By Staff Reporter
ISLAMABAD: The Power Division on Friday launched the Competitive Trading Bilateral Contract Market (CTBCM), a long-delayed reform aimed at creating a transparent electricity market and addressing decades of structural inefficiencies.
The Independent System and Market Operator (ISMO), a unit of the Power Division, outlined the auction framework for allocating 800 megawatts (MW) of wheeling demand at a workshop attended by public and private sector stakeholders.
Federal Power Minister Sardar Awais Leghari, who inaugurated the event, described the CTBCM as a cornerstone of Pakistan’s energy future. “The foundation has been laid to stabilise electricity prices in the country and provide consumers with electricity at competitive rates,” he said, declaring 2025-26 the “Year of Service to Consumers.”
Leghari emphasised the government’s commitment to a modern, transparent, and competitive electricity market. “This is not an experiment. This is a carefully planned reform that has been in the making for years,” the minister said, adding that the CTBCM would be operational soon.
The auction framework is central to the CTBCM’s implementation, designed to allocate 800 MW of wheeling demand transparently. “By inviting consultation on the auction guidelines, we want to ensure the final documents reflect stakeholders’ input,” Leghari said, noting the reform would foster trust, attract new entrants, and give consumers choice. Industrial consumers stand to benefit significantly, gaining the ability to procure electricity directly from suppliers at competitive rates. “This reform comes at a critical time,” Leghari said. “Reliable and competitively priced electricity is one of the most important enablers of growth.”
The CTBCM aims to integrate renewable energy, reduce industrial energy costs, and provide export-oriented sectors with affordable, green power. “This reform is not just about the power sector; it is about the economy, the environment, and the wellbeing of our people,” Leghari added. The minister acknowledged challenges in market design, technical regulations, and institutional coordination but warned that inaction would perpetuate inefficiencies and deter investment. “This reform is not optional, it is essential,” he said, pledging full government support for ISMO and the National Electric Power Regulatory Authority (Nepra).
ISMO detailed the auction process, which requires companies to be registered, complete interconnection studies, and, in most cases, secure agreements with bulk power consumers to qualify. Eligible bidders will submit prices in rupees per kilowatt-hour, on top of standard grid charges. ISMO will rank bids from highest to lowest, awarding capacity until the 800 MW is allocated.
Additional rounds will resolve oversubscribed bids. Successful bidders must obtain licenses, sign contracts, and provide performance guarantees. They will pay their bid price for one year based on actual energy wheeled, alongside grid charges and surcharges. Failure to meet commitments could result in forfeiture of bonds or allocation.
An ISMO representative explained that energy imbalances will be calculated hourly, with monthly settlements based on the marginal price per kilowatt-hour for each hour. Stakeholders raised concerns about the Use of System Charges (UoSC), citing double counting identified in 2023, as well as issues related to cost of service and stranded capacity, including grid reserve costs, reserve margins, and optimal components.
Some argued that only optimal component and grid reserve costs should apply, as other charges are already recovered under UoSC. Nepra representative Gul Hasan Bhutto submitted suggestions to clarify the auction process. Leghari stressed the importance of stakeholder input. “We are not imposing a top-down reform. We are building a collaborative framework where every voice matters,” he said, underscoring the government’s inclusive approach. The CTBCM, drawing on global best practices, aims to enhance transparency and efficiency, marking a shift from opaque private deals to open competition. Leghari concluded, “Together, we can ensure this reform delivers on its promise: a power sector that is efficient, transparent, competitive, and capable of fuelling Pakistan’s growth for decades to come.”
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