DHA Energy Supply Company gets 20-Year licences to power DHA City Karachi

KARACHI: Pakistan’s power sector regulator has granted a Defence Housing Authority subsidiary the right to build and operate its own electricity distribution network and act as the default power supplier for a sprawling new housing development on the outskirts of Karachi, according to determinations issued this week.

The National Electric Power Regulatory Authority, or NEPRA, approved two 20-year licences for DHA Energy Supply Company (Private) Limited, allowing the company to distribute electricity and serve as “Supplier of Last Resort” within DHA City Karachi, a 22,000-acre development the Defence Housing Authority Karachi is building in Gadap Town, about 56 kilometers from the city center.

Utilities raised financial and procurement concerns

Gujranwala Electric Power Company, the state-run Central Power Purchasing Agency and K-Electric, Karachi’s main utility, each filed formal comments questioning the new entrant’s readiness. K-Electric noted that DHA City Karachi is currently one of its customers, receiving power generated by Lucky Cement Limited under a supply arrangement set to expire Sept. 30, 2026.

The three utilities said DHA Energy Supply Company had not clearly detailed interconnection points or metering responsibilities despite proposing 11 grid stations, and had not demonstrated it met minimum financial benchmarks set out in NEPRA’s eligibility rules.

The Central Power Purchasing Agency also argued that the company’s plan to source its own generation conflicted with rules requiring supply licensees to operate exclusively in distribution and supply.

Two other stakeholders including the Punjab Industrial Estates Development and Management Company and the Defence and Clifton Association, which represents DHA residents, backed the licence applications, saying a dedicated local utility would improve reliability and accountability for the development.

Company falls short of some financial thresholds but wins approval

NEPRA’s determinations show the company did not, at the time of filing, meet several hard financial thresholds required under the regulator’s Eligibility Criteria rules for distribution and supply licensees, including minimum paid-up capital of 150 million rupees and minimum net worth of 500 million rupees.

Company filings put its paid-up capital at 10 million rupees and its net worth at roughly 15.82 million rupees, based on a balance sheet dated June 30, 2023.

The company told regulators it had already installed electrical infrastructure within the development valued at roughly 2.5 billion rupees for distribution and 3.5 billion rupees overall, which it said would be transferred onto its books before the licences took effect, bringing it into compliance.

It also submitted a credit rating from the Pakistan Credit Rating Agency, dated July 17, 2025, showing short-term and long-term ratings of A1 and A, respectively, without a stable outlook.

NEPRA concluded that because the company is a wholly owned subsidiary of DHA Energy and Service (Private) Limited, and ultimately of the Defence Housing Authority Karachi, which it described as a well-established entity with a strong financial track record, the shortfall in the newly incorporated subsidiary’s standalone balance sheet should not bar approval.

The regulator said compliance with the financial benchmarks would instead be written into the licences as an ongoing condition.

Power will keep flowing from Lucky Cement in the near term

For now, the development will continue to draw its electricity from Lucky Cement Limited, which currently supplies about 6 megawatts to the area through an 11-kilovolt feeder under K-Electric’s oversight.

The company told NEPRA it intends to formalize a direct bilateral power-purchase arrangement with Lucky Cement once its licences take effect, and said it would submit a required Power Acquisition Program to the regulator for approval before entering into any such contract, along with tariff petitions within 90 days of the supply licence and 30 days of the distribution licence taking effect.

Longer term, the company said it plans to draw power from additional nearby generation sources, including the national grid, as the development grows toward an anticipated population of more than 100,000 consumers.

DHA Energy Supply Company was incorporated in March 2017 and has authorized and paid-up capital of 10 million rupees. According to NEPRA’s filings, 99.9997% of that capital is held by DHA Energy and Service (Private) Limited, with the remaining shares split among three individuals: Naeem Azhar Lone, Muhammad Rafique and Syed Jamal Ullah Macdi.

Network already under construction

According to schedules attached to the distribution licence, the company’s network is built around underground cabling rather than overhead lines, with roughly 69.5 kilometers of high-tension line and 225 kilometers of low-tension line already in place.

The system includes two 11-kilovolt feeders, two power transformers with a combined capacity of 15 megavolt-amperes, and 79 distribution transformers with a combined capacity of 31.6 megavolt-amperes.

NEPRA said the company must complete the functional and legal separation of its distribution and supply businesses within two years of the licences’ grant, and gave it 90 days to submit a consumer supply manual for approval.