NEPRA advises against competitive market model

KARACHI: National Electric Power Regulatory Authority (NEPRA) has opposed the proposed competitive market model, as it is not based on the understanding of the ground realities in general and capacity levels of the stakeholders in particular, The News learnt on Monday.

“The transition from the existing regulatory regime to the competitive market may not be completed without national electricity policy and plan and supporting rules and guidelines, which are not yet available for stakeholders,” noted the power sector regulator in its recently issued flagship report.

The NEPRA in its report underlined the need to identify gaps in the existing working of the relevant departments and their ability to undertake any sort of potential market mechanism.

The regulator observed that any market model leading to centralisation of operations should not be considered. In this respect, a model which may be very rudimentary, but which promotes opening of the sector may be encouraged, it added.

Consistent with the objectives of the federal government, a market-based regime is foreseen for the power sector and Central Power Purchasing Agency (CPPA-G) through international consultants is currently working on proposals to develop competitive market model for the country.

Competition in the market is expected to provide essentially the choice of suppliers of electricity and to bring the overall cost of electricity down to affordable levels for the end-consumers.

“Different market models are followed successfully in different countries and we can learn a lot from the experience of other countries. One of the fundamental requirements before evaluating any of the models is to understand the ground realities and readiness of the stakeholders. A model being practiced with a high degree of success in another country may not necessarily prove a panacea for Pakistani market,” the report noted.

At the moment, according to the analysts, Pakistan’s power market is riddled with non-payments and cash flow issues, high losses, long-term generation contracts backed by government sovereign guarantees.