Govt will no longer buy electricity as power wheeling auction begins

First electricity wheeling auction begins

The federal government has invited Requests for Proposals (RFPs) for Pakistan’s first electricity wheeling auction under the Competitive Trading Bilateral Contract Market (CTBCM). The move is part of a shift from the traditional single-buyer system towards a competitive electricity market.

Federal Energy Minister Sardar Awais Ahmad Khan Leghari said the government is practically moving out of electricity purchases. He said the new system will allow electricity producers and consumers to deal directly with each other.

400MW offered in first phase

The first phase of the electricity wheeling auction will offer 400 megawatts (MW). The government plans to bring a total of 800MW into the competitive auction system over the next five years.

Under the new arrangement, businesses and industries will be able to purchase electricity from power plants on a competitive basis. Initially, the system will apply to industrial and other large consumers using more than 1MW.

Government to step away from direct purchases

"The government is practically exiting electricity purchases from today," Leghari said. He added that producers and consumers would be able to transact directly under the new market-based system.

"Nobody will have the right to sell electricity to the government, nor will the government be able to purchase it," he added. The minister said the change would gradually develop a broader electricity market where consumers could have more choice.

New system may expand to more consumers

Leghari said competitive electricity prices could help Pakistani industries remain competitive in international markets. He also linked the reform to stronger exports by allowing businesses to seek power through competitive arrangements.

The move follows the National Electric Power Regulatory Authority’s (NEPRA) work on open access and Use of System Charges under CTBCM. NEPRA records show that the regulator approved the wheeling auction process and later approved amendments to the framework in September.

The electricity wheeling auction marks a shift towards direct transactions between power producers and eligible consumers. The first 400MW phase will show how the new competitive system works for large electricity users.

The plan could gradually change how electricity is bought and sold in Pakistan. However, its wider impact will depend on participation, pricing and how the new market operates.

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