By Staff Reporter
ISLAMABAD: The government has greenlighted a pilot auction for 800 megawatts of electricity under a competitive trading model, a move aimed at injecting market forces into the power sector while scrapping future state-led procurement of generation capacity.
The Cabinet Committee on Energy, chaired by Prime Minister Shehbaz Sharif, on Wednesday also endorsed a push toward unified national energy planning to replace the current patchwork of decisions across electricity, oil, gas and other segments, according to a report in Dawn newspaper on Thursday.
The approvals mark a key step in overhauling Pakistan’s beleaguered energy industry, which has long grappled with chronic shortages, circular debt and inefficiencies. By shifting to a bilateral contract system, the government seeks to let producers and buyers negotiate directly, potentially lowering costs for industrial users and easing the fiscal burden on the state.
Under the framework guidelines for the so-called wheeling auction, part of the Competitive Trading Bilateral Contract Model, or CTBCM, 800MW of capacity will be sold via competitive bidding for a five-year term. The volume is set to ramp up gradually after the trial, pending further approvals. Wheeling allows large consumers like factories to purchase power straight from generators but pay fees for using the national grid to transmit it.
The National Electric Power Regulatory Authority will set uniform wheeling and grid charges based on a joint petition from distribution companies, guided by the power division. An indicative wheeling charge of about Rs12.55 per unit could take effect, though industrial groups are pushing back, arguing it’s excessively high and could erode their competitiveness.
The Independent System and Market Operator, a new body under the power division, will oversee the auction process with Nepra’s sign-off. It will release a calendar and procedures, with no caps or floors on bid prices, which must stay fixed for one year. The guidelines spell out roles for Nepra, ISMO and participants, structuring the broader CTBCM rollout. This aligns with timelines agreed with the International Monetary Fund, targeting guideline approval by December and Nepra’s wheeling charge nod by January 2026.
“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,” an official statement said. It added that approvals cover the competitive bidding process, participant rules and related elements, including authorisation for the CTBCM framework on electricity auctions. “Consistent with the government’s pledges, no further electricity procurement agreements shall be entered into,” the statement said, signaling a formal exit from state-driven power purchases.
The meeting also formed an 18-member steering committee of federal and provincial officials to drive integrated energy planning, or IEP, under the power division. This follows a decision by the Special Investment Facilitation Council, a top civil-military body, to coordinate federal and provincial efforts. The IEP steering committee, headed by the power minister and co-chaired by the petroleum minister, includes nine federal secretaries, four provincial chief secretaries, and the heads of Nepra, the Oil and Gas Regulatory Authority and the Water and Power Development Authority. It’s tasked with broadening stakeholder input, resolving cross-sector and intergovernmental hurdles, and syncing plans with national goals like net-zero transitions.
The Cabinet Committee on Energy’s clearance paves the way for notifying the committee by month’s end. A high-level IEP design is slated for approval by February 2026, followed by nationwide model workshops through October 2026, culminating in the National Integrated Energy Plan’s endorsement by April 2027. The committee also ordered the power division to build out an Energy Information System via its Power Planning and Monitoring Company, or PPMC, to underpin data-driven decisions. This includes capacity building, better governance, monitoring, policy crafting, plan integration, modeling and scenario planning—all channeled through PPMC as a single hub.
The NIEP will take a holistic view, encompassing supply from oil, gas, coal, hydropower, minerals, natural resources and renewables, alongside demand from homes, businesses, industry, transport and agriculture. Over time, it’s expected to integrate AI-based tools for a unified data source, eliminating discrepancies across agencies.
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