Competitive electricity market: Financial, technical readiness aspects discussed
The event brought together senior government representatives, legislators, regulatory bodies, development partners, and power sector experts to chart a path forward for implementing the long-delayed market reform under the head of the Competitive Trading Bilateral Contracts Market (CTBCM).
The CTBCM reform has already been approved by the Economic Coordination Committee (ECC) and NEPRA, followed by six-month test run by CPPA. However, its commercial operation has not been operationalised to date.
During the event, stakeholders expressed concern that the power sector of Pakistan remains entrenched in a single-buyer model, with CPPA-G as the sole purchaser and DISCOs holding exclusive distribution licences. This structure has led to escalating capacity payments, underutilized generation assets, and suppressed private sector participation.
Ramsha Panhwar, Energy Analyst at Renewables First, presented a critical overview of one of the most debated aspects of the CTBCM regime: the Use of System Charge (UoSC). She pointed out that the market has remained uncompetitive primarily because these charges have not been rationalized, making them unaffordable and excessively high for market participants.
'The UoSC is a central pillar of the CTBCM regime, determining how market participants pay for access to the transmission and distribution networks. However, more than 80 percent of the proposed UoSC comprise of stranded costs and cross-subsidy which exacerbates the overall power tariff. It directly affects the economics of open access and competitive supply,' said Panhwar. 'Rethinking the UoSC with a planned and phased recovery of stranded costs reduces the overall UoSC, making it attractive and affordable for the market participants.'
Salman Amin, Member the Competition Commission of Pakistan, highlighted the importance of free and fair competition in any sector and emphasized that Pakistan's electricity sector must transition from a monopoly to a competitive regime. With competition, a level playing field is provided, efficiency improves, and commodities become cheaper.
Omar Haroon from CPPA informed the participants that the establishment of an Independent System and Market operator (ISMO) is almost complete, and the launch of wholesale electricity is expected within a few months. He also mentioned that with the launch of this reform, the market size of CTBCM participants is expected to grow.
Former Chairman Nepra, Tauseef Farooqi mentioned that the timely launch of a wholesale electricity market is intricately linked with Pakistan's economy and investors are banking on the launch of a wholesale electricity market.
Experts from NTDC emphasized the need to increase investments in ancillary services to ensure sustainable grid operations in view of increasing renewable energy penetration. Omer Haroon emphasized the need for alignment of pricing signals for renewable energy, something which is missing from the current net metering policy. However, CTBCM ensures a competitive pricing mechanism.
Renewables First also announced the launch of Competitive Electricity Market Alliance (CEMA) as a platform for policy makers, industrialists, and experts to come together in support of a free and fair competitive electricity market. The goal of this alliance is to provide necessary resources to ensure success of a competitive regime and to help shape a competitive and sustainable energy future for Pakistan.
Copyright Business Recorder, 2025
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