Pakistan opens power market to competition

400MW wheeling auction targets large consumers

ISLAMABAD:

Energy Minister Awais Leghari on Sunday announced the launch of a competitive electricity market in Pakistan, saying the new system would initially allow industrial and other large consumers using more than one megawatt to purchase electricity directly from producers before being extended to ordinary consumers in the coming years.

"The government is practically withdrawing from electricity procurement," he said in a video message, explaining that electricity producers and consumers would instead be able to buy and sell power directly through a transparent mechanism.

The announcement came as the Independent System and Market Operator of Pakistan (ISMO) issued a request for proposals (RFP) for Pakistan's first 400-megawatt wheeling auction under the Competitive Trading Bilateral Contract Market (CTBCM) framework.

Leghari also shared the ISMO public notice on X, saying he was "proud to announce" that the RFP had been issued and that a "decades-old commitment" of successive governments had now been practically implemented. "Suppliers and consumers of power can now transact with each other," he said in his post.

Under the existing electricity market structure, the government purchases the power generated by producers and supplies it to consumers. The terms and rates under which electricity is procured have long been a subject of scrutiny, particularly in relation to independent power producers (IPPs).

He said the new system would fundamentally alter that arrangement, with producers and consumers able to enter into transactions directly rather than relying on the government as the central buyer and seller. "Electricity producers and users will buy and sell directly through a transparent mechanism," he added.

The first phase of the competitive market will cover industrial and other large consumers using more than one megawatt of electricity. Ordinary consumers will be brought into the system at a later stage, with Leghari saying the expansion was expected to take place over the next few years.

The minister said the eventual expansion would give consumers greater choice over their electricity suppliers and allow them to seek cheaper power. "For an ordinary consumer, this will mean that they will have the choice of buying cheaper electricity," he said.

Leghari further stated that lower electricity costs would also help Pakistani industry compete in international markets and support exports. "If electricity becomes cheaper, our industry will be able to compete internationally, and our exports will increase," he added.