Guidelines for electricity wheeling approved

Under this framework, 800MW will be allocated through transparent, competitive auction

ISLAMABAD:

The Cabinet Committee on Energy (CCOE) on Wednesday approved guidelines for wheeling auction of 800 megawatts to open the electricity market to competition among various players.

Prime Minister Shehbaz Sharif chaired the CCOE meeting. The guidelines are aimed at allocating 800MW of electricity through a transparent and competitive auction mechanism and will remain in force for a period of five years.

During the meeting, the Ministry of Energy (Power Division) sought approval for the Framework Guidelines for Wheeling Auctions 2025 to open the electricity market to competition.

Power-sector regulator – the National Electric Power Regulatory Authority (Nepra) – will complete the process of determining uniform wheeling charges by January 2026.

The guidelines have been prepared through a consultative process. Under this mechanism, the wheeling quantum of 800MW will be allocated to those parties that pay the highest contribution over and above the grid charges and surcharges.

The Independent System and Market Operator (ISMO), with the approval of Nepra, will set the auction process including an auction calendar, detailed procedures, etc. There will be no upper or lower limit (cap or floor) on the bid value. The bid value will remain fixed during the payment period of one year.

Additionally, minimum eligibility requirements have been prescribed and powers have been given to Nepra for specifying any additional requirements in the auction process.

Meanwhile, the Power Division said that the CCOE has issued a pivotal decision concerning integrated energy planning for the nation. Previously, various federal and provincial entities responsible for energy matters undertook planning independently.

Pursuant to this decision, collaborative and cohesive planning will be done with respect to energy requirements, consumption patterns and production capacities of both provincial and federal governments.

To facilitate comprehensive energy planning nationwide, a dedicated secretariat will be established within the Power Division's institution, the Power Planning & Monitoring Company (PPMC). Consequently, all planning activities will be executed in a unified manner through a single entity and location.

This resolution will furnish policy-formulating institutions with robust and integrated support. During the cabinet committee's meeting, the Power Division was entrusted with this mandate.

The Power Division will thereby benefit from enhanced capabilities in national energy planning, encompassing the advancement of all energy sources, with particular emphasis on green energy initiatives.

In addition, the energy committee accorded another historical approval. A consequential determination has been reached regarding electricity wheeling within the country, thereby laying the foundation for the inception and advancement of a competitive energy market.

In accordance with the decision, approvals have been extended to the competitive bidding process, participant engagement and other pertinent aspects. This encompasses authorisation for the Competitive Trading Bilateral Contract Market (CTBCM) framework pertaining to electricity auctions.

Consistent with the government's pledges, no further electricity procurement agreements will be entered into. The government has formally disengaged from electricity procurement activities. Subsequent to this decision, the competitive bidding process for 800MW will be initiated.

The aforementioned competitive process has been designed with transparency to maximise stakeholder participation. The oversight of the auction has been delegated to ISMO, an entity that comes under the Power Division.

During the meeting, the prime minister gave directives to complete the process of privatising the power distribution companies (DISCOs). He also said that competitive tariff should be offered to the industry for ensuring their growth.

The prime minister approved the comprehensive energy plan prepared in consultation with the provinces and concerned ministries.