Abstract:
This thesis presents an overview of the economic regulation of the electric market in
Pakistan, which can generally be categorized into three market segments, i.e. generation,
transmission and distribution of electricity. In addition, it evaluates the currently
employed mechanism for tariff setting for an important generation segment, the
Independent Power Producers in the field of Hydro power generation, and proposes
various recommendations to enhance transparency, simplicity, efficiency and stability in
the tariff setting mechanism. Hence offering an attractive opportunity to the investors to
invest in Pakistan’s energy market by reducing and controlling their risks as well as
protect the interests of the consumers. Emphasis is concentrated on hydropower power
generation, especially by the private sector Independent power producers. Tthe
guidelines for tariff setting as given by the NEPRA is discussed for hydro-power
generation sector. Tariff setting guidelines along with development of a tariff model is
discussed. The major goal of the thesis is to analyze and discuss a tariff setting
mechanism that attracts investors like foreign Independent Power Producers to invest in
the market’s generation sector whilst eliminating regulation uncertainties and
encouraging companies to elaborate their investment plans for the energy starved
country's electric market and at the same time protects the end consumer interests as
well. In order to illustrate the proposed approach, a case study is done, where the
feasibility of an IPP (Star Hydro PVT LTD) is studied. Finally, an attempt is made to
discuss the regulatory issues in the said sector. The difficulties in practical
implementation of the defined theoretical framework that are and can be encountered are
presented. The possible solutions to eradicate the potent irregularities are enumerated at
the end of the thesis.
