Pakistan has launched its first electricity wheeling auction. The federal government has invited Requests for Proposals (RFPs) for 400 megawatts (MW) of electricity under the Competitive Trading Bilateral Contract Market (CTBCM).
Federal Minister for Energy Sardar Awais Ahmad Khan Leghari announced the new system would allow eligible electricity producers and consumers to deal directly with each other instead of relying only on the government purchasing system.
How the new electricity market will work?
Businesses and industrial consumers will be able to purchase electricity directly from power producers through competitive agreements.
The first phase will offer 400MW through the wheeling auction. The government plans to expand the capacity offered through auctions to 800MW over the next five years, according to the minister.
The system will mainly be available to large consumers. Those with electricity demand of 1MW or more will be eligible to participate. NEPRA’s CTBCM framework was designed to give these consumers the option to obtain electricity from competitive suppliers rather than relying solely on their distribution companies.
Wheeling allows electricity bought from a producer to be delivered to a consumer through the existing transmission and distribution network.
Government described this as the final major regulatory requirement before the first CTBCM auction could proceed.
Leghari said the aim is to gradually move Pakistan away from its traditional centralised electricity purchasing model.
Government targets competitive electricity prices
The government says greater competition could help industries obtain electricity at more competitive rates. It expects this to lower business costs, improve the competitiveness of Pakistani products and support exports. These are the government’s stated objectives for the reform.
The new framework may also create more opportunities for renewable energy and battery storage providers to participate in the electricity market.
However, direct purchasing does not automatically guarantee cheaper electricity. Businesses will still need to consider the negotiated electricity price, grid charges and other applicable costs when comparing offers.
