ISLAMABAD: Pakistan has taken a major step towards shifting its power sector from a single-buyer model to a competitive electricity market, with the Power Division inviting proposals for the country’s first electricity wheeling auction.
The Power Division has issued a Request for Proposals (RFP) for the auction under the Competitive Trading Bilateral Contract Market (CTBCM) framework.
Under the new mechanism, businesses and industrial consumers will be able to purchase electricity directly from power producers on a competitive basis, marking a significant shift in the way electricity is bought and sold in the country.
According to the plan, around 800 megawatts of electricity will be auctioned over the next five years, with 400MW being offered in the first auction.
Federal Minister for Energy Sardar Awais Ahmad Khan Leghari welcomed the launch of the auction process, congratulating Prime Minister Shehbaz Sharif and the nation on the development.
Addressing the occasion, Leghari said the government currently purchases electricity under a centralised system and supplies it to consumers, adding that questions had frequently been raised over the terms and conditions governing power procurement.
He said the new system would gradually take the government out of the electricity purchasing process.
“From today, the government is practically stepping out of electricity procurement,” the minister said, adding that neither the government would be compelled to purchase electricity nor would power producers have the right to force the government to buy their electricity.
Under the competitive framework, electricity producers and consumers would be able to enter into transactions directly, while the buying and selling process would be based on greater transparency.
Leghari said the new mechanism would initially be introduced for industrial and large electricity consumers, particularly those using more than one megawatt.
He said the country would gradually develop a proper electricity market in the coming years, allowing consumers greater choice in selecting their electricity suppliers.
“Eventually, even an ordinary consumer will be able to choose where to purchase electricity from,” the minister said.
He added that under the new arrangement, the government would no longer be able to purchase electricity and sell it to consumers at rates determined solely by the government.
According to Leghari, access to competitively priced electricity would help Pakistani industries remain competitive in international markets and enable them to increase exports.
The minister said the government was fulfilling the commitments it had made regarding reforms in the power sector and congratulated Prime Minister Shehbaz Sharif and the people of Pakistan on the launch of the new competitive electricity trading mechanism.
