By Staff Reporter
ISLAMABAD: Pakistan said it’s exiting the business of buying electricity, launching a competitive market that will let large industrial users purchase power directly from producers in a break from a state-run system that has drawn years of criticism over its contracts with private generators.
Energy Minister Awais Leghari announced the move on Sunday as the Independent System and Market Operator of Pakistan issued a request for proposals for the country’s first wheeling auction, covering 400 megawatts. The auction is being held under the Competitive Trading Bilateral Contract Market framework, known as CTBCM.
“The government is practically withdrawing from electricity procurement,” Leghari said in a video message. Producers and consumers will instead buy and sell power to each other through a transparent mechanism, he said.
Under the current setup, the government buys electricity from producers and sells it to consumers. The terms on which it procures that power, particularly from independent power producers, have long been under scrutiny. “The name of IPPs has become notorious today,” Leghari said.
“Nobody will have the right to sell electricity to the government, nor will the government be able to purchase it,” he said, adding that the government “will no longer be able to purchase electricity and forcibly sell it to the public at its own rates.”
Phased Rollout
The first phase is limited to industrial and other large consumers using more than 1 megawatt. Leghari said the threshold is part of a phased rollout and doesn’t mark the final scope of the market, with smaller consumers to be brought in over the next few years.
“For an ordinary consumer, this will mean that they will have the choice of buying cheaper electricity,” he said.
Pakistan is moving away from a single-buyer model in which end users have no choice but to buy from the government. The country has capped market demand under the auction program at 800 megawatts over five years, with 400 megawatts to be auctioned initially and 100 megawatts in each subsequent round, according to the Power Division. The auctions are open to competitive suppliers and to captive generators that use the grid to wheel power for their own consumption.
Wheeling lets eligible producers and consumers contract directly while using the existing transmission network to deliver the electricity. It provides the infrastructure for trading outside the government’s traditional procurement arrangement.
Auction Timeline
Interested participants must submit proposals by Nov. 20 and register on the operator’s electronic auction platform. Local media reported earlier this month that the auction is expected to be held in the fourth quarter.
“For the first time in the country’s history, proposals have been invited from interested entities for a wheeling auction,” the Power Division said in a statement.
The announcement follows a decision days earlier by the National Electric Power Regulatory Authority to approve uniform Use of System Charges for open-access bulk electricity consumers, which allows eligible users to choose their suppliers.
Industrial Competitiveness
Leghari said cheaper power would help Pakistani manufacturers compete abroad and lift exports. “If electricity becomes cheaper, our industry will be able to compete internationally, and our exports will increase,” he said. He also said it would help generate more foreign exchange for the country.
Leghari framed the launch as the delivery of a reform that governments have pursued for decades. “Every government for the last 25 to 30 years wanted a competitive electricity market,” he said. In a post on X sharing the operator’s public notice, he said suppliers and consumers “can now transact with each other.”
He congratulated Prime Minister Shehbaz Sharif and the nation on the development.
The 400-megawatt auction is expected to serve as the first step in the transition, starting with large users before extending to smaller consumers.
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