ISLAMABAD: Pakistan is poised to introduce a competitive electricity market, with teh government approving a pilot auction to buy and sell power through competition. The move, coupled with a new push for integrated energy planning, aims to dismantle fragmented decision-making within the country’s power sector.
A New Era for Pakistani Power: Competition and Coordination
The government’s approval of a competitive electricity auction and integrated energy planning signals a major shift in Pakistan’s approach to power management.
- The Cabinet Committee on Energy (CCoE) approved a framework for an 800-megawatt “wheeling” auction under the Competitive Trading Bilateral Contract Model (CTBCM).
- The auction will initially run for five years, with potential for expansion based on trial results.
- An indicative wheeling charge of Rs12.55 per unit has been proposed, sparking objections from industrial consumers.
- An 18-member steering committee will lead integrated energy planning, encompassing oil, gas, and electricity.
The CCoE on Wednesday endorsed framework guidelines for the auction of 800 megawatts of electricity under the CTBCM. Wheeling refers to the use of the national electricity grid to deliver power from a generator to a buyer; essentially, it’s using the existing grid infrastructure to transport electricity purchased directly between producers and consumers, with a fee paid for grid usage.
The meeting, led by Prime Minister Shehbaz Sharif, also decided to halt future public sector procurement of power generation capacity. A new 18-member steering committee, comprised of federal and provincial bureaucrats, will spearhead integrated energy planning.
What are the key benefits of the Competitive Trading Bilateral Contract Model? The CTBCM aims to introduce competition and efficiency into the electricity market, potentially lowering costs and improving supply reliability.
Timelines agreed upon with the International Monetary Fund (IMF) target the approval of these auction guidelines in December and the approval of uniform wheeling charges by Nepra in January 2026.
According to an official statement, the Special Investment Facilitation Council has advocated for an integrated energy plan through collaboration between federal and provincial authorities, operating under the Power Division of the Ministry of energy.”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,” the statement read, adding that approvals extended to the competitive bidding process and related aspects.
This includes authorization for the CTBCM framework concerning electricity auctions,and a commitment to cease entering into further electricity procurement agreements,effectively removing the government from direct electricity procurement activities.
The clearance for IEP governance by the Cabinet Committee on Energy will be followed by the notification of an IEP steering committee before the end of the month.The committee will then approve the IEP’s high-level design by February 2026, conduct model workshops nationwide by October 2026, and formally approve the National Integrated Energy Plan (NIEP) by April 2027.
The IEP steering committee, co-chaired by the power and petroleum ministers, will include nine federal secretaries, four provincial chief secretaries, and the chairpersons of Nepra, ogra, and Wapda. The committee will prioritize broad stakeholder participation, resolve inter-sectoral and jurisdictional issues, and align the IEP with national development goals, including net-zero transitions.
The Cabinet committee on Energy also directed the Power Division,through its Power Planning and Monitoring Company (PPMC),to develop and institutionalize an Energy Details System (EIS) to support data-driven decision-making,including the “IEP Ecosystem.” The EIS will encompass capacity building, governance improvements, monitoring, policy formulation, and integrated planning.
the NIEP is expected to adopt a cross-sector approach, encompassing oil, gas, coal, water, hydropower, minerals, natural resources, and renewables on the supply side, and residential, commercial, industrial, transport, and agricultural needs on the demand side. The plan will also integrate an artificial intelligence-based decision-support system to ensure data consistency across institutions.
