Stakeholders push for swift implementation of competitive power market

KARACHI: Leading stakeholders from Pakistan’s energy and policy landscape convened at a high-level multi-stakeholder dialogue hosted by Renewables First, Pakistan’s think tank for energy and environment, on Wednesday in Islamabad to assess the financial and technical readiness for operationalising a competitive electricity market.

The event brought together senior government officials, legislators, regulators, development partners and power sector experts to chart a course for implementing the long-delayed competitive trading bilateral contracts market (CTBCM) reform.

The CTBCM, already approved by the Economic Coordination Committee and the National Electric Power Regulatory Authority (Nepra), and piloted through a six-month test run by CPPA, has yet to commence commercial operations. Participants expressed concern that the power sector remains locked in a single-buyer model, where CPPA-G acts as the sole purchaser and Discos hold exclusive distribution licences. This setup has contributed to rising capacity payments, underutilised generation capacity and limited private sector participation. Ramsha Panhwar, energy analyst at Renewables First, offered a critical analysis of one of the most contentious components of the CTBCM framework: the Use of System Charge (UoSC). She noted that irrational and excessive charges have hindered market competitiveness.

“The UoSC is fundamental to the CTBCM framework, dictating how participants pay for access to the grid. Over 80 per cent of the proposed charges comprise stranded costs and cross-subsidies, which inflate overall tariffs and undermine open access,” she said. “A phased and planned recovery of these stranded costs could significantly lower UoSC and make the market more viable.”

Member of the Competition Commission of Pakistan Salman Amin stressed the necessity of open competition across all sectors, adding that electricity must move away from monopolistic practices. “Competition ensures a level playing field, improves efficiency and lowers prices,” he said.

Industry representatives also reiterated their willingness to engage in a competitive market, cautioning that prolonged delays could prompt industrial consumers to exit the grid in search of cheaper power alternatives. “Consider the industry your business partner and treat us fairly,” one industrialist urged.

Omar Haroon from the Central Power Purchasing Agency (CPPA) revealed that the establishment of an independent system and market operator (ISMO) is nearing completion, with the launch of wholesale electricity trading expected in the coming months. He added that the market size under the CTBCM is poised for expansion.

Former Nepra Chairperson Tauseef Farooqi underlined the importance of timely implementation, noting that investors are closely watching the launch of the wholesale market due to its deep links with Pakistan’s economic stability.

Experts from NTDC emphasised the need for greater investment in ancillary services to ensure grid stability amid rising renewable energy penetration. Haroon also called for aligned pricing signals for renewable energy, an element currently missing from Pakistan’s net metering policy but addressed under the CTBCM’s competitive pricing model. Renewables First announced the formation of the Competitive Electricity Market Alliance (CEMA), a new platform for policymakers, industrialists and experts to collaborate in supporting a transparent and inclusive electricity market. The alliance aims to provide resources and advocacy to ensure the reform’s long-term success.

Speakers also explored the CTBCM’s potential contributions to broader economic and social goals -- including enhancing industrial competitiveness, promoting distributed energy solutions such as rooftop solar and virtual power plants, and increasing access for historically underserved communities.