Wholesale power sector to be competitive by April 2022

ISLAMABAD: In a landmark decision, the National Electric Power Regulatory Authority (Nepra) has approved a detailed design and 18-month implementation plan of Competitive Trading Bilateral Contract Market (CTBCM) to make the wholesale electricity market competitive with multiple buyers and sellers.

This regime will achieve its Commercial Operation Date (COD) in April 2022, earlier its COD was in November 2021. Once it achieves COD, there will be multiple buyers and sellers and they will be free to make their independent sale-purchase agreements. Currently, the government is the sole buyer of power. This will make the wholesale electricity market competitive.

This reform plan entails actions ranging from institutional strengthening to augmenting legal and regulatory frameworks. Interventions covering people, processes and technological aspects will provide non-discriminatory open access to all market players.

The main aim behind embarking upon the power sector’s massive unbundling was to transform the industry into functionally more efficient entities through introducing competition in the market and CTBCM will finally help accomplish this critical goal. It will initially cater to the wholesale market but will eventually pave the way for progressive opening up of the retail sector as well as trading with the regional markets.

Moreover, it will usher a new era of transparency, predictability and credibility whereby electricity shall be traded like any other commodity. CTBCM has the potential to turn around the overall technical, financial, commercial and legal climate resulting in much-needed improvements in the overall governance of the wholesale market. CTBCM will provide large consumers with the much-needed options to actively trade electricity founded on competitive market-based principles.

This eventual systemic improvement in the wholesale market will consequently have the trickle-down effect, for other consumers, resulting in more competitive prices in the days to come. CTBCM will also contribute to improving the security of supply, enhancing efficiency, amplifying payment discipline in the wholesale market operations and advancing conditions to move away from the historical sovereign guarantees-based regime.

NEPRA will keep a rigorous monitoring check on CTBCM implementation to ensure its timely and effective implementation for achieving the desired results of affordability, reliability and sustainability of power services in Pakistan.