History of the Kashmir Dispute

History of the Kashmir Dispute

Introduction

Kashmir, officially referred to as Jammu and Kashmir, is an 86,000-square-mile region in northwest India and northeast Pakistan so breathtaking in physical beauty that Mugal   emperors in the 16th and 17th century considered it an earthly paradise. After centuries of Hindu and Buddhist rule, Muslim Moghul emperors took control of Kashmir in the 15th century, converted the population to Islam and incorporated it into the Moghul Empire. Afghan invaders followed the Moghuls in the 18th century, who were themselves driven out by Sikhs from Punjab. Britain invaded in the 19th century and sold the entire Kashmir Valley for half a million rupees (or three rupees per Kashmiri) to the brutal repressive ruler of Jammu, the Hindu Gulab Singh. It was under Singh that the Kashmir Valley became part of the state of Jammu and Kashmir. 

The history of the freedom of Kashmir dates to 1931, when the people of Kashmir, both Hindus and Muslims, initiated a freedom movement against their ruler, to have their own indigenous rule in the region. The resentment of the people led to the ‘Quit Kashmir’ campaign against the Maharaja in 1946. Faced with the insurgency of his people, the Maharaja fled the capitol, Srinagar, on October 25, 1947 and implored India to send its army to help him crush the rebellion. India, coveting the territory, set the condition that the Maharaja would have to sign an ‘Instrument of Accession’ with them, subject to ‘reference to the people.’ The region has been violently disputed by India and Pakistan since their 1947 partition, which created Pakistan as the Muslim counterpart to Hindu-majority India

 India brought the dispute to the United Nations, where the Security Council discussed the question exhaustively from January to April of 1948. It was agreed upon by the governments of India and Pakistan, and approved by the international community, that the dispute over the status of Jammu and Kashmir could only be settled in accordance with the will of the people, which could be ascertained through the democratic method of a free and impartial plebiscite.

India and Pakistan were partitioned in 1947. Kashmir was split as well, with two-thirds going to India and a third going to Pakistan, even though India's share was predominantly Muslim, like Pakistan. Muslims rebelled. India repressed them. War broke out. It wasn't settled until a 1949 cease-fire brokered by the United Nations and a resolution calling for a referendum, or plebiscite, allowing Kashmiris to decide their future for themselves. India has never implemented the resolution.

Background

Kashmir has been at the heart of a territorial dispute between India and Pakistan since the two nations gained their independence in 1947. Both claim Kashmir. In 1948 the then-ruler of the princely state of Jammu and Kashmir, Maharaja Hari Singh, who was holding out for independence, acceded to India on condition that the state retain autonomy in all matters except defense, currency and foreign affairs.  . Fighting between India and Pakistan ended with U.N. intervention; since 1948 the cease-fire line has been monitored by the U.N. Military Observer Group on India and Pakistan (UNMOGIP). The far northern and western areas of the state are under Pakistan's control; the Kashmir valley, Jammu, and Ladakh are under India's control. U.N. resolutions calling for a plebiscite to determine the final status of the territory have been rejected by India, which claims that because Kashmiris have voted in national elections in India, there is no need for a plebiscite. Pakistan maintains that a plebiscite should be held under independent supervision. Several of the militant groups in Kashmir have also called for a plebiscite but argue that an independent Kashmir should be an option. On July 2, 1972, India and Pakistan signed the Simla Accord, under which both countries agreed to respect the cease-fire line, known as the Line of Control, and to resolve differences over Kashmir "by peaceful means" through negotiation. The Simla Accord left the "final settlement" of the Kashmir question to be resolved at an unspecified future date. Since then, the Simla Accord has been the touchstone of all bilateral discussions of the Kashmir issue, even though the accord itself left the issue unresolved.

Progress

India's efforts to manipulate elections in Kashmir and suppress dissent have marked Kashmir's history since 1948, but it was not until 1986 that discontent within the state found wider popular support. In that year the state's ruling National Conference (NC) party, widely accused of corruption, struck a deal with India's Congress Party administration that many in Kashmir saw as a betrayal of Kashmir's autonomy. A new party, the Muslim United Front (MUF), attracted the support of a broad range of Kashmiris, including pro-independence activists, disenchanted Kashmiri youth and the pro-Pakistan Jama'at-i Islami, an Islamic political organization, and appeared poised to do well in state elections in 1987. Blatant rigging assured a National Conference victory, which was followed by the arrests of hundreds of MUF leaders and supporters. In the aftermath, young MUF supporters swelled the ranks of growing number of militant groups who increasingly crossed over to Pakistan for arms and training. The major militant organizations were divided between those advocating an independent Kashmir and those supporting accession to Pakistan. In the late 1980s, the groups began assassinating NC leaders and engaging in other acts of violence. Some groups also targeted Hindu families, and a slow exodus of Hindus from the valley began.

After the elections, militants of the JKLF and other groups stepped up their attacks on the government, detonating bombs at government buildings, buses, and the houses of present and former state officials, and enforcing a state-wide boycott of the November 1989 national parliamentary elections. One month later, JKLF militants abducted the daughter of Home Minister Mufti Mohammad Sayeed, and then freed her when the government gave in to demands for the release of five detained militants. That event, together with a surge in popular protest against the state and central governments, led the central government to launch a massive crackdown on the militants.

On January 19, 1990, the central government imposed direct rule on the state. From the outset, the Indian government's campaign against the militants was marked by widespread human rights violations, including the shooting of unarmed demonstrators, civilian massacres, and summary executions of detainees. Militant groups stepped up their attacks, murdering and threatening Hindu residents, carrying out kidnappings and assassinations of government officials, civil servants, and suspected informers, and engaging in sabotage and bombings. With the encouragement and assistance of the government, some 100,000 Hindu Kashmiris, known as "Pandits," fled the valley. By May 1990, rising tension between Pakistan and India following the escalation of the conflict in Kashmir raised fears of another war between the two countries.

In late 1993, the All Parties Hurriyat Conference (APHC), an umbrella organization of the leaders of all the political and militant organizations fighting for independence, was founded to act as the political voice of the independence movement. However, rivalries within the APHC have limited its effectiveness. Charges of corruption have also tainted some APHC leaders.1

In the mid-1990s, Indian security forces began arming and training local auxiliary forces made up of surrendered or captured militants to assist in counterinsurgency operations. These state-sponsored paramilitary groups have committed serious human rights abuses, and human rights defenders and journalists have been among the principal victims. Indian occupation forces have also been involved in serious human rights violations including: rape; destruction of property; extra judicial killings.

In May 1996, parliamentary elections were held in the state for the first time since 1989. Militant leaders called for a boycott, however, and there were widespread reports that security forces had forced some voters to go to the polls. During state assembly elections in September of that year as well, residents-particularly those living in Srinagar and other cities-also complained that the security forces had tried to counter a militant boycott by forcing some people to go to the polls. However, a large number appeared to have voted voluntarily. Following the election, the National Conference party formed the first state government since 1990. Farooq Abdullah, who together with leaders from the Congress Party had been responsible for rigging state elections in 1987, again became chief minister.

On May 11 and 13, 1998, India tested five nuclear devices, and three weeks later, Pakistan responded in kind. The tests ignited a firestorm of criticism around the world and triggered sanctions by both countries' donors and trading partners. In the months following the tests, an upsurge in shelling and shooting by Indian and Pakistani troops stationed along the cease-fire line in Kashmir left over one hundred civilians dead. Following a the Indian prime minister's historic bus trip from New Delhi to the Pakistan border in February 1999, the prime ministers of both countries signed the Lahore Declaration in which they vowed, among other things, to renew talks on Kashmir and to alert each other of further arms tests. Following such a warning, on April 11, 1999, India test-fired its long-range Agni missile, and on April 14 and 15, Pakistan did the same with its long-range Gauri and medium-range Shaheen missiles. India conducted another ballistic missile test on April 16; the exchange again raised international concern about the prospects for an arms race on the subcontinent.

Rising tensions in the region have made clear that both India and Pakistan have legitimate security concerns related to Kashmir. But these concerns justify   the abuses committed by Indian military and paramilitary forces  .

Parties to the Conflict

As of 1999, the major militant organizations fighting in Kashmir included the Hizb-ul Mujahidin, Harakat-ul Ansar and Lashgar-i Toiba.   Most of these groups support accession to Pakistan. The Jammu and Kashmir Liberation Front (JKLF), the organization that spearheaded the movement for an independent Kashmir, declared a cease-fire in 1994 Pakistani support to freedom fighters was withdrawn after the unilateral concessions by Gen. Mushharf after which all infrastructure and personal involved in this struggle was disbanded. Pakistan also unilaterally allowed India to build the fence along the line of control and working boundary. Pakistan and Kashmiris did not receive any concessions as a result of the above mentioned concessions by the Musharraf government.

The breathing space provided by the Musharraf unilateral concessions to India was unfortunately not used well. India in fact increased violence and failed to win the Kashnmiri hearts. Butt, Guru and Wani incidents further alienated the Kashmiri people who have reached a tipping point where inclusion if the Indian Union is no longer an option.

Central government forces operating in Kashmir include the Indian Army and India's federal security forces, the Central Reserve Police Force (CRPF), and the Border Security Force (BSF). The army's role in the conflict expanded in 1993 with the introduction of the Rashtriya Rifles, an elite army unit created specifically for counterinsurgency operations in Kashmir. The Rashtriya Rifles have been the main force in charge of counterinsurgency operations in Doda, Rajouri and Punch. As of June 1999, some 400,000 army troops and other federal security forces were deployed in the valley, including those positioned along the Line of Control.2

In May 1999 India deployed thousands of additional troops to the Kargil region. The local Jammu and Kashmir policemen are generally not involved in counterinsurgency operations, largely because they are believed to be sympathetic to the insurgency.3 However, in 1995 the Special Task Force (STF) and the Special Operations Group (SOG), counterinsurgency divisions of the Jammu and Kashmir Police made up of non-Muslim non-Kashmiri recruits, including some former militants, were formed apparently to create the impression that the counterinsurgency effort had local support. These police forces frequently operate jointly with the Rashtriya Rifles.

Since at least early 1995 Indian security forces have armed and trained local auxiliary forces made up of surrendered or captured militants to assist in counterinsurgency operations. These forces, which function outside of the normal command structure of the Indian army and other security forces, nevertheless are considered state agents under international law. These groups participate in joint patrols, receive and carry out orders given by security officers, and operate in full view of army and security force bunkers and camps. Some members of these groups are even housed in military compounds. They include Ikhwan-ul Muslimoon and Muslim Mujahidin.  

Instead, India has maintained what amounts to an occupying army in Kashmir, cultivating more resentment from the locals than fertile agricultural products. Modern India's founders, Jawaharlal Nehru and Mahatma Gandhi, both had Kashmiri roots, which partially explain India's attachment to the region. To India, "Kashmir for the Kashmiris" means nothing. Indian leaders' standard line is that Kashmir is "an integral part" of India.

In 1965, India and Pakistan fought their second of three major wars since 1947 over Kashmir. The United States was largely to blame for setting the stage for war.

The cease-fire three weeks later was not substantial beyond a demand that both sides put down their arms and a pledge to send international observers to Kashmir. Pakistan renewed its call for a referendum by Kashmir's mostly Muslim population of 5 million to decide the region's future, in accordance with a 1949 UN resolution. India continued to resist conducting such a plebiscite. The 1965 war, in sum, settled nothing and merely put off future conflicts

According to a Congressional Research Service report, "Relations between Pakistan and India remain deadlocked on the issue of Kashmiri sovereignty, and a separatist rebellion has been underway in the region since 1989. Tensions were extremely high in the wake of the Kargil conflict of 1999 when an incursion by Pakistani soldiers led to a bloody six-week-long battle."

Tensions over Kashmir rose dangerously in fall 2001, (forcing then-Secretary of State Colin Powell, to de-escalate tensions in person) When a bomb exploded in the Indian Jammu and Kashmir state assembly and an armed band assaulted the Indian Parliament in New Delhi later that year, India mobilized 700,000 troops, threatened war, and provoked Pakistan into mobilizing its forces. American intervention compelled then-Pakistani President Pervez Musharraf,  . He promised to ban and eliminate terrorist infrastructure in Pakistani 

Maqbool Butt    was hanged by the then Indian regime on February 11, 1984 in Tihar Jail, as the reprisal expressed by New Delhi. People and civil society of Jammu and Kashmir do respect him for his legendary struggle for the restoration of freedom in Kashmir. He is now a hero and pioneer of the Kashmiri nation. So as to pay tribute to Maqbool Butt, People of Srinagar have already built and reserved a grave for him in Martyrs Grave Yard of Eidgah, Srinagar. However, his formal burial is still awaited. Maqbool Butt was a Kashmiri freedom fighter and co-founder of the Jammu Kashmir Liberation Front. He was a leading voice of the struggle for freedom among the Kashmiris. In the year of 1962, Maqbool Butt formed a movement called Kashmir Independence Committee (KIC). This group was later merged into the newly formed Jammu Kashmir Mahaz-Rayee-Shumari (Plebiscite Front) in Azad Kashmir, which was a crusade for complete independence from India. He was sentenced to death for murder by the Delhi High Court and hanged on 11 February 1984. Prior to the publication of ‘Shaoor-e-Farda’ (the vision of tomorrow) by Saeed Asad and Safeer-e-Hurriyat (the ambassador of liberation) by Khawaja Rafiq,  Subsequently, as it appears from his interviews and Rafiq’s narration confirmed by some of his colleagues, he went underground and then in 1958 crossed over to Pakistan along with his uncle   The biased Indian court found him guilty and passed death sentence on him, while others were given the life sentence Butt’s execution further contributed to the sense of alienation among most Kashmiris, and he continues to be a major source of inspiration for the Kashmiri freedom fighters. He was the first Kashmiri to be judicially murdered on Indian soil – making him the first authentic martyr of the Kashmiri independence movement. His execution day is celebrated as Martyr Day every year.  

Afzal Guru- On    February 9, 2013. Afzal Guru was hanged. As the news spread people of Kashmir everywhere started protesting. The protests were against the fulfillment of the collective conscience of the Indian nationalists. It was injustice, and the secret hanging then denying the family the remains are black spots on the justice system of India. Parallel thoughts and perception that Kashmiris were subject to victimization filled the head   Afzal Guru was a college drop-out, a surrendered freedom fighter, once a graduate candidate of Delhi University and victim of state injustice.   He was a person of principles.  Who never stated anything for his own expediency Once Afzal was told by security forces to coach the two sons of higher officials of defense to avoid the threats of kidnapping. And while filing of Curative petition on his behalf by Senior Counsel Indra Jaisingh, he asked him the names of people whose children he had taught.But Afzal said that if he made those names public, the students would face stigma and he did not want to harm them. It has been written in Nandita Haksar’s book “The many faces of Kashmiri Nationalism”as: “She (Indra Jaising) was deeply impressed by how honorable he was. Afzal was not the kind of human being who would sacrifice principles for the sake of expediency”.It is also said that in Delhi, Afzal Guru was taken to the Police Station of the Special Cell at Lodhi road. He was beaten, tortured and humiliated. It was the holy month of Ramzan and the policemen urinated in his mouth, telling him he could break his fast with their urine.
This shows the nature of democracy and secularism that the world’s largest democratic country boasts about 

Burhan Wani- was born in September 19, 1994 at Dadsara village of Tral area of Pulwama in an upper middle-class family of Muzaffar Wani who named him Burhan. Both his father and mother are teachers at government schools in   Burhan joined the armed struggle in October 16, 2010 to avenge the humiliation when he was severely beaten by Indian troops along with his brother Khalid Muzaffar Wani, who was later killed by the Indian army in custody on April 13, 2015 for meeting Burhan in Tral forest. Since 2011, Burhan was popular on social media as a commander of the largest indigenous Kashmiri freedom fighters organization — Hizbul Mujahideen.  . He broke more than 20 Indian army crackdowns with the help of local people who came to rescue him while pelting security forces with stones during siege and search operations that showed the popularity and love of the people for Burhan in IOK Burhan was a smart Kashmiri freedom fighter with political guts and was completely following the line of the All Parties Hurriyat Conference (APHC) to promote Kashmiris struggle.  A soft-spoken Burhan having European features with a dashing look became the real face of Kashmiri freedom fighters since 2011 to 2016 on social media. It was only Burhan who gathered all militants in Kashmir to fight under an umbrella against illegal Indian rule in IOK.To arrest Burhan, the Indian army had announced one million Indian rupees bounty. It was the martyrdom of Ishfaq Majeed Wani in March in the 1990s that shook the entire IOK and after 27 years Burhan’s martyrdom gave a new life to the freedom struggle. The Indian army along with other security agencies martyred Burhan Wani and his two colleagues — Sartaj Ahmad Sheikh and Pervaiz Ahmad Lashkari — at Bumdoora village in Kokernag area on July 8, 2016. More than one million people gathered at Eidgah Tral and offered 40 funerals of Burhan. He was laid to rest close to the grave of his elder brother Khalid Muzafar Wani. Following the martyrdom of Burhan, the entire IOK was embroiled in violence beginning July 8, 2016 to February 2017. During the longest shutdown and curfew in the history of IOK to mourn the martyrdom of Burhan, clashes erupted between Indian forces and protesters in which nearly 100 people were killed, 15,000 injured and hundreds were made blind by pellet guns.

Conclusions

The people of Kashmir never lost hope either in the United Nations as the custodian of human rights, or in their demand to exercise the right of self-determination. The scale of the popular backing of the uprising in Kashmir can be judged from the established fact that on many occasions during the month of July-August 2018, virtually the entire population of Srinagar and other major towns in the Valley, came out on the streets. They protested attempts by the Government of India to scrap Article 35A of the Indian constitution, which provides special rights and privileges to the state of Jammu and Kashmir, and its residents. Article 35A also bars foreigners from buying land or immovable property, etc. in the State. The Joint Resistance Leadership and other legal, religious and business fraternities believe that the abrogation of this constitutional provision is a conspiracy to change the demographic composition of the state. However, the Supreme Court of India adjourned the hearting of Article 35A till August 27, 2018.

Continuous violations of basic human rights (,HR Violations (\From Jan 1989 till July 31, 2018 Total Killings * 95,071 Custodial Killings 7,112 Civilian arrested 144,362 Structures Arson/Destroyed 108,868 Women Widowed 22,880 Children Orphaned 107,717.) frequent massacres, rapes, constant fear, hunger and misery — these are the gifts of the Indian occupation to the people of Kashmir. For the populous South Asian subcontinent, the Kashmir situation entails a recurrent possibility of disaster and nuclear war. However, there is a way to bring these atrocities to an end. If the Secretary General of the United Nations uses his moral and legal authority to resume peaceful dialogue between India and Pakistan, along with the legitimate representatives of the people of Kashmir, then a final settlement of the dispute can be formulated.

By adopting several resolutions from 1948 to 1962 reaffirming the principle of free choice for the people of Kashmir, the Security Council assumed a moral responsibility to ensure that conditions in Kashmir will permit the exercise of that choice. To disown that responsibility would expose the world organization to the charge of making hollow promises and, indeed, deceiving a population which is larger than that of many members of the United Nations, individually.

 

Like the Arab-Israeli conflict, the conflict over Kashmir remains unresolved. And like the Arab-Israeli conflict, it is the source, and perhaps the key, to peace in regions far greater than the territory in dispute. The latest moves to push the zero Palestine solution does not bide well for the beleaguered people of Palestine and perhaps also the Kashmiri people also have not seen much progress even after gross human rights violations by Indian Occupation Forces. UNHRC ( “According to report documented by Jammu Kashmir Coalition of civil society JKCCS, in 2016 the Jammu and Kashmir witnessed the killing of 383 persons which is statistically the highest in last five years. Moreover, thousands of persons were injured and there were illegal detentions of around 10,000 people besides arson and clampdown of communication services. The violence intensified on July 8, after the extra-judicial killing of, Burhan Wani. His killing was followed by a mass uprising of people all across Kashmir. In order to quell the uprising, the government pressed into service police, military and paramilitary forces, which resorted to excessive use of unbridled force that resulted into large-scale abuse of human rights. During the unrest, there was extrajudicial execution of more than 100 civilians; more than 15,000 persons got injured in the State forces action with 6000+ injuries by the use of pellet shotguns with 1000+ civilians receiving eye damage fully or partially. Protest gatherings and marches, including funeral processions and public prayers, were met with violence. Essential services including telecommunication and internet services remained by and large curtailed. Freedom of Press was violated as media professionals were attacked and injured. There were instances of ban on publication of few dailies and seizure of daily newspapers. The Medical aid services during the uprising were also affected as there were attacks on ambulances, assault on doctors and paramedical workers and crackdown on voluntary aid workers by various security agencies. The long pending dispute on the agenda of the United Nations continues to take lives of human beings every year, endlessly. Jammu and Kashmir has lost its children and youth in the current mayhem. It has lost its tomorrow. The dale is in the state of mourning– wailing for its departed children, its visionless children, its detained children and its offended children. Everywhere there are injuries, those eternal wounds which nothing on earth can heal. A state, when the crimson has taken over green .Out of over 95 people who have been gunned down so far, the government of Jammu and Kashmir has ordered enquiry in only seven cases.” Quote from UNHRC Report) even prepared a detailed report on HR violations and demanded a full scale enquiry which India has refused to allow.  The fate of Kashmir hangs in the balance. The Islamic world is divided and embroiled in infighting and the Kashmiri cause is not taken up by the Islamic world.

Pakistan’s Transformation to Open Electricity Access

 

Pakistan’s Transformation to Open Electricity Access

Introduction

The power market in Pakistan is required to evolve to a new structure. Today’s wholesale power procurement model is based on Single Buyer Model where National Grid Company (NTDC) and Distribution Companies are mandated to procure power from generation companies. Primarily the power is procured through long term contracts by following Cost Plus tariff settings with limited incentives for generators to improve efficiency. It is the need of the time that desired power market structure of procumbent of power through Multiple Buyer Model e.g. each distribution company procuring for its own requirement, should be evolved. Suitable mix of long, medium and short term contracts should be promoted by allowing market forces in tariff settings and by benefitting the generators who produce electricity at lower rate with higher efficiency.

Under the competitive bidding route, the Regulator should in addition to regulating tariffs, also scrutinize and approve the process to be adopted for competitive bidding, with a view to ensure that competitive conditions do prevail in the power market.

The proposed Regulations states that NEPRA will be responsible for approval of Request for Proposal (RfP) and any amendment made in the RFP during bidding process. It also envisages that Final Evaluation of Bids shall also be submitted for approval of NEPRA.   The very purpose of having oversight on the bidding process can best be achieved through regulations and by providing standard bidding documents for procuring/relevant agency. However, in case the procuring agency wants to deviate or doesn’t wish to use standard bidding document for any reason, only then relevant agency should seek approval of the RFP from NEPRA. By providing standard bidding documents including RFQs/RFPs, it would be convenient for both, the relevant agency as well as Regulator to oversight the bidding process without compromising expediency and smoothness of process.

It is obvious that the proposed regulations would be subservient to primary legislation of federal and provincial PPRA Acts, so these regulations should be formulated in conformity to the primary legislation. Under Punjab PPRARules, 2014 procurement involves the following  

The previous government had started the process for transformation of Central Power Purchasing Agency-Guarantee (CPPA-G) as an independent operator of the country’s electricity market from its existing role of a billing and financial settlement agent of the distribution companies. An application to register CPPA as a ‘market operator’ was admitted by the National Electricity and Power Regulatory Authority (NEPRA) in July 2017

The move to a competitive trading bilateral contract market (CTBCM) is a good start towards a shift in the current model. Doing away with inflexible long term PPAs structured as take-or-pay contracts and encouraging competition in new capacity procurement opportunities are some of the objectives presented in the Central Power Purchase Agency’s (CPPA)  

As market operator, the transformed CPPA-G will be responsible for almost all buying and selling of electricity at market prices, from power generation to transmission and distribution companies and enable third-party private players as well. Pricing of electricity was supposed to become market based many years ago

The CPPA was originally a part of the National Transmission and Despatch Company (NTDC) and then separated as a CPPA-G licensee through a business transfer agreement (BTA). Under that agreement, NTDC became the transmission network operator or system operator, while CPPA-G took over the role of market operator although at a limited scale.

 Turkish Model

The plan and road map is heavily influenced by the   Turkish model and aims to to ensure that competitive electricity markets take shape by 2020 under various covenants from international lenders. As part of this, the CPPA-G has to develop and expand core functions like strategy, corporate planning, information technology, energy demand and supply forecasting mechanism and taxation.As part of the process, the National Electric Power Regulatory Authority (NEPRA) has accepted a petition from the CPPA-G for issuance of a formal license  

The authorities have been engaged with Turkish authorities at different levels to emulate their reform process. Turkish power market, according to CPPA-G, has been reformed with great success since 2001 when the Turkish electricity market was in doldrums like currently in Pakistan. The market conditions back in 2001 were very similar to Pakistani market conditions recognised with non-payments and cash flow issues, high losses, long-term generation contracts backed by government sovereign guarantees and fewer investments.

 Turkey created an independent market operator, and around two dozen distribution companies. At present, Turkey also have a private and independent market operator, a transmission or system operator, public and private generators and one regulator. About 30 per cent shares of the Turkish market operator were held by the stock exchange (Borsa Istanbul), another 30pc by the public sector and remaining 40pc shares are traded. The market operator is responsible for management of energy market through transparent operations of both, electricity and gas, by operating as power exchange of Turkey. It also provides the counterparty guarantee of all the transactions and billing and settlement of payments.

Until recently, the Turkish market had around 950 electricity market participants of various natures and trading is taking place on an intraday basis and what is called the Day Ahead Market. The prices are quoted for the intraday and for a day later.

Suggested Model

The government claims that after the introduction of liberalized and transparent market following creation of a market operator, the private investments in the power sector increased manifold and no investment required sovereign guarantees from the government as was the case in the previous structure.

It said the Turkish electricity market was moving towards complete freedom for consumers where all the consumers have the liberty to make bilateral contracts for buying electricity from whichever retail company or generator they choose to. Before the liberalization and privatization of the distribution companies in Turkey, in some areas, losses due to non-payments were as high as 80pc. Non-collection was a prevalent culture. However, after the transition, Turkey has been able to substantially reduce power sector losses. Currently, the highest losses were below 40pc.

The CPPA-G has prepared its integrated business plan to lay out scope, time and cost of various initiatives necessary to facilitate a power market transition.   The objectives also include enforcing payment discipline, while an exchange based model will also create more competition in the form of new capacity procurement opportunities. As things are currently structured, power purchase agreements (PPAs) are inflexible long term arrangements and are taking or pay contracts.

This has resulted in excess capacity payments in times of power surplus and chronic deficits at other times due to a lack of generation capacity. This has ensued continuous pressure on the exchequer and frequent power breakdowns that end up hurting the end consumer eventually.

Therefore, another main objective would be also to create the requisite conditions to reduce government liabilities by reducing the need for sovereign guarantees and let market participants assume the risk and provide the financial resources for management of the power system. The market system will also ensure trading of firm or reliable capacity at competitive and efficient prices.

According to the plan demand participants such as DISCOs, K-Electric and BPC’s will have their capacity obligations in such a manner that they have in advance the capacity required to supply the forecasted system peaks as well as operational reserves. Overall, the move to a wholesale electricity market is the need of the hour for Pakistan’s power sector.   

·         Initiate RFQ/Pre-Qualification of Bidders

·         Shortlist bidders

·         Issuance of RFP

·         Pre-Bid Conference and clarification in the RFP

·         Submission of Bids

·         Evaluation of bids

·         Award of bid(s)

·         Post bid negotiations

·         Award of Contract

During the bidding process, at least at three different stages the RFQs/RFPs are modified, firstly in case procuring agency may make additions through issuing corrigendum, secondly upon queries of bidders after pre-bid conference and lastly while negotiation with the successful bidders before award of contract. So if NEPRA shall assume that at all these stages, the bidding documents will be approved by the regulator, it will result not only in inordinate delay but also entails procedural issues as per procurement laws. Furthermore, in case NEPRA will become the custodian of RFP, it is incumbent upon NEPRA to solely evaluate the bidders as upon rejection of certain bidders, a legal issue would arise that against whom the aggrieved bidders shall file the grievance after completion of bidding process, against procuring agency (as required under PPRA Rules) or the NEPRA.

To run the process of competitive bidding smoothly, it is appropriate that standard bidding documents are approved by NEPRA beforehand along with these regulations. The relevant/procuring agency should be made responsible to conduct the bidding as per standard documents and Regulations and then submit the final tariff proposed by successful bidder for approval of NEPRA.

Regulations also provide for declaring a “Benchmark Tariff” by NEPRA. However the regulations do not prescribe any procedure for arriving at benchmark tariff. By providing a benchmark tariff, the regulator shall have to determine the tariff twice, one while giving benchmark tariff and secondly at the time of final approval of tariff upon completion of bidding process. By giving benchmark tariff, there is the likelihood of receiving substantially lower bids as it was observed in government LNG plants which ended up with regulator’s withdrawal of upfront tariff for LNG power plants. Benchmark tariff therefore would not serve any useful purpose and should be removed from the regulations and bids should be evaluated on the basis of competition among the bidders and subsequently approved by NEPRA.It is also imperative that before commencement of bidding process for a specific technology or fuel, the regulator should conduct diligence regarding demand forecast of electricity and upon its satisfaction should allow the relevant agency to proceed with the competitive bidding process.

The government has started the process for transformation of Central Power Purchasing Agency-Guarantee (CPPA-G) as an independent operator of the country’s electricity market from its existing role of a billing and financial settlement agent of the distribution companies. An application to register CPPA as a ‘market operator’ was admitted by the National Electricity and Power Regulatory Authority (Nepra) in July 2017. Having taken stakeholder comments, NEPRA has held ta public hearing to be held on March 6.

As market operator, the transformed CPPA-G will be responsible for almost all buying and selling of electricity at market prices, from power generation to transmission and distribution companies and enable third-party private players as well.  The CPPA was originally a part of the National Transmission and Despatch Company (NTDC) and then separated as a CPPA-G licensee through a business transfer agreement (BTA). Under that agreement, NTDC became the transmission network operator or system operator, while CPPA-G took over the role of market operator although at a limited scale.

Separately, the government is working on market development on the Turkish model to ensure that competitive electricity markets take shape by 2020 under various covenants from international lenders. As part of this, the CPPA-G has to develop and expand core functions like strategy, corporate planning, information technology, energy demand and supply forecasting mechanism and taxation. As part of the process, the National Electric Power Regulatory Authority (NEPRA) has accepted a petition from the CPPA-G for issuance of a formal license and market structure and will be holding a public hearing process early next month.

Roadmap

The roadmap, presents a detailed plan towards formation of a liberalized market in Pakistan.  The first step which is the sharing of the CTBCM with NEPRA has been done in May 18   this will be followed by stakeholder and public consultations and approval by the regulator.
The next step would be to make the necessary amendments to the legal framework, which will mean modifying the NEPRA Act to incorporate the approved market development policy. However, as this could be a time consuming process, the plan notes that the market could possibly start in a transitory mode before enactment of amendments is completed.

This will be followed by the Ministry of Water and Power (MoWP) modifying and replacing the relevant power policies such as generation and transmission policies to comply with the market development policy.

The next step would be the modifications to the power sector regulatory framework and assignment of pre-existing power purchase agreements done by CPPA among the DISCOs. After these steps, the CPPA will then be able to be separated into a Market Operator and Special Wholesale Supplier Business Unit. However, this is only the sixth milestone in a roadmap comprising of seventeen steps  

Background

The Economic Coordination Committee (ECC) of the Cabinet approved the creation of a competitive electricity market in April 2015. The development and implementation of a competitive electric power market in Pakistan, as one of the main goals of the NEPRA Act (Amendment) 2017, envisages the role of market participants i.e. generators, distributors, traders, suppliers and bulk power consumers to sell and buy in a competitive marketplace. It also delineates the role of service providers i.e. the network operator, system operator and market operator which will enable the selling and buying in the market.

Turkish Model

The authorities have been engaged with Turkish authorities at different levels to emulate their reform process. Turkish power market, according to CPPA-G, has been reformed with great success since 2001 when the Turkish electricity market was in doldrums like currently in Pakistan. The market conditions back in 2001 were very similar to Pakistani market conditions recognised with non-payments and cash flow issues, high losses, long-term generation contracts backed by government sovereign guarantees and fewer investments.

Until recently, the Turkish market had around 950 electricity market participants of various natures and trading is taking place on an intraday basis and what is called the Day Ahead Market. The prices are quoted for the intraday and for a day later.

The government claims that after the introduction of liberalised and transparent market following operationalisation of a market operator, the private investments in the power sector increased manifold and no investment required sovereign guarantees from the government as was the case in the previous structure.

It said the Turkish electricity market was moving towards complete freedom for consumers where all the consumers have the liberty to make bilateral contracts for buying electricity from whichever retail company or generator they choose to. Before the liberalisation and privatisation of the distribution companies in Turkey, in some areas, losses due to non-payments were as high as 80pc.

Non-collection was a prevalent culture. However, after the transition, Turkey has been able to substantially reduce power sector losses. Currently, the highest losses were below 40pc.

Present Status

A wholesale market model is being developed which will lead to the setting up of the first competitive wholesale target market by mid-2021. The design of the wholesale market, will allow, through simple regulatory adjustments, the future evolution towards increasing competition for and in the market. More specifically, the first target market design will also note certain conditions and whenever those conditions are met, the future evolution towards more competitive and sophisticated trading environment (such as spot market, electronic trading platforms, etc.) will be made through simple regulatory adjustments. The policy envisages that the design of competitive wholesale market for Pakistan will pursue the achievement of the following particular-objectives to enhance power sector security of supply, generation adequacy and contribute in developing power sector sustainability in the short, medium and long term:

i.               Create the conditions for a fair allocation of risk and benefit sharing between investors/sellers and buyers/consumers

ii.             Provide level playing field by removing conflict of interest to facilitate entry of new investors and participation of private players, including Bulk Power Customers

iii.           Create the conditions to attract investments based on credit cover provided by market participants, by eliminating the need of the government providing sovereign guarantees overtime

iv.            Improve efficiency arising from competition for the market (new capacity procurement) and in the market (optimization through centralized economic dispatch within system security constraints, to maximize the economic benefits of available resources and promote efficiency)

v.              Create the proper conditions to facilitate and be part of a regional electricity market

vi.            Ensure accountability of all Participants and Service Providers

vii.          Ensure transparency and predictability

viii.        Open access to information

Roadmap to Open Access

The Market Operations Roadmap envisages that the design of the first CTBCM market (a bilateral contract market with balancing mechanism) and a plan to implement it will be finalized by CPPA-G (in the role of Market Operator (MO)), to be approved by NEPRA. In the future, the MO will work with market participants and service providers to lead in making proposals to transition the market to more advanced stages through simple regulatory adjustments as approved by NEPRA. The role of the Regulator will be to ensure efficient competitive market design and promote competition through effective stakeholder consultation process and in-line with effective market monitoring and enforcement models. Following are some key considerations in the design of the market model:

i.               The existence of take or pay, both capacity and energy contracts (Power Purchase and Energy Purchase Agreements) is a reality and all current contractual obligations will be honored.

ii.             The existing contracts will be seamlessly transitioned to the new wholesale market.

iii.           Commercial trading in the new market will be based on bilateral contracts for the purpose of creation of wholesale power market.

iv.           Future capacity procurement shall be based on competitive mechanism.

v.             Efficiency will be improved by ensuring economic dispatch run by System Operator.

vi.           Steps for the gradual evolution to increase competition for and in the market will be undertaken leading to sophisticated trading mechanisms in the future.

Organizational arrangements

Currently, the CPPA-G performs two functions simultaneously – the agency function on behalf of DISCOs and Market Operator function. The transition to wholesale market will see the separation of the two functions that is required to maintain independence and autonomy to function as an independent Market Operator. The System Operator will ensure that generation scheduling and dispatch, demand control and real time system operator are transparent and predictable. The NPCC (National Power Control Centre) will implement the software, systems, procedures and practices for the full implementation of the Grid Code, staffing and capacity building. DISCOs will implement functions and systems for the participation in the electricity market and function as retail suppliers. The BOD of NTDC will oversee implementation of standard transmission connection agreements as required in the Grid Code, to clarify limits, rights and obligations of power plants, distribution licensees and bulk power consumers connected to transmission for power to be exchanged freely in the balancing market.

Regulatory Measures

The transition to competitive wholesale power market regulatory framework including applicable NEPRA rules, regulations, guidelines and procedures (and if necessary (new) standard templates for licenses and registration) will be carried out by NEPRA to meet timelines envisaged under the ECC decision. NEPRA will ensure that sufficient stakeholder consensus is generated which will allow a market regime to develop which is fair and equitable to all stakeholders. In particular, NEPRA shall develop regulations / guidelines for the monitoring of competitive process for new contracts of DISCOs, the monitoring of dispatch and balancing mechanism, and the monitoring of the retail/supplier’s market. Some of the major milestones for the implementation of the roadmap to a competitive wholesale market are presented below:

The following tasks are identified for implementation of National Electricity Policy 2018 for development of CTBCM market by mid-2021:

                                i.            The NEPRA shall approve the “First Competitive Wholesale Target Market” design and roadmap by October 2018.

                              ii.            CPPA-G is assisting the Ministry of Energy to achieve finalization of market development framework (in-line with the approved market model) by January 2019.

                            iii.            A Market Implementation Monitoring Group (MIMG) has been created to facilitate the implementation of roadmap by mid-2021; MIMG is providing resources and capacity building support.

                             iv.            Legal and regulatory framework including the Grid Code and Commercial Codes will be amended to reflect the approved market model by January 2021.

                               v.            Strengthening of the System Operator, the Planning function of NTDC and the Market Operator will be completed by January 2020 for which NTDC and CPPA will prepare plans to be approved by their respective BODs.

                             vi.            Re-structuring of CPPA to remove the conflict of interest (i.e. keeping MO and SO at arm’s length) will be completed by June of 2020.

                           vii.            DISCOs’ market interface departments shall be established by mid of 2019.

                         viii.            The wholesale metering project for acquiring data remotely through secured and reliable AMR systems shall be completed by NTDC by January 2020.

         Federal Government will devise a mechanism with support from NEPRA to charge the             capacity charges payable to generators for committed long-term take or pay contracts, in-case BPCs opt for open access. Such mechanism shall be enacted by December 2018 for charging capacity 

Concluding Remarks

CPPA has prepared an elaborate plan with road map and detailed steps to be taken. The new federal government needs to evaluate all this and enact as per requirements.

The fact that the power sector is beset with financial problems suggests that the first steps should include: elimination of circular debt; removal of tax and other issues that impact upon financial health; and introduction of competition for procurement of any capacity. After these initial steps the open market structure can be embraced.