongly Agree = 5, Agree = 4, Neither Agree Nor Disagree = 3, Disagree
= 2 and Strongly Disagree = 1.
At the end of the questionnaire, a section was given containing an open-ended question
in which the respondents were free to give some useful information in addition to the given
questions. In addition, the section of basic information was given at the start of the
questionnaire. This information included the name of respondent, his/her designation, name of
the organization and the area of working; in the consumers’ questionnaire the area of working
has been replaced by the city or district of the respondents. All types of respondents had been
ensured about the secrecy of information given by them.
3.5.4 Variables There were four independent variables i.e., “Autonomy of Functions at NEPRA”,
“Fulfillment of Institutional Requirements”, “Management Expertise at NEPRA” and
“Avoidance of Environmental Forces”. There were two dependent variables i.e., “Effectiveness
of NEPRA with respect to Power Companies” and “Effectiveness of NEPRA with respect to
Electricity Consumers” which depend upon the satisfaction of electric power services providers
(Producers, distributors & suppliers of electric power) and that of electricity consumers
respectively.
51
3.5.5 Hypotheses Testing Both dependent variables ensure the “Effectiveness of NEPRA”. The relation and
dependency of both dependent variables with each of the independent variable were verified
for which the following eight hypotheses were tested.
(i) “Effectiveness of NEPRA with respect to Power Companies” depends upon
“Autonomy of Functions at NEPRA”.
(ii) “Effectiveness of NEPRA with respect to Power Companies” depends upon the
“Fulfillment of Institutional Requirements”.
(iii) “Effectiveness of NEPRA with respect to Power Companies” depends upon the
“Management expertise at NEPRA”.
(iv) “Effectiveness of NEPRA with respect to Power Companies” depends upon the
“Avoidance of Environmental Forces”.
(v) “Effectiveness of NEPRA with respect to Electricity Consumers” depends upon
“Autonomy of Functions at NEPRA”.
(vi) “Effectiveness of NEPRA with respect to Electricity Consumers” depends upon
the “Fulfillment of Institutional Requirements”.
(vii) “Effectiveness of NEPRA with respect to Electricity Consumers” depends upon
the “Management expertise at NEPRA”.
(viii) “Effectiveness of NEPRA with respect to Electricity Consumers” depends upon
the “Avoidance of Environmental Forces”.
SPSS software was used to analyze the data, which was collected by mean of
questionnaires. The results were discussed in the light of relevant literature and hence the
conclusions were made accordingly.
The literature was mostly contained the earlier researches on the subject, available in
the shape of research papers and articles. The literature, comprising the evaluation of other
regulatory authorities and supportive to this research, was reviewed.
52
3.6 DATA COLLECTION TOOLS
The researcher designed three survey questionnaires, first for the
Producers/Transmitters/Distributors of electric power, second for electricity consumers (mostly
industrial and commercial) and third for officials of NEPRA management. These
questionnaires have been be filled by “officials of NEPRA officials”, “the representatives of
electric power producers/ transmitters/ distributors” and “members/ representatives of
Chambers of Commerce and Industry”; as mentioned at Appendices “E”, “F” and “G”
respectively.
Following sources were used to formulate the questions designed for NEPRA Officials
(N1 through N30), Electric Power Companies (P1 through P22) and Electricity Consumers (C1
through C11) as mentioned below:-
3.6.1 Autonomy of Functions N1, P1,P12, N2, P4,P20; N3, P3,P4 (Levy & Spiller, 1994; Smith, 1997; Stern &
Holder, 1999; Stern, 2000; Pachauri, 2001; Harbison, 2001; Bacon & Besant-Jones, 2002;
Cordova-Novion & Hanlon, 2003; Jacobs, 2004; Stern & Cubbin, 2005; Malik, 2007);
regarding Regulatory Autonomy.
N6, P5 (Harbison, 2001; Stern & Cubbin, 2005; Malik, 2007); regarding Availability of
Financial Resources.
N4, N5, P2, N17, P13 (Gray & Schuster, 1998; Cook, 1999; Harbison, 2001; Tsaplin,
2001; Bacon & Besant-Jones, 2002; Cordova-Novion and Hanlon, 2003; Stern & Cubbin,
2005; Malik, 2007); regarding Independence in Legislation and Enforcement of Rules.
3.6.2 Institutional Requirements N12, P9, P10, P11 (Gray & Schuster, 1998; Bacon & Besant-Jones, 2002; Cordova-
Novion & Hanlon, 2003; Stern & Cubbin, 2005; Malik, 2007); regarding Legal Design or
Institutional Framework.
53
N7, P12, P20 (Stern, 2000; Cordova-Novion & Hanlon, 2003; Stern & Cubbin, 2005;
Bari, 2006; Malik, 2007); regarding Sufficient and Trained Manpower.
N9, P12, P20 (Levy & Spiller, 1994; Smith, 1997; Stern & Holder, 1999; Stern &
Holder, 1999; Stern, 2000; Jacobs, 2004; Harbison, 2001; Cordova-Novion & Hanlon, 2003;
Jacob, 2004; Malik, 2007); regarding Clarity of Roles.
N10, N11, P6,P7,P8 (Levy & Spiller, 1994; Smith, 1997; Stern & Holder, 1999; Stern,
2000; Kazmi, 2000; Bacon & Besant-Jones, 2002; Cordova-Novion & Hanlon, 2003; Jacobs,
2004; Cook, Kirkpatrick, Minogue & Parker, 2004); regarding Transparency.
N8, P12, P20 (Levy & Spiller, 1994; Stern, 2000; Stern & Holder, 1999; Smith, 1997;
Jacobs, 2004; Cook, Kirkpatrick, Minogue & Parker, 2004; Malik, 2007); Cordova-Novion &
Hanlon, 2003); regarding Accountability.
3.6.3 Management Expertise N14, N15, N16, P14, P15, P20, P20, N14, N15, N16, P17, P18 (Stern, 2000; Cook,
Kirkpatrick, Minogue & Parker, 2004; Bari, 2006; Malik, 2007); regarding Proportionality i.e.,
qualification according to job requirements.
N13, N14, P14, P20 (Harbison, 2001; Bari, 2006; Malik, 2007); regarding Proficiency
or Expertise.
N18, C9,C10, N19, P16,P17, P18 (Levy & Spiller, 1994; Stern, 2000; Stern & Holder,
1999; Smith, 1997; Jacobs, 2004; Cordova-Novion & Hanlon, 2003; Cook, Kirkpatrick,
Minogue & Parker, 2004; Malik, 2007); regarding Reliability i.e., predictability, credibility and
consistency.
N17, P13, N18, C9,C10, N19, P16,P17, P18 (Harbison, 2001; Cook, Kirkpatrick,
Minogue & Parker, 2004; Malik, 2007); regarding Targeting i.e., objectivity.
54
N18, C9,C10 (Levy & Spiller, 1994; Stern, 2000; Stern & Holder, 1999; Smith, 1997;
Jacobs, 2004; Malik, 2007; Cordova-Novion & Hanlon, 2003); regarding Participation of
Customers.
3.6.4 Environmental Factors
N29, P19 (Malik, 2007); regarding Federal Government Influence.
N21, N22, N23, N25, P21, N24, P6, P7 (Malik, 2007); regarding Provincial Resources
and Support.
N26, C1, C2, C3, C4 (Bacon & Besant-Jones, 2002); regarding Influence by
Customers.
N20, C5,C6, C7,C8, N27, P12, N28, P4 (Stern & Holder, 1999; Kazmi, 2000; Jacob,
2004; Ahmed, 2007; Malik, 2007); Influence by Power Companies.
N30, P19 (Bacon & Besant-Jones, 2002); Political Forces
55
CHAPTER 4
DATA ANALYSIS
4.1 RELIABILITY STATISTICS CRONBACH’S ALPHA
Before putting the questionnaires before the participants to solve them, the reliability of
the questions was checked by calculating Cronbach’s Alpha for all the three questionnaires.
Firstly the reliability test Cronbach’s alpha was applied on the questionnaire which was
filled by the NEPRA officials. The results of reliability statistics show that the value of
Cronbach’s alpha is more than 0.7 for thirty (30) items, as well as for the four main
effectiveness factors for the same questionnaire (Table 4.1). This proves that the data, collected
so for, is reliable and normal.
Table 4.1 Reliability Statistics for “NEPRA Officials’ Questionnaire”
Variable Cronbach's Alpha N of Items
All items .792 30
Autonomy of Functions .719 6
Institutional Requirements .702 4
Management Expertise .733 9
Environmental Factors .708 11
The reliability test Cronbach’s alpha was then applied on the questionnaire which was
filled by the representatives of electric power companies i.e., producers, transmitters and
distributors. The results of reliability statistics show that the value of Cronbach’s alpha is more
than 0.7 for twenty two (22) items , which proves the reliability and normality of data (Table
4.2).
56
Table 4.2 Reliability Statistics for “Power Companies’ Questionnaire”
Variable Cronbach's Alpha N of Items
All items .748 22
The reliability test Cronbach’s alpha was also applied on the questionnaire which was
filled by the electric power consumers i.e., the representatives of Chambers of Commerce and
Industries. The results of reliability statistics show that the value of Cronbach’s alpha is more
than 0.7 for twenty two (11) items, which proves the reliability and normality of data (Table
4.3).
Table 4.3 Reliability Statistics for “Power Consumers’ Questionnaire”
Variable Cronbach's Alpha N of Items
All items .790 11
4.2 COMPARISON OF RESPONSE
Multiple Regression was used to find out the relation between four independent
variables namely Autonomy of Functions (AUT_FN), Fulfillment of Institutional
Requirements (FIR), Management Expertise (ME) & Avoidance of Environmental Forces
(AEF) and the dependent variable i.e., Effectiveness of NEPRA. The satisfaction of stake-
holders provides the collateral for effectiveness of the organization. The stake-holders for
NEPRA are electric power companies and electric power consumers. In this way there are two
different aspects of regulatory effectiveness in respect of power sector of Pakistan and two
dependent variables namely Effectiveness of NEPRA with respect to Power Companies
(EN_P) and Effectiveness of NEPRA with respect to Electricity Consumers (EN_C) are used
in the model. The effect of above mentioned four independent variables on these two
dependent variables will be observed separately.
57
All the four variables were consisted of the response of NEPRA officials on the
questions related to the four main factors that influence the Effectiveness of NEPRA i.e.,
Autonomy of Functions (AUT_FN), Fulfillment of Institutional Requirements (FIR),
Management Expertise (ME) & Avoidance of Environmental Forces (AEF).
To compare response of NEPRA officials, questions were asked from Electric Power
Companies and the Electricity Consumers related to the factors influencing the effectiveness,
then Correlation was applied on the data taken from the response of NEPRA officials and its
stake holders i.e., Electric Power Companies and Electricity Consumers.
Pearson correlation coefficient is a measure of linear association between two variables.
The values of the correlation coefficient range from -1 to 1. The sign of the correlation
coefficient indicates the direction of the relationship, i.e., positive and negative signs represent
direct and inverse relation respectively between the two variables. The absolute value of the
correlation coefficient indicates the strength, i.e., the values closer to 1 or -1 indicate stronger
relationships. The correlation coefficients on the main diagonal are always 1.0, because each
variable has a perfect positive linear relationship with itself. Correlations above the main
diagonal are a mirror image of those below. Due to this reason, only the single values of
correlation coefficients are shown in the forthcoming correlation tables.
Table 4.4 identifies the variables used in the data analysis alongwith the source of data.
The four independent variables are based on the data collected from NEPRA officials, and the
corresponding variables extracted from the data collected from Electric Power Companies and
Electricity Consumers.
58
Table 4.4 Description of Variables
Variable Description NEPRA Officials
Electric Power Companies
Electricity Consumers
1 Autonomy of Functions AUT_FN AUT_FN_P -
2 Institutional Requirements FIR FIR_ P -
3 Management Expertise ME ME_ P ME_C
4 Environmental Factors AEF AEF_ P AEF_C
4.3 INTER-ITEM CORRELATIONS FOR DIFFERENT DATA
SOURCES 4.3.1 NEPRA and Electric Power Companies Table 4.5 shows the correlation coefficient between AUT_FN and AUT_FN_P as 0.416
at p-value < 0.05. The result was significant which indicates that both variables are linearly
related, but the relationship was not strong as the coefficient value was not closed to 1.
Table 4.5 Autonomy of Functions AUT_FN AUT_FN_P
AUT_FN Pearson Correlation 1 -
Sig. (2-tailed)
AUT_FN_P Pearson Correlation .416(*) 1
Sig. (2-tailed) .016
* Correlation is significant at the 0.05 level (2-tailed).
59
Table 4.6 shows the correlation coefficient between FIR and FIR_P as 0.361 at p-value
< 0.05. The result was significant which indicates that both variables are linearly related, but
the relationship was not much strong as the coefficient value was not closed to 1.
Table 4.6 Institutional Requirements FIR FIR_P
FIR Pearson Correlation 1 -
Sig. (2-tailed)
FIR_P Pearson Correlation .361(*) 1
Sig. (2-tailed) .039
* Correlation is significant at the 0.05 level (2-tailed).
Table 4.7 shows the correlation coefficient between ME and ME_P as 0.380 at p-value
< 0.05. The result was significant indicating the linear relation between both variables, but the
relationship was not much strong as the coefficient value was not closed to 1.
Table 4.7 Management Expertise ME ME_P ME Pearson Correlation 1 - Sig. (2-tailed) ME_P Pearson Correlation .380(*) 1 Sig. (2-tailed) .029
* Correlation is significant at the 0.05 level (2-tailed).
60
Table 4.8 shows the correlation coefficient between AEF and AEF_P as 0.351 at p-
value < 0.05. The result was significant indicating the linear relation between the variables, but
the relationship was not strong due to small value of correlation coefficient.
Table 4.8 Avoidance of Environmental Factors AEF AEF_P
AEF Pearson Correlation 1 -
Sig. (2-tailed)
AEF_P Pearson Correlation .351(*) 1
Sig. (2-tailed) .045
* Correlation is significant at the 0.05 level (2-tailed).
These results show that the data collected from NEPRA officials is correlated with that
of electric power companies. In this way the data from different sources was compared.
According to the opinion of Electric power companies, NEPRA has more autonomy, but it has
weak institutional framework with less management expertise, and electric power companies
can not exert unnecessary pressure to NEPRA for getting undue favours. Off and on,
government exerts unnecessary pressure on NEPRA for implementation of its decisions, to
satisfy the political forces in the country and to satisfy the international financing agencies like
IMF and World Bank.
4.3.2 NEPRA and Electricity Consumers Table 4.9 shows the correlation coefficient between ME and ME_C as 0.383 at p-value
< 0.05. The result was significant indicating the positive linear correlation between both
variables, but the relationship was not much strong as the coefficient value was not closed to 1.
61
Table 4.9 Management Expertise AEF AEF_C
AEF Pearson Correlation 1 -
Sig. (2-tailed)
AEF_C Pearson Correlation .383(*) 1
Sig. (2-tailed) .028
* Correlation is significant at the 0.05 level (2-tailed).
Table 4.10 shows the correlation coefficient between AEF and AEF_C as −0.387 at p-
value < 0.05. The result was significant indicating the negative linear correlation between both
variables and the relationship was not strong as the coefficient value was not closed to -1.
Table 4.10 Avoidance of Environmental Factors AEF AEF_C AEF Pearson Correlation 1 - Sig. (2-tailed) - AEF_C Pearson Correlation -.387(*) 1 Sig. (2-tailed) .026
* Correlation is significant at the 0.05 level (2-tailed).
These results show that the data collected from NEPRA officials is correlated with that
of electricity consumers. In this way the data collected from different sources was compared.
According to the consumers’ opinion, NEPRA has less management expertise, and consumers
some times exert pressure on government for getting relief, government further exerts this
pressure to NEPRA and electric power companies as well as gives some rebate in the billing.
The negative correlation between the data collected from NEPRA and that of consumers
regarding Environmental Factors depicts the use of environmental factors in the favour of
electricity consumers up to some extent. However the undue pressure by the government and
other forces in the country hamper the efficiency of NEPRA.
62
4.4 CORRELATIONS AMONG INDEPENDENT VARIABLES
Table 4.11 presents inter-correlations among four independent variables used in EPRE
Model. The result showed 6 combinations of two different independent variables each. Out of
which, 4 were found positively correlated at p < 0.01 and 2 were found positively correlated at
p < 0.05. Such results satisfy the multi-collinearity of all independent variables used in the data
analysis.
Table 4.11 Inter-Variable Correlations for Independent Variables AUT_FN FIR ME AEF
AUT_FN Pearson Correlation 1 - - -
Sig. (2-tailed)
FIR Pearson Correlation .545(**) 1 - -
Sig. (2-tailed) .001
ME Pearson Correlation .370(*) .546(**) 1 -
Sig. (2-tailed) .026 .001
AEF Pearson Correlation .469(**) .591(**) .341(*) 1
Sig. (2-tailed) .004 .000 .042
** Correlation is significant at the 0.01 level (2-tailed).
* Correlation is significant at the 0.05 level (2-tailed).
4.5 CORRELATION BETWEEN DEPENDENT VARIABLES Table 4.12 presents inter-correlations between two dependent variables used separately
in EPRE Model i.e., EN_P and EN_C. According to the result, both dependent variables were
found positively correlated at p < 0.01. This result has satisfied the multi-collinearity
dependent variables used independently for EPRE Model.
63
Table 4.12 Inter-Variable Correlations for Dependent Variables EN_P EN_C
EN_P Pearson Correlation 1 -
Sig. (2-tailed)
EN_C Pearson Correlation .592(**) 1
Sig. (2-tailed) .000
** Correlation is significant at the 0.01 level (2-tailed).
4.6 THE REGRESSION MODEL 4.6.1 Regression Analysis With Respect To Power Companies
In Table 4.13 the Method column displays the selection method that was used to
remove or enter the variable. In this case, all the four independent variables i.e., AUT_FN,
FIR, ME and AEF were entered against the dependent variable i.e., EN_P
Table 4.13 Variables Entered/Removed (b)
Model Variables Entered Variables Removed Method 1
AEF, ME, AUT_FN, FIR(a) . Enter
a All requested variables entered.
b Dependent Variable: EN_P Table 4.14 displays the values of R, R Squared, Adjusted R Squared, and Standard
Error. R is the multiple correlation coefficient, which is the correlation between the observed
and predicted values of the dependent variable.
64
Table 4.14 Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .848(a) .720 .680 .284
a Predictors: (Constant), AEF, ME, AUT_FN, FIR
The values of R range from 0 to 1 for regression models. In this case the value of R is
0.848 which indicates stronger relationships among the predictors, i.e., the independent
variables.
R Squared is the proportion of variation in the dependent variable explained by the
regression model. The large value of R Squared i.e., 0.720 indicates that the model fits the data
well. Adjusted R Squared more closely reflects the goodness of fit of the model. In view of
above, it is obvious that the model best fits in the population and is easy to interpret because
there are not too many variables.
Table 4.15 displays values of sum of squares, degrees of freedom, and mean square for
regression and residual. The output for Regression displays information about the variation
accounted for by the model, whereas the output for Residual displays information about the
variation that is not accounted for by the model.
Table 4.15
F Statistics
Model Sum of Squares df Mean
Square F Sig.
1 Regression 5.802 4 1.450 17.982 .000(a)
Residual 2.259 28 .081
Total 8.061 32
a Predictors: (Constant), AEF, ME, AUT_FN, FIR
b Dependent Variable: EN_P
65
In Table 4.15, Sum of Squares for Regression was calculated as 5.082 which is much
greater than that of Residual which is 2.259. This situation indicates that the model accounts
for most of variation in the dependent variable and there is not a requirement to look for
additional factors. Mean Square is the sum of squares divided by the degrees of freedom,
whereas F statistic is calculated by dividing the Regression Mean Square by the Residual Mean
Square.
As the significance value of the F Statistic is smaller than 0.05, therefore, the
independent variables do a good job explaining the variation in the dependent variable.
In Table 4.16 the unstandardized coefficients, standardized coefficients, t value and p
value (significance) are given for all the four independent variables as well as for the constant.
Table 4.16
Coefficients (a)
Unstandardized Coefficients
Standardized Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .354 .450 .787 .438 AUT_FN .031 .117 .035 .268 .791 FIR .342 .121 .427 2.834 .008 ME .214 .106 .241 2.024 .053 AEF .341 .137 .326 2.487 .019
a Dependent Variable: EN_P The unstandardized coefficients are the coefficients of the estimated regression model.
Now the estimated regression model is as under:-
Effectiveness of NEPRA with respect to Electric Power Companies = 0.354 +
0.031(Autonomy of Functions) + 0.342(Fulfillment of Institutional Requirements) +
0.214(Management expertise) + 0.341(Avoidance of Environmental Forces)
In some cases, the independent variables are measured in different units. The
standardized coefficients or betas are an attempt to make the regression coefficients more
comparable.
66
The t statistics can help in determining the relative importance of each variable in the
model. The t values well below -2 or above +2 indicate the usefulness of predictors. In this
model the independent variables FIR, ME and AEF are found as comparatively better
predictors of the dependent variable EN_P.
There are four independent variables namely Autonomy of Functions (AUT_FN),
Fulfillment of Institutional Requirements (FIR), Management Expertise (ME) & Avoidance of
Environmental Forces (EF) and one dependent variable namely Satisfaction of Power
Companies (EN_P). The results show that p value < 0.01 for this model. Therefore, the
independent variables better predict the dependent variable in this model. The calculated
constant value has been calculated as 0.354 but the result is not significant (p > 0.1). The
coefficient of independent variable AUT_FN is 0.031 (insignificant at p > 0.1), the coefficient
of FIR is 0.342 (significant at p < 0.05), the coefficient of ME is 0.214 (significant at p < 0.1)
and the coefficient of AEF is 0.341 (significant at p < 0.05).
Table 4.16 reveals that in case of independent variables of ‘Fulfillment of Institutional
Requirements’ (FIR), ‘Management Expertise’ (ME) and ‘Avoidance of Environmental
Forces’ (AEF), the probability of the t statistic (2.834, 2.024 & 2.487 respectively) was
positive, indicating that the slopes associated with these variables were not equal to zero (b ≠
0). The b coefficients associated with these variables (0.342, 0.214 & 0.341 respectively) were
positive, indicating their direct relationship with ‘Effectiveness of NEPRA with respect to
Electric Power Companies’. ‘Fulfillment of Institutional Requirements’, ‘Management
Expertise’ and ‘Avoidance of Environmental Forces’ explained 34.2%, 21.4% and 34.1%
variations towards ‘Effectiveness of NEPRA’.
For independent variable of ‘Autonomy of Functions’ (AUT_FN), the probability of the
t statistic (0.268) for the b coefficient provided little evidence (p > 0.1) that the slope
associated with this variable was not equal to zero (b ≠ 0). The b coefficient associated with
this variable (0.031) was positive, indicating direct relationship with ‘Effectiveness of NEPRA
with respect to Electric Power Companies’. Due to insignificant role, ‘Autonomy of Functions’
explained only 3.1% variation towards ‘Effectiveness of NEPRA’.
67
The probability of t statistic (0.787) for the b coefficient provided little evidence
(p > 0.1) that the slope associated with this variable was not equal to zero (b ≠ 0). However, the
b coefficient associated with this intercept (0.354) indicated direct relationship with
‘Effectiveness of NEPRA with respect to Electric Power Companies’. The intercept presented
the value of ‘Effectiveness of NEPRA with respect to Electric Power Consumers’ when all the
variables were zero.
Thus the EPRE Regression Model with respect to Electric Power Companies can be
written as:-
EN_P = 0.354 + 0.031 AUT_FN + 0.342 FIR + 0.214 ME + 0.341 AEF
4.6.2 Regression Analysis With Respect To Electricity Consumers
In Table 4.17 the Method column displays the selection method that was used to
remove or enter the variable. In this case, all the four independent variables i.e., AUT_FN,
FIR, ME and AEF were entered against the dependent variable i.e., EN_C
Table 4.17 Variables Entered/Removed (b)
Model Variables Entered Variables Removed Method
1 AEF, ME, AUT_FN, FIR(a) . Enter
a All requested variables entered.
b Dependent Variable: EN_C
Table 4.18 displays the values of R, R Squared, Adjusted R Squared, and Standard
Error.
68
Table 4.18 Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .753(a) .567 .506 .435
a Predictors: (Constant), AEF, ME, AUT_FN, FIR
R is the multiple correlation coefficient having the range of values between 0 to 1 for
regression models. In this case the value of R is 0.753 which indicates stronger relationships
among the predictors, i.e., the independent variables.
R squared is the proportion of variation in the dependent variable explained by the
regression model. The large value of R Squared i.e., 0.567 indicates that the model fits the data
well. In view of above, it is obvious that the model fits in the population and is easy to interpret
because there is a limited number of variables.
Table 4.19 displays values of sum of squares, degrees of freedom, and mean square for
regression and residual. The output for Regression displays information about the variation
accounted for by the model, whereas the output for Residual displays information about the
variation that is not accounted for by the model.
Table 4.19 F Statistics
Model Sum of Squares df Mean
Square F Sig.
1 Regression 6.946 4 1.736 9.179 .000(a)
Residual 5.297 28 .189
Total 12.242 32
a Predictors: (Constant), AEF, ME, AUT_FN, FIR
b Dependent Variable: EN_C
69
In Table 4.19, Sum of Squares for Regression was calculated as 6.946 which is much
greater than that of Residual which is 5.297. This situation indicates that the model accounts
for most of variation in the dependent variable and there is not a requirement to look for
additional factors. Mean Square is the sum of squares divided by the degrees of freedom,
whereas F statistic is calculated by dividing the Regression Mean Square by the Residual Mean
Square.
As the significance value of the F Statistic is smaller than 0.05, therefore, the
independent variables do a good job explaining the variation in the dependent variable.
In Table 4.20 the unstandardized coefficients, standardized coefficients, t value and p
value (significance) are given for all the four independent variables as well as for the constant.
Table 4.20 Coefficients(a)
Unstandardized Coefficients
Standardized Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) -.314 .689 -.456 .652
AUT_FN -.020 .179 -.018 -.113 .911
FIR .172 .185 .174 .929 .361
ME .508 .162 .463 3.133 .004
AEF .391 .210 .303 1.860 .073
a Dependent Variable: EN_C
The unstandardized coefficients are the coefficients of the estimated regression model.
Now the estimated regression model is as under:-
Effectiveness of NEPRA with respect to Electricity Consumers = −0.314 − 0.020(Autonomy
of Functions) + 0.172 (Fulfillment of Institutional Requirements) + 0.508(Management
expertise) + 0.391(Avoidance of Environmental Forces)
70
The t statistics can help in determining the relative importance of each variable in the
model. The t values well below -2 or above +2 indicate the usefulness of predictors. In this
model the independent variable ME is found to be comparatively better predictor of the
dependent variable EN_P.
There are four independent variables namely Autonomy of Functions (AUT_FN),
Fulfillment of Institutional Requirements (FIR), Management Expertise (ME) & Avoidance of
Environmental Forces (EF) and one dependent variable namely Satisfaction of Power
Companies (EN_P). The results show that p value < 0.01 for this model. Therefore, the
independent variables better predict the dependent variable in this model. The calculated
constant value has been calculated as −0.314 but the result is not significant. The coefficient of
independent variable AUT_FN is 0.020 (insignificant at p > 0.1), the coefficient of FIR is
0.172 (insignificant at p > 0.1), the coefficient of ME is 0.508 (significant at p < 0.01) and the
coefficient of AEF is 0.391 (significant at p < 0.1).
Table 4.20 reveals that in case of independent variables of ‘Management Expertise’
(ME) and ‘Avoidance of Environmental Forces’ (AEF), the probability of the t statistic (3.133
& 1.860 respectively) was positive, indicating that the slopes associated with these variables
were not equal to zero (b ≠ 0). The b coefficients associated with these variables (0.508 &
0.391 respectively) were positive, indicating their direct relationship with ‘Effectiveness of
NEPRA with respect to Electricity Consumers’. ‘Management Expertise’ and ‘Avoidance of
Environmental Forces’ explained 50.8% and 39.1% variations towards ‘Effectiveness of
NEPRA with respect to Electricity Consumers’.
For independent variable of ‘Autonomy of Functions’ (AUT_FN) and ‘Fulfillment of
Institutional Requirements’ (FIR), the probability of the t statistic (-0.113 & 0.929
respectively) for the b coefficient provided little evidence (p > 0.1) that the slopes associated
with these variables were not equal to zero (b ≠ 0). The b coefficient associated with this
variable (-0.020 & 0.172 respectively) were positive, indicating inverse relationship in case of
1st variable and direct relationship in case of 2nd variable with ‘Effectiveness of NEPRA with
respect to Electricity Consumers’. Due to insignificant role, ‘Autonomy of Functions’ and
71
‘Fulfillment of Institutional Requirements’ explained only 2% and 17.2% variations towards
‘Effectiveness of NEPRA with respect to Electricity Consumers’.
The probability of t statistic (-0.456) for the b coefficient provided little evidence
(p > 0.1) that the slope associated with this variable was not equal to zero (b ≠ 0). However, the
b coefficient associated with this intercept (-0.314) indicated inverse relationship with
‘Effectiveness of NEPRA with respect to Electricity Consumers’. The intercept presented the
value of ‘Effectiveness of NEPRA’ when all the variables were zero.
Thus the EPRE Regression Model with respect to Electricity Consumers can be written
as:-
EN_C = −0.314 − 0.020 AUT_FN + 0.172 FIR + 0.508 ME + 0.391 AEF
4.7 HYPOTHESIS TESTING
There were four independent variables i.e., “Autonomy of functions at NEPRA”,
“Availability of required provincial resources”, “Management expertise of NEPRA” and
“External factors”, with two dependent variables i.e., “Satisfaction of electric power services
providers (Producers, distributors & suppliers of electric power)” and “Satisfaction of electric
power consumers”.
There were four independent variables i.e., Autonomy of Functions at NEPRA
(AUT_FN), Fulfillment of Institutional Requirements (FIR), Management Expertise (ME) and
Avoidance of Environmental Forces (AEF). The dependent variable “Effectiveness of
NEPRA” has two tiers. In this way there were two dependent variables i.e., Effectiveness of
NEPRA with respect to Power Companies (EN_P) and Effectiveness of NEPRA with respect
to Electricity Consumers (EN_C). Both dependent variables were drawn from the satisfaction
of electric power companies and electricity consumers respectively as the satisfaction of stake-
holders provides collateral for effectiveness of an organization.
72
Both dependent variables ensure the “Effectiveness of NEPRA”. The predictability of
independent variables for the dependent variables was tested by means of Regression Analysis
for all the eight (8) hypotheses.
The statistical software “SPSS” was used to calculate the values for regression analysis.
4.7.1 Hypothesis-1
Null Hypothesis: H0 : AUT_FN is a good predictor for EN_P.
H1 : AUT_FN is a not a good predictor for EN_P.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = 0.268 ⇒ ⏐ t ⏐ = 0.268
Result: As the value of t lies in the rejection region, therefore H0 is rejected.
Hence “Autonomy of Functions at NEPRA” (AUT_FN) is not a good predictor for
“Effectiveness of NEPRA with respect to Power Companies” (EN_P).
4.7.2 Hypothesis-2
Null Hypothesis: H0 : FIR is a good predictor for EN_P.
H1 : FIR is a not a good predictor for EN_P.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = 2.834 ⇒ ⏐ t ⏐ = 2.834
Result: As the value of t does not lie in the rejection region, therefore H0 is
accepted. Hence “Fulfillment of Institutional Requirements” (FIR) is a good predictor for
“Effectiveness of NEPRA with respect to Power Companies” (EN_P).
73
4.7.3 Hypothesis-3
Null Hypothesis: H0 : ME is a good predictor for EN_P.
H1 : ME is a not a good predictor for EN_P.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = 2.024 ⇒ ⏐ t ⏐ = 2.024
Result: As the value of t does not lie in the rejection region, therefore H0 is
accepted. Hence “Management expertise at NEPRA” (ME) is a good predictor for
“Effectiveness of NEPRA with respect to Power Companies” (EN_P).
4.7.4 Hypothesis-4
Null Hypothesis: H0 : AEF is a good predictor for EN_P.
H1 : AEF is a not a good predictor for EN_P.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = 2.487 ⇒ ⏐ t ⏐ = 2.487
Result: As the value of t does not lie in the rejection region, therefore H0 is
accepted. Hence “Avoidance of Environmental Forces” (AEF) is a good predictor for
“Effectiveness of NEPRA with respect to Power Companies” (EN_P).
4.7.5 Hypothesis-5
Null Hypothesis: H0 : AUT_FN is a good predictor for EN_C.
H1 : AUT_FN is a not a good predictor for EN_C.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = - 0.113 ⇒ ⏐ t ⏐ = 0.113
74
Result: As the value of t lies in the rejection region, therefore H0 is rejected.
Hence “Autonomy of Functions at NEPRA” (AUT_FN) is not a good predictor for
“Effectiveness of NEPRA with respect to Electricity Consumers” (EN_C).
4.7.6 Hypothesis-6
Null Hypothesis: H0 : FIR is a good predictor for EN_C.
H1 : FIR is a not a good predictor for EN_C.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = 0.929 ⇒ ⏐ t ⏐ = 0.929
Result: As t lies in the rejection region, therefore H0 is rejected. Hence
“Fulfillment of Institutional Requirements” (FIR) is a not good predictor for “Effectiveness of
NEPRA with respect to Electricity Consumers” (EN_C).
4.7.7 Hypothesis-7
Null Hypothesis: H0 : ME is a good predictor for EN_C.
H1 : ME is a not a good predictor for EN_C.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = 3.133 ⇒ ⏐ t ⏐ = 3.133
Result: As the value of t does not lie in the rejection region, therefore H0 is
accepted. Hence “Management expertise at NEPRA” (ME) is a good predictor for
“Effectiveness of NEPRA with respect to Electricity Consumers” (EN_C).
75
4.7.8 Hypothesis-8
Null Hypothesis: H0 : AEF is a good predictor for EN_C.
H1 : AEF is a not a good predictor for EN_C.
Rejection Region: ⏐ t ⏐ ≤ 2
Calculation: The value of t = 1.860 ⇒ ⏐ t ⏐ = 1.860
Result: As the value of t lies in the rejection region, therefore H0 is rejected.
Hence “Avoidance of Environmental Forces” (AEF) is not a good predictor for “Effectiveness
of NEPRA with respect to Electricity Consumers” (EN_C).
4.8 FACTORS AFFECTING REGULATORY EFFECTIVENESS 4.8.1 Autonomy of Functions (i) Regulatory Autonomy
Regulatory autonomy was mentioned as a requirement of efficient regulatory authority
by Levy & Spiller (1994), Smith (1997), Stern & Holder (1999), Stern (2000), Pachauri (2001),
Harbison (2001), Bacon & Besant-Jones (2002), Cordova-Novion & Hanlon (2003), Jacobs
(2004), Stern & Cubbin (2005) and Malik (2007).
(ii) Availability of Financial Resources
Harbison (2001), Stern & Cubbin (2005) and Malik (2007) referred the availability of
financial resources as a basic component of good regulation.
(iii) Independence in Legislation and Enforcement of Rules
Gray & Schuster (1998), Cook (1999), Harbison (2001), Tsaplin (2001), Bacon &
Besant-Jones (2002), Cordova-Novion & Hanlon (2003), Stern & Cubbin (2005) and Malik
76
(2007) revealed after their research that independence in legislation and the enforcement of
rules are necessary for an efficient regulatory authority.
4.8.2 Institutional Requirements
(i) Legal Design or Institutional Framework
Gray & Schuster (1998), Bacon & Besant-Jones (2002), Cordova-Novion & Hanlon
(2003), Stern & Cubbin (2005) and Malik (2007) concluded that a legal design or existence of
institutional framework is an inescapable requirement for good regulatory body.
(ii) Sufficient and Trained Manpower
Sufficient and trained manpower can play a vital role in the effectiveness of a
regulatory body according to the research of Stern (2000), Cordova-Novion & Hanlon (2003),
Stern & Cubbin (2005), Bari (2006) and (Malik (2007).
(iii) Clarity of Roles
Clarity of roles for the employees and the members of higher management is
considered to be very important for the better performance of a regulatory body, as per the
conclusion of many researchers like Levy & Spiller (1994), Smith (1997), Stern & Holder
(1999), Stern & Holder (1999), Stern (2000), Jacobs (2004), Harbison (2001), Cordova-Novion
& Hanlon (2003), Jacob (2004) and Malik (2007).
(iv) Transparency
Levy & Spiller (1994), Smith (1997), Stern & Holder (1999), Stern (2000), Kazmi
(2000), Bacon & Besant-Jones (2002), Cordova-Novion & Hanlon (2003), Jacobs (2004) and
Cook, Kirkpatrick, Minogue & Parker (2004) highlighted the necessity of transparency in the
function of a regulatory body.
77
(v) Accountability
Levy & Spiller (1994), Stern (2000), Stern & Holder (1999), Smith (1997), Cordova-
Novion & Hanlon (2003), Jacobs (2004), Cook, Kirkpatrick, Minogue & Parker (2004) and
Malik (2007) emphasized the importance of accountability within a regulatory body.
4.8.3 Management Expertise
(i) Proportionality i.e., qualification according to job requirements
Stern (2000), Cook, Kirkpatrick, Minogue & Parker (2004), Bari (2006) and Malik
(2007) underlined the importance of proportionality i.e., the qualification of personnel should
coincide with their job responsibilities.
(ii) Proficiency or Expertise
Proficiency or the expertise of the employees can play an important role in the
effectiveness of a regulatory body as per the research outcomes of Harbison (2001), Bari
(2006) and Malik (2007).
(iii) Reliability i.e., predictability, credibility and consistency
Levy & Spiller (1994), Stern (2000), Stern & Holder (1999), Smith (1997), Jacobs
(2004), Cordova-Novion & Hanlon (2003), Cook, Kirkpatrick, Minogue & Parker (2004) and
Malik (2007) pointed out the importance of reliability, predictability or the credibility &
consistency for good regulatory services.
(iv) Targeting i.e., objectivity
Harbison (2001), Cook, Kirkpatrick, Minogue & Parker(2004) and Malik (2007)
concluded that targeting or objectivity is an inevitable requirement for effective regulation of
utility services.
78
(v) Participation of Customers
Participation of customers is very important factor which enhance the effectiveness of a
regulatory body according to the research of Levy & Spiller (1994), Stern (2000), Stern &
Holder (1999), Smith (1997), Cordova-Novion & Hanlon (2003), Jacobs (2004) and Malik
(2007).
4.8.4 Avoidance of Environmental Factors
(i) Federal Government Influence
Malik (2007) has mentioned in her research that the governmental influence can affect
the efficiency of a regulatory body.
(ii) Provincial Influence
Provincial government or the representatives of provinces can influence the decision
making at electric power regulatory authority according to a researcher i.e., Malik (2007).
(iii) Influence by Customers
Bacon & Besant-Jones (2002) concluded that customers can also influence on decision
making at a regulatory body for utility services.
(iv) Influence by Power Companies
Electric power companies can exert their influence on the regulatory body extent which
can sometimes hamper its efficiency according to the researches conducted by Stern & Holder
(1999), Kazmi (2000), Jacob (2004), Ahmed (2007) and Malik (2007).
(v) Political Forces
Bacon & Besant-Jones (2002) indicated that political forces can affect the efficiency of
a regulatory body.
79
CHAPTER 5
RESULTS AND DISCUSSION
Following results were gained from the surveys. 36 NEPRA Officials gave their
responses against 30 questions, 33 representatives of electric power companies gave their
responses against 22 questions and 33 representatives of chambers of commerce & industry
(electricity consumers) gave their responses against 11 questions.
The pilot testing has been done at an initial stage, after which the reliable and valid
questions were selected for the surveys.
Different statistical tools were used, of which the results have been given in the
previous chapter. However, the results of the responses of all the three surveys are being
discussed with the help of Descriptive Statistics i.e., frequency distribution tables and bar
graphs.
5.1 RESPONSE OF NEPRA MANAGEMENT
A questionnaire comprising of 30 questions was filled up by the officials of National
Electric Power Regulatory Authority (NEPRA). Details of their response with the discussion of
these results are given as follows:
80
N1. Effective standards and procedures are adopted at NEPRA.
Strongly AgreeAgreeNeither Agree Nor Disagree
Effective standards and procedures are adopted at NEPRA.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 11.1 11.1 11.1 Agree 23 63.9 63.9 75.0 Neither Agree
Nor Disagree 9 25.0 25.0 100.0
Total 36 100.0 100.0
Out of 36 participants, 4 participants i.e., 11.1% strongly agreed and 23 participants i.e.,
63.9% agreed the statement “Effective standards and procedures are adopted at NEPRA”,
whereas only 9 participants i.e., 25% neither agreed nor disagreed, and none of the participants
clearly disagreed. Conclusively a clear majority of 75% NEPRA officials were sure that
effective standards and procedures had been adopted at NEPRA.
81
N2. NEPRA officials have sufficient authority to discharge their responsibilities
satisfactorily.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA officials have sufficient authority to discharge their responsibilitiessatisfactorily.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 5 13.9 13.9 13.9 Agree 19 52.8 52.8 66.7 Neither Agree
Nor Disagree 9 25.0 25.0 91.7
Disagree 3 8.3 8.3 100.0 Total 36 100.0 100.0
Out of the 36 participants, 4 participants i.e., 13.9% strongly agreed and 19 participants
i.e., 52.8% agreed with the statement “NEPRA officials have sufficient authority to discharge
their responsibilities satisfactorily”, but 9 participants i.e., 25% neither agreed nor disagreed
and only 3 of them i.e., 8.3% disagreed with the statement. In this way a majority of 66.7%
participants have been feeling as much independence and authority which is required to
discharged their duties and responsibilities in satisfactory manner.
82
N3. Federal Government does not take such decisions those affect the autonomy of
NEPRA.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Federal government does not take such decisions those affect the autonomyof NEPRA.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 6 16.7 16.7 16.7 Agree 11 30.6 30.6 47.2 Neither Agree
Nor Disagree 15 41.7 41.7 88.9
Disagree 4 11.1 11.1 100.0 Total 36 100.0 100.0
The statement “Federal government does not take such decisions those affect the
autonomy of NEPRA” was strongly agreed by 16.7% participants and agreed by 30.6%
participants. However, 15 participants i.e., 41.7% shown indifference and 11.1% disagreed
with the statement. This indicates that 47.2% of the participants think that Federal Government
does not intervene in decision making at NEPRA as compared to a less number i.e., 11.1%
participants are of the opinion that Federal Government influences on the decision made at
NEPRA.
83
N4. NEPRA is independently setting the performance standards for electric power
companies.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA is independently setting the performance standards for electricpower companies.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 2 5.6 5.6 5.6 Agree 20 55.6 55.6 61.1 Neither Agree
Nor Disagree 11 30.6 30.6 91.7
Disagree 3 8.3 8.3 100.0 Total 36 100.0 100.0
The statement “NEPRA is independently setting the performance standards for electric
power companies” was strongly agreed by 2 participants i.e., 5.6% and agreed by 20
participants i.e., 55.6%, out of 36 participants. However, 11 participants i.e., 30.6% neither
agreed nor disagreed and only 3 participants i.e., 8.3% disagreed with the statement. These
results show that a majority of 61.1% participants understand that the setting of performance
standards for power companies is exclusively done at NEPRA.
84
N5. NEPRA is independent in prescribing its fee structure for electric power
companies.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA is independent in prescribing fee structure for electric powercompanies.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 11.1 11.1 11.1 Agree 16 44.4 44.4 55.6 Neither Agree
Nor Disagree 13 36.1 36.1 91.7
Disagree 3 8.3 8.3 100.0 Total 36 100.0 100.0
Out of 36 participants, 4 participants i.e., 11.1% strongly agreed and 16 participants i.e.,
44.4% agreed with the statement “NEPRA is independent in prescribing its fee structure for
electric power companies”, however 13 participants i.e., 36.1% neither agreed nor disagreed,
and only 8.3% of the participants clearly disagreed with the statement. Conclusively, the
majority of NEPRA officials think their organization to be independent in prescribing fee
structure for electric power companies.
85
N6. The financial resources are sufficient for proper functioning of NEPRA.
Strongly AgreeAgreeNeither Agree Nor Disagree
The financial resources are sufficient for proper functioning of NEPRA.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 16 44.4 44.4 44.4 Agree 16 44.4 44.4 88.8 Neither Agree
Nor Disagree 4 11.2 11.2 100.0
Total 36 100.0 100.0
Out of 36 participants, 16 participants i.e., 44.4% strongly agreed and the same number
of participants agreed that sufficient financial resources remains available at NEPRA for its
proper functioning, whereas the remaining 4 participants i.e., 11.2 % neither agreed nor
disagreed with opinion, but none of them clearly disagreed. The results indicate that most of
NEPRA officials are sure about the sufficiency of the organizational financial resources.
86
N7. Sufficient manpower is available at NEPRA for its smooth functioning.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Sufficient manpower is available at NEPRA for its smooth functioning.
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 1 2.8 2.8 2.8 Agree 10 27.8 27.8 30.6 Neither Agree
Nor Disagree 14 38.9 38.9 69.4
Disagree 11 30.6 30.6 100.0 Total 36 100.0 100.0
Out of 36 participants from NEPRA, only 1 participant i.e., 2.8% strongly agreed and
10 participants i.e., 27.8% agreed with the statement “Sufficient manpower is available at
NEPRA for its smooth functioning”, however, 14 participants i.e., 38.9% neither agreed nor
disagreed and 11 participants i.e., 30.6% has shown disagreement with the statement. Although
a considerable number of NEPRA officials have shown indifference about the sufficiency of
manpower in their organization, but the percentage of agreement and disagreement is the same.
87
N8. There is a strong system of accountability within NEPRA.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
There is a strong system of accountability within NEPRA.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent
Valid Percent
Cumulative Percent
Valid Strongly Agree 8 22.2 22.2 22.2 Agree 20 55.6 55.6 77.8 Neither Agree
Nor Disagree 5 13.9 13.9 91.7
Disagree 3 8.3 8.3 100.0 Total 36 100.0 100.0
The statement “There is a strong system of accountability within NEPRA” was strongly
agreed by 8 participants i.e., 22.2% and agreed by another 20 participants i.e., 55.6%.
However, 5 participants i.e., 13.9% had shown indifference and 3 participants i.e., 8.3% clearly
disagreed with the statement. In this way, a strong majority of 77.8% NEPRA officials
understand that a strong system of accountability is available within the organization, in
comparison with only 8.3% participants opposing this view point.
88
N9. Roles and tasks for each employee are clearly defined.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Roles and tasks for each employee are clearly defined.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 5 13.9 13.9 13.9 Agree 18 50.0 50.0 63.9 Neither Agree
Nor Disagree 7 19.4 19.4 83.3
Disagree 6 16.7 16.7 100.0 Total 36 100.0 100.0
Out of the 36 participants, 5 participants i.e., 13.9% strongly agreed and 18 participants
i.e., 50% agreed that the roles and tasks for each employee were clearly defined. However, 7
participants i.e., 19.4% neither agreed nor disagreed with the opinion and the remaining 6
participants i.e., 16.7% clearly disagreed. In this way a cumulative percentage of 63.9%
NEPRA participants were sure about clarity of roles and tasks defined for each employee in
comparison with only 16.7% who didn’t think so.
89
N10. Companies working under PEPCO are not given more freedom than IPPs while
determining the tariffs.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Companies working under PEPCO are not given more freedom than IPPswhile determining the tariffs.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 8 22.2 22.2 22.2 Agree 8 22.2 22.2 44.4 Neither Agree
Nor Disagree 15 41.7 41.7 86.1
Disagree 5 13.9 13.9 100.0 Total 36 100.0 100.0
Out of the 36 participants, 8 participants i.e., 22.2% strongly agreed and the same
number of participants agreed with the statement “Companies working under PEPCO are not
given more freedom than IPPs while determining the tariffs”, however, 15 participants i.e.,
41.7% neither agreed nor disagreed with the statement and 7 participants i.e., 13.9% clearly
disagreed. In this manner, 44.4% NEPRA officials understood that the power companies
working under PEPCO are not preferred to the IPPs, whereas only 13.9% didn’t think so.
90
N11. Foreign companies and local IPPs are equally treated for grant/ renewal of
licenses and setting of tariffs.
Strongly AgreeAgreeNeither Agree Nor Disagree
Foreign companies and local IPPs are equally treated for grant/ renewal oflicenses and setting of tariffs.
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 11 30.6 30.6 30.6 Agree 11 30.6 30.6 61.1 Neither Agree
Nor Disagree 14 38.9 38.9 100.0
Total 36 100.0 100.0
Out of 36 participants, 11 participants i.e., 30.6% strongly agreed and the same number
of participants agreed the statement “Foreign and local IPPs are being treated equally while
grant/ renewal of licenses and setting of tariffs”, whereas 14 participants i.e., 38.9% neither
agreed nor disagreed. But none of the participants clearly disagreed with the opinion.
Conclusively, a majority of 61.1% NEPRA officials are of the opinion that the local and
foreign electric power companies are equally treated.
91
N12. A well-defined legal design is available.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
A well-defined legal design is available.
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 5 13.9 13.9 13.9 Agree 14 38.9 38.9 52.8 Neither Agree
Nor Disagree 12 33.3 33.3 86.1
Disagree 5 13.9 13.9 100.0 Total 36 100.0 100.0
Only 5 participants i.e., 13.9% have strongly agreed and 14 participants i.e., 38.9%
have agreed with the availability of a well-defined legal design at NEPRA. However, 12
participants i.e., 33.3% had shown indifference and 5 participants i.e., 13.9% disagreed with
the opinion. In this way a cumulative percentage of 52.8% participants agreed with statement
as compared to 13.9% who had clearly disagreed.
92
N13. NEPRA employees are motivated towards their job responsibilities.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA employees are motivated towards their job responsibilities.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 5 13.9 13.9 13.9 Agree 18 50.0 50.0 63.9 Neither Agree
Nor Disagree 8 22.2 22.2 86.1
Disagree 5 13.9 13.9 100.0 Total 36 100.0 100.0
Out of the 36 participants, only 5 participants i.e., 13.9% strongly agreed and 18
participants i.e., 50% agreed that with the statement “NEPRA employees are motivated
towards their job responsibilities”, however, 8 participants i.e., 22.2% neither agreed nor
disagreed with the statement and the 5 participants i.e., 13.9% clearly disagreed. These results
show that 63.9% participants think that the NEPRA officials are motivated towards their job
responsibilities, whereas 13.9% don’t think so.
93
N14. NEPRA officials are qualified and trained according to job responsibilities.
AgreeNeither Agree Nor Disagree
NEPRA officials are qualified and trained according to job responsibilities.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 22 61.1 61.1 61.1 Neither Agree
Nor Disagree 14 38.9 38.9 100.0
Total 36 100.0 100.0
Out of the 36 participants, a strong majority of 2 participants i.e., 61.1% agreed with
the statement “NEPRA officials are qualified and trained according to job responsibilities”
whereas 14 participants i.e., 38.9% had shown indifference, but none of them disagreed with
the statement. Results show that a majority of 61.1% is of the opinion that the NEPRA officials
are as much qualified and trained that they can satisfactorily discharge their duties and
responsibilities.
94
N15. Present chairman & members of NEPRA are qualified and expert at required level.
AgreeNeither Agree Nor DisagreeDisagree
Present chairman & members of NEPRA are qualified and expert at requiredlevel.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 12 33.3 33.3 33.3 Neither Agree
Nor Disagree 21 58.3 58.3 91.7
Disagree 3 8.3 8.3 100.0 Total 36 100.0 100.0
Out of 36 participants, 12 participants i.e., 33.3% participants agreed with the statement
“Present chairman & members of NEPRA are qualified and expert at required level”, whereas
a majority of 12 participants i.e., 58.3% neither agreed nor disagreed with the statement and
only 3 participants i.e., 8.3% had clearly disagreed. In this way, the percentage of agreeing
participants (33.3%) is more than the disagreeing ones (8.3%); these are the participants who
clearly expressed their opinion about the qualification and expertises of present NEPRA
chairman and members.
95
N16. Previous chairmen & members of NEPRA had been qualified and expert.
AgreeNeither Agree Nor DisagreeDisagree
Previous chairman & members of NEPRA had been qualified and expert.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 23 63.9 63.9 63.9 Neither Agree
Nor Disagree 12 33.3 33.3 97.2
Disagree 1 2.8 2.8 100.0 Total 36 100.0 100.0
Out of 36 participants, a majority of 23 participants i.e., 63.9% agreed with the opinion
“Previous chairmen & members of NEPRA had been qualified and expert”, however 12
participants i.e., 33.3% neither agreed nor disagreed with the opinion and only 1 participant
i.e., 2.8% clearly disagreed. In this way, a majority of 63.9% participants assumed that the
previous chairmen & members of NEPRA had required qualification and expertise.
96
N17. Companies are provided by uniform accounting system.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Companies are provided by uniform accounting system.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 7 19.4 19.4 19.4 Agree 7 19.4 19.4 38.9 Neither Agree
Nor Disagree 15 41.7 41.7 80.6
Disagree 7 19.4 19.4 100.0 Total 36 100.0 100.0
The statement “Companies are provided by uniform accounting system” was strongly
agreed by 7 participants i.e., 19.4% and agreed by the same number of participants. However, a
considerable number of 15 participants i.e., 41.7% had shown indifference; the statement was
disagreed by 7 participants i.e. 19.4%. In this way, the number of participants agreeing with the
statement (38.9%) is greater than ones who clearly disagreed (19.4%).
97
18. NEPRA is successful in protecting the interests of electric power consumers.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA is successful in protecting the interests of electric power consumers.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 5 13.9 13.9 13.9 Agree 10 27.8 27.8 41.7 Neither Agree
Nor Disagree 18 50.0 50.0 91.7
Disagree 3 8.3 8.3 100.0 Total 36 100.0 100.0
Out of the 36 participants, 5 participants i.e., 13.9% strongly agreed and 10 participants
i.e., 27.8% agreed that “NEPRA is successful in protecting the interests of electric power
consumers”. However, 18 participants i.e., 50% neither agreed nor disagreed with the
statement and 3 participants i.e., 8.3% clearly disagreed with the statement. In this way the half
of the NEPRA officials are not sure that their organization could protect the interest of electric
power consumers.
98
N19. NEPRA is successful in protecting the interests of electric power companies.
Strongly AgreeAgreeNeither Agree Nor Disagree
NEPRA is successful in protecting the interests of electric power companies.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 11.1 11.1 11.1 Agree 23 63.9 63.9 75.0 Neither Agree
Nor Disagree 9 25.0 25.0 100.0
Total 36 100.0 100.0
Out of the 36 participants, 4 participants i.e., 11.1% strongly agreed and 23 participants
i.e., 63.9% agreed with the statement “NEPRA is successful in protecting the interests of
electric power companies”. However, only 9 participants i.e., 25% neither agreed nor disagreed
with the statement and none of them clearly disagreed. In this way a strong majority of 75%
NEPRA officials are sure that their organization could protect the interest of electric power
companies.
99
N20. WAPDA & PEPCO can not exert any pressure to NEPRA for favourable
decisions.
Strongly AgreeAgree
WAPDA & PEPCO can not exert any pressure to NEPRA for favourabledecisions.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 17 47.2 47.2 47.2 Agree 19 52.8 52.8 100.0 Total 36 100.0 100.0
Out of the 36 participants, 17 participants i.e., 47.2% strongly agreed and the remaining
19 i.e., 52.8% agreed that “WAPDA & PEPCO can not exert any pressure to NEPRA for
favourable decisions”. None of the participants had shown indifference or clearly disagreed
with the statement. In this way 100% participants were of the opinion that WAPDA & PEPCO
which are the major stake holders can’t take undue favours from NEPRA.
100
N21. Sufficient co-operation is given by provincial governments for smooth running of
power projects.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Sufficient co-operation is given by provincial governments for smoothrunning of power projects.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 1 2.8 2.8 2.8 Agree 11 30.6 30.6 33.3 Neither Agree
Nor Disagree 19 52.8 52.8 86.1
Disagree 5 13.9 13.9 100.0 Total 36 100.0 100.0
Out of the 36 participants, 1 participant i.e., 2.8% strongly agreed and 11 participants
i.e., 30.6% agreed with the statement “Sufficient co-operation is given by provincial
governments for smooth running of power projects”. However, 19 participants i.e., 52.8%
neither agreed nor disagreed and 5 participants i.e., 13.9% clearly agreed with the statement.
Conclusively the majority of NEPRA officials have shown indifference about co-operation of
provincial governments for power projects, whereas a greater number of participants have
agreed with the statement as compared to that of contrary opinion.
101
N22. Availability of provincial resources (land and funds) for power projects.
AgreeNeither Agree Nor DisagreeDisagree
Availability of provincial resources (land and funds) for power projects.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 18 50.0 50.0 50.0 Neither Agree
Nor Disagree 15 41.7 41.7 91.7
Disagree 3 8.3 8.3 100.0 Total 36 100.0 100.0
Out of the 36 participants, 18 participants i.e., 50% agreed with the statement
“Availability of provincial resources (land and funds) for power projects”. However, 15
participants i.e., 41.7% neither agreed nor disagreed and the remaining 3 i.e., 8.3% clearly
disagreed with the statement. In this way the half of NEPRA officials are sure about the
availability of provincial resources (land & funds) for the power projects, whereas a small
number of participants disagreed with the statement.
102
N23. Assistance given by provincial governments for laying transmission lines.
AgreeNeither Agree Nor DisagreeDisagree
Assistance given by provincial governments for laying transmission lines.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 21 58.3 58.3 58.3 Neither Agree
Nor Disagree 9 25.0 25.0 83.3
Disagree 6 16.7 16.7 100.0 Total 36 100.0 100.0
Out of the 36 participants, 21 participants i.e., 58.3% agreed with the statement
“Assistance given by provincial governments for laying transmission lines”. However, 9
participants i.e., 25% neither agreed nor disagreed and 6 participants i.e., 16.7% clearly
disagreed with the statement. In this way the agreement ratio is much greater than the
disagreement, although a considerable number of participants have shown indifference.
103
N24. Provincial governments do not intervene in the process of tariff determination.
AgreeNeither Agree Nor DisagreeDisagree
Provincial governments do not intervene in the process of tariffdetermination.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 9 25.0 25.0 25.0 Neither Agree
Nor Disagree 25 69.4 69.4 94.4
Disagree 2 5.6 5.6 100.0 Total 36 100.0 100.0
Out of the 36 participants, 9 participants i.e., 25% agreed with the statement “Provincial
governments do not intervene in the process of tariff determination”, whereas, a majority of 25
participants i.e., 69.4% neither agreed nor disagreed and the only 2 participants i.e., 5.6%
clearly disagreed with the statement. This situation indicates that majority of NEPRA officials
do not clear about the role of provincial governments in tariff determination for electric power
companies, however, the percentage agreement is greater than that of disagreement.
104
N25. Provincial governments provide sufficient security arrangements to power
projects.
AgreeNeither Agree Nor DisagreeDisagree
Provincial governments provide sufficient security arrangements to powerprojects.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 5 13.9 13.9 13.9 Neither Agree
Nor Disagree 23 63.9 63.9 77.8
Disagree 8 22.2 22.2 100.0 Total 36 100.0 100.0
Out of the 36 participants, only 5 participants i.e., 13.9% agreed with the statement
“Provincial governments provide sufficient security arrangements to power projects”.
However, a majority of 23 participants i.e., 63.9% neither agreed nor disagreed and 8
participants i.e., 22.2% clearly disagreed with the statement. In this way that majority of
NEPRA officials have shown unconcern about the extent of security services provided by
provincial governments for power projects, whereas more the participants clearly disagreed
with the opinion as compared with agreeing ones.
105
N26. Consumers duly cooperate with NEPRA.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Consumers duly cooperate with NEPRA.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 11.1 11.1 11.1 Agree 6 16.7 16.7 27.8 Neither Agree
Nor Disagree 17 47.2 47.2 75.0
Disagree 9 25.0 25.0 100.0 Total 36 100.0 100.0
Out of the 36 participants, 4 participants i.e., 11.1% strongly agreed and 6 participants
i.e., 16.7% agreed with the statement “Consumers duly cooperate with NEPRA”. However, 17
participants i.e., 47.2% neither agreed nor disagreed and 9 participants i.e., 25% disagreed with
the statement. In this way only 27.8% of NEPRA officials were sure about the cooperation of
electric power consumers towards implementation of NEPRA policies and decisions as
compared to 25% who clearly disagreed with the opinion.
106
N27. Electric power producers, transmitters and distributors cooperate with NEPRA
for implementation of its policies and decisions.
AgreeNeither Agree Nor Disagree
Electric power producers, transmitters and distributors cooperate withNEPRA for implementation of its policies and decisions.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 16 44.4 44.4 44.4 Neither Agree
Nor Disagree 20 55.6 55.6 100.0
Total 36 100.0 100.0
Out of the 36 participants, 16 participants i.e., 44.4% agreed with the statement
“Electric power producers, transmitters and distributors cooperate with NEPRA for
implementation of its policies and decisions”, whereas 20 participants i.e., 55.6% neither
agreed nor disagreed and none of the participants clearly disagreed with the statement. In this
way majority of NEPRA officials were not sure about the cooperation of electric power
companies towards implementation of NEPRA policies and decisions.
107
N28. Electric power service providers appropriately pay their dues to NEPRA.
Strongly AgreeAgreeNeither Agree Nor Disagree
Electric power service providers appropriately pay their dues to NEPRA.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 14 38.9 38.9 38.9 Agree 19 52.8 52.8 91.7 Neither Agree
Nor Disagree 3 8.3 8.3 100.0
Total 36 100.0 100.0
Out of the 36 participants, 14 participants i.e., 38.9% strongly agreed and another 19
i.e., 52.8% agreed with the statement “Electric power service providers appropriately pay their
dues to NEPRA”, whereas only 3 participants i.e., 8.3% neither agreed nor disagreed with the
statement. This indicates that a strong majority of 91.7% of NEPRA officials were sure that the
power companies appropriately pay their dues, which is a major source of NEPRA finances.
108
N29. NEPRA is not compelled by the federal and provincial governments for
unjustified decisions.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA is not compelled by the federal and provincial governments forunjustified decisions.
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 2 5.6 5.6 5.6 Agree 8 22.2 22.2 27.8 Neither Agree
Nor Disagree 12 33.3 33.3 61.1
Disagree 14 38.9 38.9 100.0 Total 36 100.0 100.0
Out of the 36 participants, only 2 participants i.e., 5.6% strongly agreed and 8
participants i.e., 22.2% agreed with the statement “NEPRA is not compelled by the federal and
provincial governments for unjustified decisions”. However, 12 participants i.e., 33.3% neither
agreed nor disagreed with the statement and 14 participants i.e., 38.9% disagreed with the
statement. These results indicate a split mandate, but a considerable number of participants
comprising of 38.9% has clearly disagreed with the opinion as compared to only 27.8%
agreeing with the statement.
109
N30. The functions of NEPRA are not affected by political forces within the country.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
The functions of NEPRA are not affected by political forces within the country.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 12 33.3 33.3 33.3 Agree 15 41.7 41.7 75.0 Neither Agree
Nor Disagree 8 22.2 22.2 97.2
Disagree 1 2.8 2.8 100.0 Total 36 100.0 100.0
Out of the 36 participants, 12 participants i.e., 33.3% strongly agreed and 15
participants i.e., 41.7% agreed with the statement “The functions of NEPRA are not affected
by political forces within the country”. However, 8 participants i.e., 22.2% neither agreed nor
disagreed with the statement and only 1 of them i.e., 2.8% clearly disagreed with the statement.
In this way a majority of 75% of NEPRA officials don’t think that the functions of NEPRA
were being affected by political forces within the country.
110
5.2 RESPONSE OF ELECTRIC POWER COMPANIES
A questionnaire comprising of 22 questions was filled up by the representatives of
Electric Power Production, Transmission and Distribution companies. Details of their response
with the discussion of these results are given below:
P1. The fee structure and performance standards are made by NEPRA keeping in
view the interests of power companies.
AgreeNeither Agree Nor Disagree
The fee structure and performance standards are made byNEPRA keeping in view the interests of power companies.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 18 54.5 54.5 54.5 Neither Agree
Nor Disagree 15 45.5 45.5 100.0
Total 33 100.0 100.0 Out of the 33 participants, 18 participants i.e., 54.5% agreed with the statement “The
fee structure and performance standards are made by NEPRA keeping in view the interests of
power companies”, whereas 15 participants i.e., 45.5% neither agreed nor disagreed with the
statement and none of the participants disagreed with the statement. In this way the majority of
the power companies are sure that NEPRA protects their interests for while setting the fee
structure and performance standards.
111
P2. There is no involvement of government agencies for preparation and
implementation of the fee structure and performance standards.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
There is no involvement of government agencies forpreparation and implementation of the fee structure and
performance standards.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 7 21.2 21.2 21.2 Agree 15 45.5 45.5 66.7 Neither Agree
Nor Disagree 8 24.2 24.2 90.9
Disagree 3 9.1 9.1 100.0 Total 33 100.0 100.0
Out of the 33 participants, 7 participants i.e., 21.2% strongly agreed and another 15 i.e.,
45.5% agreed with the statement “There is no involvement of government agencies for
preparation and implementation of the fee structure and performance standards”, however 8
participants i.e., 24.2% neither agreed nor disagreed with the statement and only 3 participants
i.e., 9.1 have clearly disagreed with the statement. This indicates that a clearly majority of
66.7% of the power companies sure that government agencies do not intervene in the
preparation and implementation procedures of fee structure and performance standards.
112
P3. License issuance/ renewal procedures, for electric power companies, are easy and
do not involve lengthy approvals by the government agencies in addition to
NEPRA authorities.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
License issuance/ renewal procedures, for electric powercompanies, are easy and do not involve lengthy approvals by the
government agencies in addition to NEPRA authorities.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 7 21.2 21.2 21.2 Agree 16 48.5 48.5 69.7 Neither Agree
Nor Disagree 6 18.2 18.2 87.9
Disagree 4 12.1 12.1 100.0 Total 33 100.0 100.0
Out of the 33 participants, 7 participants i.e., 21.2% strongly agreed and another 16 i.e.,
48.5% agreed with the statement “License issuance/ renewal procedures, for electric power
companies, are easy and do not involve lengthy approvals by the government agencies in
addition to NEPRA authorities”, however 6 participants i.e., 18.2% neither agreed nor
disagreed with the statement and only 4 participants i.e., 12.1 have clearly disagreed with the
statement. This indicates that a clear majority of 69.7% power companies are of the opinion
that government approvals are not required for license issuance/ renewal.
113
P4. NEPRA officials deal with power companies without any stress.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA officials deal with power companies without anystress.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 7 21.2 21.2 21.2 Agree 16 48.5 48.5 69.7 Neither Agree
Nor Disagree 6 18.2 18.2 87.9
Disagree 4 12.1 12.1 100.0 Total 33 100.0 100.0
Out of the 33 participants, 7 participants i.e., 21.2% strongly agreed and 16 participants
i.e., 48.5% agreed that with the statement “NEPRA officials deal with power companies
without any stress”, however, 6 participants i.e., 18.2% neither agreed nor disagreed with the
statement and 4 participants i.e., 12.1% clearly disagreed. These results show that a majority of
69.7% participants think that NEPRA officials feel no stress from anyone while dealing with
the matters related to power companies.
114
P5. Power companies in time pay their dues to NEPRA.
Strongly AgreeAgreeNeither Agree NorDisagree
Power companies in time pay their dues to NEPRA.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 14 42.4 42.4 42.4 Agree 18 54.5 54.5 97.0 Neither Agree
Nor Disagree 1 3.0 3.0 100.0
Total 33 100.0 100.0
Out of the 33 participants, 14 participants i.e., 42.4% strongly agreed and 18
participants i.e., 54.5% agreed that with the statement “Power companies in time pay their dues
to NEPRA” and only 1 participant i.e., 3% clearly disagreed with the statement. These results
show that almost all the power companies are of the opinion that they pay their dues in time to
NEPRA.
115
P6. Interim tariffs are set according to the requirement of the company.
Strongly AgreeAgreeNeither Agree NorDisagree
Interim tariffs are set according to the requirement of thecompany.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 6 18.2 18.2 18.2 Agree 23 69.7 69.7 87.9 Neither Agree
Nor Disagree 4 12.1 12.1 100.0
Total 33 100.0 100.0
Out of the 33 participants, 6 participants i.e., 18.2% strongly agreed and 23 participants
i.e., 69.7% agreed that with the statement “Interim tariffs are set according to the requirement
of the company”, however, 4 participants i.e., 12.1% neither agreed nor disagreed with the
statement. These results show that the most of power companies i.e., 87.9% are satisfied with
the interim tariff setting.
116
P7. Regular tariffs are set according to the requirement of the company.
Strongly AgreeAgreeNeither Agree NorDisagree
Regular tariffs are set according to the requirement of thecompany.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 12.1 12.1 12.1 Agree 17 51.5 51.5 63.6 Neither Agree
Nor Disagree 12 36.4 36.4 100.0
Total 33 100.0 100.0
Out of the 33 participants, 4 participants i.e., 12.1% strongly agreed and another 17 i.e.,
51.5% agreed with the statement “Regular tariffs are set according to the requirement of the
company”, however 12 participants i.e., 36.4% neither agreed nor disagreed with the statement.
None of the participants clearly disagreed. This indicates that 63.6% i.e., the majority of power
companies satisfied with the regular tariff setting.
117
P8. Terms and conditions imposed by NEPRA for power services are acceptable.
AgreeNeither Agree NorDisagree
Disagree
Terms conditions imposed by NEPRA for power servicesare acceptable.
50
40
30
20
10
0
Perc
ent
Frequency Percent
Valid Percent
Cumulative Percent
Valid Agree 12 36.4 36.4 36.4 Neither Agree
Nor Disagree 15 45.5 45.5 81.8
Disagree 6 18.2 18.2 100.0 Total 33 100.0 100.0
Out of the 33 participants, 12 participants i.e., 36.4% agreed with the statement “Terms
and conditions imposed by NEPRA for power services are acceptable”, whereas, 15
participants i.e., 45.5% neither agreed nor disagreed with the statement and 6 participants i.e.,
18.2% clearly disagreed. These results show that a majority of participants do not accept the
terms and conditions imposed by NEPRA on power companies.
118
P9. NEPRA adopts appropriate ways to evaluate the performance of companies.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
NEPRA adopts appropriate ways to evaluate theperformance of companies.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 2 6.1 6.1 6.1 Agree 10 30.3 30.3 36.4 Neither Agree
Nor Disagree 16 48.5 48.5 84.8
Disagree 5 15.2 15.2 100.0 Total 33 100.0 100.0
Out of the 33 participants, 2 participants i.e., 6.1% strongly agreed and 10 participants
i.e., 30.3% agreed with the statement “NEPRA adopts appropriate ways to evaluate the
performance of companies”, whereas, 16 participants i.e., 48.5% neither agreed nor disagreed
with the statement and 5 participants i.e., 15.2% clearly disagreed. These results show that a
majority of participants do not sure about the appropriateness of ways adopted by NEPRA to
evaluate the performance of electric power companies.
119
P10. NEPRA policies are encouraging for retaining and enhancing our service level.
Strongly AgreeAgreeNeither Agree NorDisagree
NEPRA policies are encouraging for retaining andenhancing our service level.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 2 6.1 6.1 6.1 Agree 16 48.5 48.5 54.5 Neither Agree
Nor Disagree 15 45.5 45.5 100.0
Total 33 100.0 100.0
Out of the 33 participants, 2 participants i.e., 6.1% strongly agreed and 16 participants
i.e., 48.5% agreed with the statement “NEPRA policies are encouraging for retaining and
enhancing our service level”, whereas, 15 participants i.e., 45.5% neither agreed nor disagreed
with the statement, but none of them clearly disagreed. These results show that a majority of
power companies are sure whether NEPRA policies are encouraging for retaining and
enhancing their skill level.
120
P11. NEPRA standards towards getting private investment in power sector are
justified.
AgreeNeither Agree NorDisagree
DisagreeStrongly Disagree
NEPRA standards towards getting private investment inpower sector are justified.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 14 42.4 42.4 42.4 Neither Agree
Nor Disagree 11 33.3 33.3 75.8
Disagree 6 18.2 18.2 93.9 Strongly
Disagree 2 6.1 6.1 100.0
Total 33 100.0 100.0
Out of the 33 participants, only 14 participants i.e., 42.4% agreed with the statement
“NEPRA standards towards getting private investment in power sector are justified”, whereas,
11 participants i.e., 33.3% neither agreed nor disagreed with the statement. Besides it, 6
participants i.e., 18.2% disagreed and 2 participants i.e., 6.1% strongly disagreed. These results
show that only a small number of power companies are satisfied with the NEPRA standards for
getting private investment.
121
P12. NEPRA gives required cooperation to power companies for their smooth
functioning.
Strongly AgreeAgreeNeither Agree NorDisagree
NEPRA gives required cooperation to power companies fortheir smooth functioning.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 8 24.2 24.2 24.2 Agree 18 54.5 54.5 78.8 Neither Agree
Nor Disagree 7 21.2 21.2 100.0
Total 33 100.0 100.0
Out of the 33 participants, 8 participants i.e., 24.2% strongly agreed and 18 participants
i.e., 54.5% agreed with the statement “NEPRA gives required cooperation to power companies
for their smooth functioning”. However, 7 participants i.e., 21.2% neither agreed nor disagreed
with the statement. In this way a clear majority of 78.8% participants are satisfied with the
cooperation given by NEPRA for power companies.
122
P13. Reforms suggested by NEPRA are beneficial for electric power companies.
Strongly AgreeAgreeNeither Agree NorDisagree
Reforms suggested by NEPRA are beneficial for electricpower companies.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 12.1 12.1 12.1 Agree 18 54.5 54.5 66.7 Neither Agree
Nor Disagree 11 33.3 33.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 4 participants i.e., 12.1% strongly agreed and 18 participants
i.e., 54.5% agreed with the statement “Reforms suggested by NEPRA are beneficial for electric
power companies”. However, 11 participants i.e., 33.3% neither agreed nor disagreed with the
statement, but no one had clearly disagreed. In this way a majority of 66.7% participants
understand that the reforms suggested by NEPRA are beneficial for electric power companies.
123
P14. NEPRA officials are aware of their responsibilities, as they are qualified and
trained.
Strongly AgreeAgreeNeither Agree NorDisagree
NEPRA officials are aware of their responsibilities, as theyare qualified and trained.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 12.1 12.1 12.1 Agree 19 57.6 57.6 69.7 Neither Agree
Nor Disagree 10 30.3 30.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 4 participants i.e., 12.1% strongly agreed and 19 participants
i.e., 57.6% agreed with the statement “NEPRA officials are aware of their responsibilities, as
they are qualified and trained”. However, 10 participants i.e., 30.3% neither agreed nor
disagreed with the statement and none of them disagreed. In this way most of the participants
i.e., 69.7% understand that NEPRA officials are aware of their responsibilities because of
appropriate qualification and training.
124
P15. NEPRA top management and officials have required expertise in regulatory
matters, as they solve the related problems efficiently.
Strongly AgreeAgreeNeither Agree NorDisagree
NEPRA top management and officials have requiredexpertise in regulatory matters, as they solve the related
problems efficiently.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 12.1 12.1 12.1 Agree 20 60.6 60.6 72.7 Neither Agree
Nor Disagree 9 27.3 27.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 4 participants i.e., 12.1% strongly agreed and 20 participants
i.e., 60.6% agreed with the statement “NEPRA top management and officials have required
expertise in regulatory matters, as they solve the related problems efficiently”. However, 9
participants i.e., 27.3 neither agreed nor disagreed with the statement. In this way most of the
participants i.e., 72.7% understand that the top management and officials of NEPRA have
required expertise in regulatory matters because they efficiently solve the problems related to
power companies.
125
P16. Tariffs are set according the satisfaction of electric power companies.
Strongly AgreeAgreeNeither Agree NorDisagree
Tariffs are set according the satisfaction of electric powercompanies.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 3 9.1 9.1 9.1 Agree 20 60.6 60.6 69.7 Neither Agree
Nor Disagree 10 30.3 30.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 3 participants i.e., 9.1% strongly agreed and 20 participants
i.e., 60.6% agreed with the statement “Tariffs are set according the satisfaction of electric
power companies”. However, 10 participants i.e., 30.3% neither agreed nor disagreed with the
statement. In this way a majority of 69.7% participants are satisfied with the tariff setting.
126
P17. Power companies are getting satisfactory share for increases in electricity tariffs.
Strongly AgreeAgreeNeither Agree NorDisagree
Power companies are getting satisfactory share forincreases in electricity tariffs.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 4 12.1 12.1 12.1 Agree 19 57.6 57.6 69.7 Neither Agree
Nor Disagree 10 30.3 30.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 4 participants i.e., 12.1% strongly agreed and 19 participants
i.e., 57.6% agreed with the statement “Power companies are getting satisfactory share for
increases in electricity tariffs”. However, 10 participants i.e., 30.3% neither agreed nor
disagreed, but none of them clearly disagreed with the statement. In this way most of the power
companies i.e., 69.7% are of the opinion that they get required benefits for every increase in
electricity tariffs.
127
P18. NEPRA helps in payment adjustments and resolution of conflicts among power
producer, transmitters, distributors and the consumers.
Strongly AgreeAgreeNeither Agree NorDisagree
NEPRA helps in payment adjustments and resolution ofconflicts among power producer, transmitters, distributors
and the consumers.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 6 18.2 18.2 18.2 Agree 16 48.5 48.5 66.7 Neither Agree
Nor Disagree 11 33.3 33.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 6 participants i.e., 18.2% strongly agreed and 16 participants
i.e., 48.5% agreed with the statement “NEPRA helps in payment adjustments and resolution of
conflicts among power producer, transmitters, distributors and the consumers”. However, 11
participants i.e., 33.3% had shown indifference in this regard. In this way majority of the
participants i.e., 66.7% assume that NEPRA provides required help to electric power
companies for adjustment of payment and resolution of conflicts among them.
128
P19. NEPRA does not affect the organizational affairs of electric power companies due
to the decisions under the influence of government and political forces.
AgreeNeither Agree NorDisagree
Disagree
NEPRA does not affect the organizational affairs of electricpower companies due to the decisions under the influence
of government and political forces.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 7 21.2 21.2 21.2 Neither Agree
Nor Disagree 16 48.5 48.5 69.7
Disagree 10 30.3 30.3 100.0 Total 33 100.0 100.0
Out of the 33 participants, only 7 participants i.e., 21.2% agreed with the statement
“NEPRA does not affect the organizational affairs of electric power companies due to the
decisions under the influence of government and political forces”, whereas 16 participants i.e.,
48.5% had neither agreed nor disagreed and 10 of them i.e., 30.3% clearly disagreed with the
statement. In this way, comparatively a large number of participants understand that some
organizational affairs of electric power companies are affected by the decisions of NEPRA that
are made under the influence of government and political forces.
129
P20. Power companies are satisfied with the reports of NEPRA submitted to Govt.
Strongly AgreeAgreeNeither Agree NorDisagree
Power companies are satisfied with the reports of NEPRAsubmitted to Govt.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 6 18.2 18.2 18.2 Agree 16 48.5 48.5 66.7 Neither Agree
Nor Disagree 11 33.3 33.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 6 participants i.e., 18.2% strongly agreed and 16 participants
i.e., 48.5% agreed with the statement “Power companies are satisfied with the reports of
NEPRA submitted to Govt”, whereas 11 participants i.e., 33.3% had neither agreed nor
disagreed with the statement. In this way, a cumulative percentage of 66.7% participants
clearly agreed with the statement. Hence, comparatively a small number of power companies
are not satisfied with the reports of NEPRA submitted to the government.
130
P21. NEPRA is successful in getting required co-operation from the provincial
governments for smooth running of power projects.
Strongly AgreeAgreeNeither Agree NorDisagree
NEPRA is successful in getting required co-operation fromthe provincial governments for smooth running of power
projects.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 6 18.2 18.2 18.2 Agree 16 48.5 48.5 66.7 Neither Agree
Nor Disagree 11 33.3 33.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 6 participants i.e., 18.2% strongly agreed and 16 participants
i.e., 48.5% agreed with the statement “NEPRA is successful in getting required co-operation
from the provincial governments for smooth running of power projects”, however 11
participants i.e., 33.3% had neither agreed nor disagreed and with the statement. In this way,
majority of the participants understand that NEPRA successfully acquires provincial
governments’ co-operation and favour for smooth running of power projects.
131
P22. Power companies are satisfied with the performance of NEPRA.
Strongly AgreeAgreeNeither Agree NorDisagree
Power companies are satisfied with the performance ofNEPRA.
70
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 1 3.0 3.0 3.0 Agree 23 69.7 69.7 72.7 Neither Agree
Nor Disagree 9 27.3 27.3 100.0
Total 33 100.0 100.0
Out of the 33 participants from Electric Power Companies, 1 participant i.e., 3%
strongly agreed and 23 participants i.e., 69.7% agreed with the statement “Power companies
are satisfied with the performance of NEPRA”. However, 9 participants i.e., 27.3% neither
agreed nor disagreed with the statement and none of them disagreed with the statement. These
results indicate that the majority of participants i.e., 72.7% have shown their satisfaction about
the performance of NEPRA.
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5.3 RESPONSE OF ELECTRICITY CONSUMERS A questionnaire comprising of 11 questions was filled-up by Electric Power
Consumers, i.e., representatives of Chambers of Commerce & Industries. Details of their
response with the discussion of these results are given below:
C1. There is a satisfactorily level of availability and quality of electricity supply for
consumers.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
There is a satisfactorily level of availability and quality ofelectricity supply for consumers.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 3 9.1 9.1 9.1 Agree 4 12.1 12.1 21.2 Neither Agree
Nor Disagree 18 54.5 54.5 75.8
Disagree 8 24.2 24.2 100.0 Total 33 100.0 100.0
Out of the 33 participants, 3 participants i.e., 9.1% strongly agreed and 4 participants
i.e., 12.1% agreed that “There is a satisfactorily level of availability and quality of electricity
supply for consumers”. However, 18 participants i.e., 54.5% neither agreed nor disagreed with
the statement and 8 participants i.e., 24.2% clearly disagreed with the statement. In this way
most of the consumers are not much satisfied with the availability and quality levels of
electricity supply.
133
C2. Smooth electricity supply is observed without fluctuation.
Strongly AgreeAgreeNeither Agree NorDisagree
Disagree
Smooth electricity supply is observed without fluctuation.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 3 9.1 9.1 9.1 Agree 3 9.1 9.1 18.2 Neither Agree
Nor Disagree 18 54.5 54.5 72.7
Disagree 9 27.3 27.3 100.0 Total 33 100.0 100.0
Out of the 33 participants, 3 participants i.e., 9.1% strongly agreed and the same
number of participants agreed that “Smooth electricity supply is observed without fluctuation”.
However, 18 participants i.e., 54.5% neither agreed nor disagreed with the statement and 9
participants i.e., 27.3% clearly disagreed with the statement. In this way comparatively more
consumers understand that the supply of electricity is not smooth due to voltage fluctuation.
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C3. Losses are not borne by the industry due to uneven supply of electricity.
Strongly AgreeAgreeNeither AgreeNor Disagree
DisagreeStronglyDisagree
Losses are not borne by the industry due to uneven supplyof electricity.
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 2 6.1 6.1 6.1 Agree 3 9.1 9.1 15.2 Neither Agree
Nor Disagree 13 39.4 39.4 54.5
Disagree 11 33.3 33.3 87.9 Strongly
Disagree 4 12.1 12.1 100.0
Total 33 100.0 100.0
Out of the 33 participants, only 2 participants i.e., 6.1% strongly agreed and 3
participants i.e., 9.1% agreed with the statement “Losses are not borne by the industry due to
uneven supply of electricity”, whereas, 13 participants i.e., 39.4% neither agreed nor disagreed
with the statement, 11 participants i.e., 33.3% clearly disagreed with the statement and 4
participants i.e., 12.1% strongly disagreed. In this way a small number of industrial consumers
do not bear losses due to uneven supply of electricity, as compared to a large number of
industries which bear big losses due to same problem; however, most of the consumers have to
face bearable losses because of uneven electric supply.
135
C4. Losses are not borne by the industry due to electricity outage.
Strongly AgreeAgreeNeither AgreeNor Disagree
DisagreeStronglyDisagree
Losses are not borne by the industry due to electricityoutage.
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Strongly Agree 3 9.1 9.1 9.1 Agree 4 12.1 12.1 21.2 Neither Agree
Nor Disagree 13 39.4 39.4 60.6
Disagree 10 30.3 30.3 90.9 Strongly
Disagree 3 9.1 9.1 100.0
Total 33 100.0 100.0
Out of the 33 participants, only 3 participants i.e., 9.1% strongly agreed and 4
participants i.e., 12.1% agreed with the statement “Losses are not borne by the industry due to
electricity outage”, whereas, 13 participants i.e., 39.4% neither agreed nor disagreed with the
statement. Besides this, 10 participants i.e., 30.3% disagreed and 3 participants i.e., 9.1%
strongly disagreed with the statement. In this way 39.4% industrial consumers have to face big
losses due to electricity outage and the same percentage of industries are facing tolerable
losses, whereas only 21.2% industries have not to face any loss due to electricity outage.
136
C5. Electricity tariffs are acceptable according to the economic position of consumers.
AgreeNeither Agree NorDisagree
DisagreeStrongly Disagree
Electricity tariffs are acceptable according to the economicposition of consumers.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 5 15.2 15.2 15.2 Neither Agree
Nor Disagree 3 9.1 9.1 24.2
Disagree 10 30.3 30.3 54.5 Strongly
Disagree 15 45.5 45.5 100.0
Total 33 100.0 100.0
Out of the 33 participants, only 5 participants i.e., 15.2% agreed with the statement
“Electricity tariffs are acceptable according to the economic position of consumers”, whereas,
3 participants i.e., 9.1% neither agreed nor disagreed with the statement. Besides this, 10
participants i.e., 30.3% disagreed and 15 participants i.e., 45.5% strongly disagreed with the
statement. In this way, Electricity tariffs are not acceptable to most of the consumers (75.8%).
137
C6. Electricity charges acceptable to consumers according to the level of supply.
Neither Agree NorDisagree
DisagreeStrongly Disagree
Electricity charges acceptable to consumers according tothe level of supply.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Neither Agree
Nor Disagree 18 54.5 54.5 54.5
Disagree 8 24.2 24.2 78.8 Strongly
Disagree 7 21.2 21.2 100.0
Total 33 100.0 100.0
Out of the 33 participants, 18 participants i.e., 54.5% neither agreed nor disagreed with
the statement “Electricity charges acceptable to consumers according to the level of supply”,
whereas, 8 participants i.e., 24.2% disagreed and 7 participants i.e., 21.2% strongly disagreed
with the statement. In this way the electricity tariffs are not acceptable to the consumers in
accordance with the level of electric supply, as clearly indicated by 45.5% consumers, while
the remaining 54.5% consumers half heartedly accept the high cost of electricity charges.
138
C7. The trend of increase in electricity tariffs is justified.
Neither Agree NorDisagree
DisagreeStrongly Disagree
The trend of increase in electricity tariffs is justified.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Neither Agree
Nor Disagree 5 15.2 15.2 15.2
Disagree 19 57.6 57.6 72.7 Strongly
Disagree 9 27.3 27.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, only 5 participants i.e., 15.2% neither agreed nor disagreed
with the statement “The trend of increase in electricity tariffs is justified”. However, 19
participants i.e., 57.6% disagreed and 9 participants i.e., 27.3% strongly disagreed with the
statement. In this way, a strong majority of 84.8% consumers do not think the increasing trend
of electricity tariffs as justified.
139
C8. The other charges imposed on consumers are acceptable for them.
Neither Agree NorDisagree
DisagreeStrongly Disagree
The other charges imposed on consumers are acceptablefor them.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Neither Agree
Nor Disagree 17 51.5 51.5 51.5
Disagree 7 21.2 21.2 72.7 Strongly
Disagree 9 27.3 27.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, 17 participants i.e., 51.5% neither agreed nor disagreed with
the statement “The other charges imposed on consumers are acceptable for them”, however 7
participants i.e., 21.2% disagreed and 9 participants i.e., 27.3% strongly disagreed with the
statement. In this way, 48.5% do not accept the other charges imposed on consumers in
addition to the actual electricity charges, whereas the majority of consumers i.e., 51.5% just
accept these charges but do not suppose them justified.
140
C9. Consumers expect from NEPRA for improvement of electricity supply condition.
AgreeNeither Agree NorDisagree
DisagreeStrongly Disagree
Consumers expect from NEPRA for improvement ofelectricity supply condition.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 17 51.5 51.5 51.5 Neither Agree
Nor Disagree 7 21.2 21.2 72.7
Disagree 6 18.2 18.2 90.9 Strongly
Disagree 3 9.1 9.1 100.0
Total 33 100.0 100.0
Out of the 33 participants, 17 participants i.e., 51.5% agreed with the statement
“Consumers expect from NEPRA for improvement of electricity supply condition”, but 7
participants i.e., 21.2% showed indifference in this regard. However, 6 participants i.e., 18.2%
disagreed and 3 participants i.e., 9.1% strongly disagreed with the statement. Conclusively,
majority of consumers possess high expectations from NEPRA for improvement of electricity
supply condition in future, but some consumers (27.3%) have no expectations at all.
141
C10. NEPRA gives weight to the suggestions of consumers for changing in tariffs.
AgreeNeither Agree NorDisagree
DisagreeStrongly Disagree
NEPRA gives weight to the suggestions of consumers forchanging in tariffs.
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 3 9.1 9.1 9.1 Neither Agree
Nor Disagree 4 12.1 12.1 21.2
Disagree 15 45.5 45.5 66.7 Strongly
Disagree 11 33.3 33.3 100.0
Total 33 100.0 100.0
Out of the 33 participants, only 3 participants i.e., 9.1% agreed with the statement
“NEPRA gives weight to the suggestions of consumers for changing in tariffs”, whereas 4
participants i.e., 12.1% neither agreed nor disagreed with the statement. Instead of that, 15
participants i.e., 45.5% disagreed and 11 participants i.e., 33.3% strongly disagreed with the
statement. Conclusively, majority of 78.8% representatives of consumers are of the opinion
that NEPRA does not give due weight to their suggestions while setting or changing the
electricity tariffs.
142
C11. Power consumers are satisfied with the performance of NEPRA.
AgreeNeither Agree NorDisagree
Disagree
Power consumers are satisfied with the performance ofNEPRA.
60
50
40
30
20
10
0
Perc
ent
Frequency Percent Valid
Percent Cumulative
Percent Valid Agree 18 54.5 54.5 54.5 Neither Agree
Nor Disagree 13 39.4 39.4 93.9
Disagree 2 6.1 6.1 100.0 Total 33 100.0 100.0
Out of the 33 participants from Electric Power Consumers, 18 participants i.e., 54.5%
agreed with the statement “Power consumers are satisfied with the performance of NEPRA”,
whereas, 13 participants i.e., 39.4% neither agreed nor disagreed with the statement and only 2
participants i.e., 6.1% disagreed with the statement. These results indicate that most of the
participants i.e., 54.5% participants are satisfied with the overall performance of NEPRA,
although a considerable number of participants have shown indifference who are not much
satisfied.
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5.4 RESULTS OF DATA ANALYSIS To ensure the reliability of data, the statistical test “Cronbach’s Alpha” was applied on
all the questionnaires, among which the first questionnaire was filled by “NEPRA Officials”.
The results of reliability statistics show that the value of Cronbach’s alpha was more than 0.7
for all 30 items. The same test was also applied separately on the items those compose the four
independent variables i.e., factors for effectiveness of NEPRA (within the same questionnaire),
all the four values were greater than 0.7 (Table 4.1). This proves that the data, collected so for,
is reliable and normal.
Reliability test was then applied on the other two questionnaires (dependent variables),
i.e., filled by “Electric Power Companies” (22 items) and “Electricity Consumers” (11 items).
The values of Cronbach’s Alpha calculated in both cases were greater than 0.7 as depicted in
Tables 4.2 & 4.3 respectively. Thus the data collected by means of these two questionnaires
was also found reliable and normal.
For all the factors i.e., “Autonomy of Functions”, “Institutional Requirements”,
“Management Expertise” and “Avoidance of Environmental Factors”, the response of NEPRA
Officials and that of Electric Power Companies were found positively correlated at p < 0.05, as
shown in Tables 4.5, 4.6, 4.7 & 4.8 respectively. However, the correlations were not strong.
For “Management Expertise”, the response of NEPRA Officials and that of Electricity
Consumers were found positively correlated at p < 0.05, as shown in Table 4.9. On the other
hand, for “Avoidance of Environmental Factors” the response of NEPRA Officials and that of
the Electricity Consumers were found negatively correlated at p < 0.05 (Table 4.10).
Pearson’s Correlation Coefficients were calculated for independent variables and
dependent variables separately. All the four independent variables were found positively inter-
correlated which satisfied their multi-collinearity. There were 6 combinations of two different
independent variables each, out of which 4 were found positively correlated at p < 0.01 and 2
were found positively correlated at p < 0.05, as depicted in Table 4.11.
144
Pearson’s Correlation was then applied to find the inter-correlation between two
dependent variables i.e., EN_P and EN_C, which were used separately in EPRE Models. Both
dependent variables were found positively correlated at p < 0.01, as shown in Table 4.12.
“Multiple Regression” was used to confirm the EPRE model and the model was proved
to be fit in both cases of “Power Companies” and “Electricity Consumers” as relationship of
between the set of four independent variables was found to be significantly strong. The four
independent variables were: Autonomy of Functions (AUT_FN), Fulfillment of Institutional
Requirements (FIR), Management Expertise (ME) and Avoidance of Environmental Factors
(AEF), whereas the dependent variables were: Efficiency of NEPRA with respect to Power
Companies (EN_P) and Efficiency of NEPRA with respect to Electricity Consumers (EN_C).
In case of Power Companies, Fulfillment of Institutional Requirements (FIR) was found to be
the most significant variable having the strong relationship with the dependent variable,
whereas in case of Electricity Consumers, Management Expertise (ME) was found to be the
most significant variable.
There were eight (8) hypotheses, out of which four (4) were accepted and four (4) were
rejected. t-test was applied for hypotheses testing for which the rejection region consisted of
⏐t⏐≤ 2. Resultantly the three variables i.e., “Fulfillment of Institutional Requirements”,
“Management expertise at NEPRA” and “Avoidance of Environmental Forces” were found to
be good predictors for “Effectiveness of NEPRA with respect to Power Companies”, whereas
“Management expertise at NEPRA” was found to be the good predictor for “Effectiveness of
NEPRA with respect to Electricity Consumers”.
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CHAPTER 6
CONCLUSION AND RECOMMENDATIONS 6.1 OUTCOMES OF THE STUDY
The response of Electric Power Companies and that of Electricity Consumers were
correlated to the response of NEPRA Officials on the same topic, it was found that the
correlations were weak in the case of Electricity consumers. The situation indicates that
Electric Power Companies are satisfied with the functioning of NEPRA but the Electricity
Consumers are less satisfied. Although Electricity Consumers are not satisfied with the
functioning of NEPRA, still they have high expectations for betterment in near future.
Prior to data analysis, the reliability test Cronbach’s Alpha was applied on the data
collected by means of all three questionnaires. In each case the value of alpha was greater than
0.7 verifying the reliability and validity of data.
Pearson’s Correlation Coefficients were calculated for independent variables and
dependent variables separately. All the four independent variables were found positively inter-
correlated which satisfied their multi-collinearity (Table 4.11). Said Test was also applied to
find the inter-correlation between two dependent variables. Both dependent variables, used in
EPRE Models, were found positively correlated (Table 4.12). Likewise the results of
correlations showed the significant relationship was found among the data collected from
different sources i.e., NEPRA officials, electric power companies and electricity consumers.
The standard procedure of Multiple Regression confirmed the EPRE model as fit in
both cases of power companies and electricity consumers, showing significantly strong
relationship between a set of four (4) independent variables i.e., Autonomy of Functions
(AUT_FN), Fulfillment of Institutional Requirements (FIR), Management Expertise (ME) and
Avoidance of Environmental Factors (AEF). However, Fulfillment of Institutional
Requirements (FIR) was found to be the most significant variable having the strong
146
relationship with the dependent variable i.e., Efficiency of NEPRA with respect to Power
Companies (EN_P). In case of Electricity Consumers, Management Expertise (ME) was found
to be the most significant variable having strong relationship with the dependent variable i.e.,
Efficiency of NEPRA (EN_C).
According to the results of hypotheses testing, “Fulfillment of Institutional
Requirements”, “Management expertise at NEPRA” and “Avoidance of Environmental
Forces” were three independent variables those can excellently predict the dependent variable
i.e., “Effectiveness of NEPRA” in case of Power Companies. On the other hand “Management
expertise at NEPRA” was found to be the good predictor for dependent variable i.e.,
“Effectiveness of NEPRA” in case of Electricity Consumers.
6.2 REGULATORY EFFECTIVENESS Effectiveness of Electric Power Regulation has two dimensions i.e., regulatory
governance and regulatory substance (Malik, 2007). Regulatory governance consists of
institutional and legal framework which includes sufficient trained manpower, clarity of roles,
transparency in the functions and a system of accountability. All these require autonomy of
functions. Regulatory substance refers to the contents of regulation including setting of
standards, setting of tariffs, quality of services, etc. Both regulatory governance and regulatory
substance surely require autonomy of functions and management expertise; and both are
affected by the environmental factors like influences by the federal government, provincial
governments and other stake holders i.e., electric power service providing companies, electric
power consumers and other political forces in the country.
This research work was focused on above said four main factors which positively
influence the effectiveness of electric power regulation in Pakistan i.e., Autonomy of
Functions, Fulfillment of Institutional Requirements, Management Expertise, and Avoidance
of Environmental Factors. Previous researches on the subject revealed eighteen (18) different
factors that can affect the efficiency of an electric power regulator, however all these factors
are not equally effective simultaneously in Pakistan’s scenario. Hence, the relevant factors
were combined for bringing more simplicity in the research work and subsequently more
clarity and better understanding of the results.
147
NEPRA has the autonomy in most of its functions. Autonomy of Functions includes
Regulatory Autonomy, Availability of Financial Resources, and Independence in Legislation
& Enforcement of Rules/ Regulations, among which Enforcement of Rules/ Regulations often
require involvement of government agencies and institutions. Hence the enforcement of
regulations seems to be a weak area. The importance of all these aspects of regulatory
autonomy has already been highlighted in earlier researches. According to these researches,
autonomy of functions is an important factor that can affect the efficiency of a regulatory
body.
It has been revealed that NEPRA is fulfilling majority of the almost all the institutional
requirements at satisfactory level. The institutional requirements include Legal Design or
Institutional Framework, Sufficient and Trained Manpower, Clarity of Roles, Transparency,
and Accountability. It has been concluded that NEPRA has a strong institutional framework,
which is a basic requirement of a regulatory authority. NEPRA officials have been assigned
different roles and tasks and most of them are aware of their concerned issues only. In this
way, all of them are not aware of all the decisions taken by the top management. There is felt a
scarcity of manpower, especially trained and experienced manpower, due to which the power
companies have to face difficulty while getting their problems solved.
NEPRA higher management and other employees have adequate management
expertise, which are necessary to deal with stake holders and making in-time and right
decisions. Management expertise are based upon fulfilling these aspects: Proportionality
(Qualification according to job requirements), Proficiency, Reliability (Predictability,
Credibility & Consistency), Targeting (Objectivity), and Participation of Customers.
Avoidance of Environmental Factors can positively influence the efficiency of a
regulatory authority, as most of the environmental factors hamper its effectiveness. The
environmental factors that would be avoided include Federal Government Influence, Provincial
Influence, Influence by Customers, and Influence by Power Companies. It is concluded that
NEPRA has to face many of the influences, mostly from federal government (including
indirect pressures from other political forces in the country) and secondly from provincial
governments/ bodies, although the provincial governments often cooperate for power projects
through provisioning of land and other resources. Other influences can be from electric power
companies and electricity consumers, in attempts to secure their interests.
148
It has been concluded that there are three stake holders for an electric power regulatory
authority, i.e., the government, the power companies and the consumers. NEPRA is already
working under the umbrella of federal government. Chairman and members are appointed by
the federal government and they are responsible to it. Hence, NEPRA cannot deviate from the
goals fixed by the government. Consequently government remains satisfied with the
performance of NEPRA.
As per the research findings, NEPRA is presently working at a nice manner, but its
policies and practices are more beneficial for electric power companies than electricity
consumers.
It has also been concluded that the federal government acts as a supporting utility, and
the higher management of NEPRA, comprising of its Chairman and members, as well as its
officials are mostly drawn from government services that have not fresh thinking and the
thinking of getting freedom from government influence. There is felt a deficiency of adequate
and accurate information at some places. This conclusion is similar with the conclusions of
previous researches as referred by Malik (2007). Because of these reasons the delays are
observed in the implementation of NEPRA policies and most of the changes needed for its
effectiveness.
According to the opinion of Electric Power Companies, NEPRA has more autonomy,
but it has weak institutional framework with less management expertise, and electric power
companies can not get undue favours from NEPRA by pressurising it, instead government
sometimes exerts unnecessary pressures upon NEPRA for implementation of its decisions in
order to satisfy the political forces in the country the international financing agencies like IMF
and World Bank.
According to the opinion of Electricity Consumers, NEPRA has less management
expertise, and consumers some times exert pressure upon government for getting relief,
government further exerts this pressure to NEPRA and electric power companies, and also
gives some rebate in the billing. The negative correlation between the data collected from
NEPRA and that of consumers regarding Environmental Factors depicts the use of
environmental factors in the favour of electricity consumers up to some extent. However the
149
efficiency of NEPRA is hampered due to the undue pressures directly by the government and
indirectly by political forces in the country as well as the international financing agencies.
6.3 RECOMMENDATIONS
The results were analyzed in the light of literature reviewed in this regard and the
following steps were recommended:-
1. The nominations of Chairman and Members of NEPRA should be on merit and
Government should consider the qualifications, experience and management expertise
while filling the top management positions at NEPRA.
2. Government should avoid exerting undue pressures upon NEPRA and let it work
independently for satisfaction of all stakeholders.
3. NEPRA should retain and maintain its autonomy by ensuring availability of necessary
financial resources and by making right legislation & enforcement of regulations.
4. NEPRA should take steps for strengthening its institutional framework, with the special
attention to availability of trained manpower.
5. NEPRA should take necessary steps to enhance its management expertise, especially by
placing right persons at right places, maintaining its credibility and ensuring the
participation of customers in decision making on relevant matters.
6. There should be separate process of licensing and regulatory procedures for Small
Power Producers (SPPs), as it is difficult to handle so much SPPs individually from a
central place, while handling the matters of other big power companies. There may be a
separate Wing of NEPRA that will deal with SPPs or their matters should be dealt at
regional offices of NEPRA.
7. Self sufficient power producing industries, which are not engaged in transmission of
electric power on national grid, should have separate regulatory criteria and should be
granted license accordingly.
150
8. Safety at Power Plants, Distribution Facilities and Transmission Lines is a subject of
primary attention for an electric power regulatory authority. This includes the Safety of
Human, Material, Equipment and Installations; among which the human safety is of
utmost importance. In this regard special attention is required in the power transmission
area; where there are insufficient personal protective equipment, proper safe tools and
other facilities to protect the persons working with live high transmission lines or with
live high-voltage equipment. The human safety has been unattended for a long time
probably due to scarcity of funds with power companies including WAPDA and the
companies working under the shelter of PEPCO.
9. NEPRA has to play its role in adjustment of payments among different electric power
service providing companies and other government institutions.
10. Government should not privatize the profitable power generation units and power
projects. Instead those power generation units are required to be privatized which are
either not profitable or they are not being run in full capacity.
151
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155
Appendix - A
Structure of Pakistan Electric Power Company (PEPCO)
PEPCO is responsible for the management of all the affairs of 14 corporatized entities including four Thermal Power Generation Companies (GENCOs), a National Transmission Dispatch Company (NTDC) and nine Distribution Companies (DISCOs). Following is given the details of Thermal Power Generation Companies (GENCOs) Description Name Structural Formation/ Area of Jurisdiction Generation Companies (GENCOs) 1 Southern Generation Power
Company Limited, Jamshoro, Distt Dadu, Sindh.
GENCO-1 TPS Jamshoro & GTPS Kotri
2 Central Power Generation Company Limited, Guddu, Distt Jacobabad, Sindh.
GENCO-2 TPS Guddu & TPS Quetta
3 Northern Power Generation Company Limited, District Muzaffargarh, Punjab.
GENCO-3 TPS Muzaffargarh, NGPS Multan, GTPS Faisalabad, SPS Faisalabad, GTPS Shahdara & CGTM W/Shop F/Abad
4 Lakhra Power Generation Company Limited,
GENCO-4 FBC Lakhra
Transmission Company 1 National Transmission &
Power Dispatch Company NTDC
Distribution Companies (DISCOs) 1 Lahore Electric Supply
Company LESCO Sheikhupura, Kasur, Lahore, Okara.
2 Gujranwala Electric Power Company
GEPCO Gujranwala, Sialkot, Mandi Bahauddin, Hafizabad, Narowal, Gujrat.
3 Faisalabad Electric Supply Company
FESCO Faisalabad, Sargodha, Khushab, Jhang, Toba Tek Singh, Bhalwal, Mianwali, Bhakkar Districts of Punjab Province.
4 Islamabad Electric Supply Company
IESCO Islamabad, Rawalpindi, Attock, Jhelum, Chakwal.
5 Multan Electric Power Company
MEPCO Rahim Yar Khan, Multan, Khanewal, Sahiwal, Pakpattan, Vehari, Muzaffargarh, Dera Ghazi Khan, Leiah, Rajan Pur, Bahawalpur, Lodhran, Bahawalnagar.
6 Peshawar Electric Power Company
PESCO Whole Province of NWFP.
7 Hyderabad Electric Supply Company
HESCO Whole Province of Sindh except Karachi where KESC is responsible for distribution of power.
8 Quetta Electric Supply Company
QESCO Whole Province of Balochistan.
9 Tribal Electric Supply Company
TESCO FATA and Tribal area of NWFP.
Source: WAPDA Website (2009)
156
Appendix - B
Details of Independent Power Produces (IPPs)
Detail of the IPPs Projects commissioned and under commercial operations is as under:
Sr.# Name of Project Technology
Commercial Operation
Date
Gross Capacity
(MW)
Net Capacity
(MW)
Energy Received July, 2006 to June, 2007
(GWh)
1 KAPCO GTs, Combined cycle, Steam Turbine on LSFO/Gas/ Diesel
27.06.1996 1638 1345 8183
2 Hubco Steam Turbine on Fuel Oil 31.03.1997 1292 1207.3 7212
3 Kohinoor Energy Ltd Diesel engines on fuel oil 20.06.1997 131 124 806
4 AES Lalpir Steam turbines on fuel oil 06.11.1997 362 350.7 1356 5 AES Pakgen Steam turbines on fuel oil 01.02.1998 365 350.5 1943
6 Southern Electric Power Diesel engines on fuel oil 10.03.1999 117 103.791 539
7 Habibullah Coastal Power
Combined cycle on natural gas 11.09.1999 140 129.15 966
8 Fauji Kabir-wala Power Combined cycle on gas 21.10.1999 157 151.2 1184
9 Rousch (Pakistan) Power
Combined cycle on fuel oil 11.12.1999 450 395 3090
10 Saba Power Steam turbine on fuel oil 31.12.1999 134 125.55 868
11 Japan Power Generation Diesel engines on fuel oil 14.03.2000 135 107.0 528
12 Uch Power Combined cycle on low Btu gas 18.10.2000 586 551.25 3889
13 Altern Energy Flared gas/Gas Engine 06.06.2001 10.5 5.13 0
14 Liberty Power Combined cycle on natural gas 10.09.2001 235 210.341 1305
15 CHASNUPP Nuclear 325 300 1944 16 JAGRAN Hydel 23.10.2000 30 30 96
17 Rental Power Station Gas Turbine 22.02.2007 150 150 213
18 Tavanir, Iran Import from Iran Sep. 2003 39 39 171 Total: 6296.5 5674.912 34293
Source: WAPDA Website (2009)
157
Appendix - C
Status of Generation Projects Under Process
Sr. No. Name of Project Capacity (MW)
Date of LOS RCOD
1 Attock Gen Limited 156 PPA Signed 01.09.07 10.01.09 2 Gulf Power Project 179 19.04.2007 31.10.08 3 Eastern Power Project 150 19.04.07 31.10.08 4 Tayio Hills Power Project 120 29.03.07 31.10.08
5 Orient Thermal Power Project 225
PPA signed 01.11.05 (F C Achieved on
16.12.06) 29.03.09
6 Atlas Power (Shirazi Investment) 225 PPA signed 06.09.07 31.03.09 7 Associated Technology 100 31.03.09 8 Amzon Energy 117 31.10.09 9 Tapal Energy Expansion 161 31.10.09
10 Kohinoor Energy Expansion 143 31.10.09 11 Japan Power Expansion 101 31.10.09 12 Nishat (Chunian) Ltd 200 06.07.07 30.06.10 13 Nishat Power Ltd 200 06.07.07 31.12.09 14 Hubco Narowal Plant 225 31.03.10
15 Mari Power Project, Daharki, 175 PPA signed 29.08.07
(F.C. Achieved on 08.09.07)
April 09
16 Green Power Project 205 June 09
17 Sapphire Electric Company Ltd Muridke 235
PPA signed 30.09.06 (F.C. Achieved on
20.06.07) 20.10.09
18 Engro Power Project 150 11.08.07 Dec 09 19 Halmore Power Project At Bhikki 225 PPA signed 16.12.06 Nov 09 20 Saif Power Project At Sahiwal 200 PPA signed 17.10.06 Jan 10 21 Star Power Project, At Jarwar 133 27.10.05 Feb 10 22 Fauji Korangi Power Project 150 Project shifted to KESC May 10 23 Inter Gen Power Project 150 June 10 24 Western Electric Power Project 150 Project shifted to KESC Dec 10
Source: WAPDA Website (2009)
158
Appendix - D
Category-wise Number of Consumers (Year 2008*) Categories LESCO GEPCO FESCO IESCO MEPCO PESCO HESCO QESCO TESCO WAPDA
Agriculture Tube Well 45030 29190 29024 6722 56951 25328 23999 20371 8290 244905
Bulk Supply 476 114 185 771 384 812 744 191 53 3730
Bulk Supply (K) 0 11 0 79 0 23 0 0 0 113
Co-Generation 12 0 0 0 4 1 0 0 0 17
Commercial 451762 249071 281559 271915 372361 246140 235899 86246 28379 2223332
Domestic 2359728 1947868 2266619 1579607 3181213 2072136 1161488 348836 253040 15170535
Industrial 60677 44585 35932 11323 37997 22508 21369 2940 4054 241385
Public Lighting 1562 378 1257 1211 1108 792 804 196 0 7308
Railway Traction 4 0 0 0 4 0 0 0 0 8
Resident Coly. 184 13 84 40 99 45 101 4 0 570
TOTAL 29,19,435 22,71,230 26,14,660 18,71,668 36,50,121 23,67,785 14,44,404 4,58,784 2,93,816 1,78,91,903
* As on 31st May, 2008. Source: WAPDA (2009)
159
Appendix - E
Questionnaire for Management Research
A. Personal Information Name (Optional): ________________________ Designation (Optional): _________________ Area of Working: _______________________________________________________________ Functioning of National Electric Power Regulatory Authority (NEPRA) Put ‘Y’ or ‘ ’ sign in one of the five columns before each of the following questions. 1 means “Strongly Disagree”; 2 means “Agree”; 3 means “Neither Agree nor Disagree” (Neutral); 4 means “Agree” and 5 means “Strongly Disagree”. B. Questions to be filled by officials/ representatives of NEPRA
1 2 3 4 5 Sr. No. Questions Strongly
Disagree DisagreeNeither
Agree nor Disagree
Agree Strongly Agree
N1 Effective standards and procedures are adopted at NEPRA.
N2 NEPRA officials have sufficient authority to discharge their responsibilities satisfactorily.
N3 Federal government does not take such decisions those affect the autonomy of NEPRA.
N4 NEPRA is independently setting the performance standards for electric power companies.
N5 NEPRA is independent in prescribing fee structure for electric power companies.
N6 The financial resources are sufficient for proper functioning of NEPRA.
N7 Sufficient manpower is available at NEPRA for its smooth functioning.
N8
There is a strong system of accountability within NEPRA.
N9 Roles and tasks for each employee are clearly defined.
N10 Companies working under PEPCO are not given more freedom than IPPs while determining the tariffs.
N11 Foreign companies and local IPPs are equally treated for grant/ renewal of licenses and setting of tariffs.
N12 A well-defined legal design is available.
160
1 2 3 4 5 Sr. No. Questions Strongly
Disagree DisagreeNeither
Agree nor Disagree
Agree Strongly Agree
N13 NEPRA employees are motivated towards their job responsibilities.
N14 NEPRA officials are qualified and trained according to job responsibilities.
N15 Present chairman & members of NEPRA are qualified and expert at required level.
N16 Previous chairmen & members of NEPRA had been qualified and expert.
N17 Companies are provided by uniform accounting system.
N18 NEPRA is successful in protecting the interests of electric power consumers.
N19 NEPRA is successful in protecting the interests of electric power companies.
N20 WAPDA & PEPCO can not exert any pressure to NEPRA for favourable decisions.
N21 Sufficient co-operation is given by provincial governments for smooth running of power projects.
N22 Availability of provincial resources (land and funds) for power projects.
N23 Assistance given by provincial governments for laying transmission lines.
N24 Provincial governments do not intervene in the process of tariff determination.
N25 Level of security services provided by provincial governments for power projects.
N26 Level of cooperation given by the consumers. N27 Electric power producers, transmitters and
distributors cooperate with NEPRA for implementation of its policies and decisions.
N28 Electric power service providers appropriately pay their dues to NEPRA.
N29 NEPRA is not compelled by the federal and provincial governments for unjustified decisions.
N30 The functions of NEPRA are not affected by political forces within the country.
C. If you would like to add any other useful information, please write down:-
161
Appendix – F
Questionnaire for Management Research
A. Personal Information
Name (Optional): __________________________Designation (Optional: ___________________
Organization Name: ______________________________________________________________
Area of Working: ________________________________________________________________ Functioning of National Electric Power Regulatory Authority (NEPRA)
Put ‘Y’ or ‘ ’ sign in one of the five columns before each of the following questions. 1 means “Strongly Disagree”; 2 means “Agree”; 3 means “Neither Agree nor Disagree” (Neutral); 4 means “Agree” and 5 means “Strongly Disagree”. B. Questions to be filled by representatives of Electricity Producers / Transmitters /
Distributors 1 2 3 4 5
Sr. No. Questions Strongly
Disagree DisagreeNeither
Agree nor Disagree
Agree Strongly Agree
P1 The fee structure and performance standards are made by NEPRA keeping in view the interests of power companies.
P2 There is no involvement of government agencies for preparation and implementation of the fee structure and performance standards.
P3 License issuance/ renewal procedures, for electric power companies, are easy and do not involve lengthy approvals by the government agencies in addition to NEPRA authorities.
P4 NEPRA officials deal with power companies without any stress.
P5 Power companies in time pay their dues to NEPRA. P6 Interim tariffs are set according to the requirement
of the company.
P7 Regular tariffs are set according to the requirement of the company.
P8 Terms conditions imposed by NEPRA for power services are acceptable.
P9 NEPRA adopts appropriate ways to evaluate the performance of companies.
P10 NEPRA policies are encouraging for retaining and enhancing our service level.
P11 NEPRA standards towards getting private investment in power sector are justified.
P12 NEPRA gives required cooperation to power companies for their smooth functioning.
162
1 2 3 4 5 Sr. No. Questions Strongly
Disagree DisagreeNeither
Agree nor Disagree
Agree Strongly Agree
P13 Reforms suggested by NEPRA are beneficial for electric power companies.
P14 NEPRA officials are aware of their responsibilities, as they are qualified and trained.
P15 NEPRA top management and officials have required expertise in regulatory matters, as they solve the related problems efficiently.
P16 Tariffs are set according the satisfaction of electric power companies.
P17 Power companies are getting satisfactory share for increases in electricity tariffs.
P18 NEPRA helps in payment adjustments and resolution of conflicts among power producer, transmitters, distributors and the consumers.
P19 NEPRA does not affect the organizational affairs of electric power companies due to the decisions under the influence of government and political forces.
P20 Power companies are satisfied with the reports of NEPRA submitted to Govt.
P21 NEPRA is successful in getting required co-operation from the provincial governments for smooth running of power projects.
P22 Power companies are satisfied with the performance of NEPRA.
C. If you would like to add any other useful information, please write down:-
163
Appendix - G
Questionnaire for Management Research
A. Basic Information
Name: ______________________________ Designation: _________________________
Organization Name: ________________________________________________________
Area of Working: __________________________________________________________
Functioning of National Electric Power Regulatory Authority (NEPRA)
Put ‘Y’ or ‘ ’ sign in one of the five columns before each of the following questions. 1 means “Strongly Disagree”; 2 means “Agree”; 3 means “Neither Agree nor Disagree” (Neutral); 4 means “Agree” and 5 means “Strongly Disagree”. B. Questions to be filled by members/ representatives of Chambers of Commerce and
Industry 1 2 3 4 5
Sr. No. Questions Strongly
Disagree DisagreeNeither
Agree nor Disagree
Agree Strongly Agree
C1 There is a satisfactorily level of availability and quality of electricity supply for consumers.
C2 Smooth electricity supply is observed without fluctuation.
C3 Losses are not borne by the industry due to uneven supply of electricity.
C4 Losses are not borne by the industry due to electricity outage.
C5 Electricity tariffs are acceptable according to the economic position of consumers.
C6 Electricity charges acceptable to consumers according to the level of supply.
C7 The trend of increase in electricity tariffs is justified. C8 The other charges imposed on consumers are
acceptable for them.
C9 Consumers expect from NEPRA for improvement of electricity supply condition.
C10 NEPRA gives weight to the suggestions of consumers for changing in tariffs.
C11 Power consumers are satisfied with the performance of NEPRA.
C. If you would like to add any other useful information, please write down:-