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CTBCM: Commercial operations may begin by Sept-end
ISLAMABAD: The Power Division has assured representatives of nearly a dozen development partners that commercial market operations of the Competitive Trading Bilateral Contract Market (CTBCM) are expected to begin by the end of September 2025.
This development will enable bulk power consumers (BPCs) — those with demand of 1 MW and above — to procure electricity through independent bilateral contracts with competitive suppliers, sources told Business Recorder.
According to the Power Division, the framework for viable open access charges (wheeling) and a transparent process for the allocation of wheeling quantum is at an advanced stage of finalization. The operationalisation of the Independent System & Market Operator (ISMO) will play a key role in facilitating CTBCM implementation.
Electricity market under CTBCM: Power Div invites comments from stakeholders
During a meeting with development partners, the following key issues were discussed: (i) updates on power sector reforms; (ii) proposed industrial and agriculture package, pricing reforms, and grid capacity/utilization strategy ; and (iii) distribution sector reforms, including private sector participation, investment readiness, and future action plans
The Power Division informed participants that capacity costs—denominated in USD—have surged from Rs 11.1/kWh to Rs 18.8/kWh, primarily due to the depreciation of the Pakistani Rupee. However, fuel costs have remained stable due to the addition of lower-cost generation capacity. The government emphasized that de-linking capacity costs from currency depreciation and increasing reliance on indigenous energy sources are critical to long-term sustainability.
Electricity tariffs remain inflated due to extraneous taxes and duties, increasing the financial burden on end-users. The growing circular debt is attributed to both inefficiencies in the power sector and suboptimal debt pricing. Inefficient pricing has increased debt servicing costs, further burdening consumers and dampening demand. A structured roadmap to reduce circular debt is currently under development.
The government recently launched the 'Bijli Sahulat package' for winter months, offering electricity at marginal cost plus a nominal margin. Another similar mechanism, based on marginal pricing, is being evaluated for industrial consumers to incentivize incremental grid usage through a subsidy-neutral framework. This initiative is expected to stimulate industrial and overall economic growth.
Nepra has determined total fixed charges at Rs 2.505 trillion based on 106 billion units. A 5–10% drop in demand does not significantly reduce these charges due to their fixed nature, underscoring the importance of increasing consumption to improve cost recovery.
To stimulate demand, a three-year package (March 2025–December 2027) has been proposed for industrial and agricultural sectors. It projects an increase of 3,745 MW in demand between March–June 2025, 10,720 MW in 2026, and 11,018 MW in 2027. The package offers a rate of Rs 22.98 per unit, yielding a Rs 10.50/unit saving for industrial users (from Rs 33.48) and Rs 7.77/unit for agricultural users (from Rs 30.75). The unified rate for both sectors is proposed at Rs 22 per unit.
On broader power sector reforms, the Power Division noted that, for the first time in years, the government is actively pursuing long-term generation and transmission planning. A 10-year forward-looking plan is being developed to align generation with projected demand and reduce reliance on costly peaking plants.
The government highlighted the need for improved data utilization and performance tracking through tools such as SCADA and AMI, to support predictive and transparent operations.
The proposed package is based on marginal cost pricing for incremental consumption, while ensuring fixed cost recovery through base tariffs. The World Bank emphasized the need for a clear sunset clause (e.g., a 3-year limit with annual reviews), transparent marginal cost tracking, and avoidance of regressive subsidies. It also suggested incentives for off-peak and solar-hour industrial consumption.
Power Division further shared that transmission projects are underway to increase northward evacuation capacity by 2,000 MW over the next 3–4 years. Development partners stressed the urgency of fast-tracking grid investments to meet the anticipated 25% industrial demand growth. Several projects currently stalled at planning or early implementation stages were flagged, with calls to resolve legacy design and execution bottlenecks.
The rollout of 35 million AMI (Advanced Metering Infrastructure) meters and effective big data utilization will require change management and enhanced digital literacy within DISCOs.
The newly licensed ISMO is preparing to commence operations by September 2025, enabling market-based trading. A phased market opening will begin with the establishment of wheeling charges and regulatory frameworks.
The Energy Infrastructure Development and Management Company (EIDMC) will assume responsibility for planning and executing PSDP-funded transmission projects by FY26/27. Board approvals are in process, and CEO recruitment is expected by year-end. ISMO—formed by integrating technical teams from NTDC and CPPA-G—is now operationally structured and will manage market operations following its separation from NTDC.
Development partners underscored the need for pricing predictability over the next 3–5 years, advocating for technology-neutral support policies, and cautioning against price discrimination that protects inefficient domestic industries. They also recommended: (i) finalize and publish wheeling charges and market rules by September; (ii) tracking and publishing marginal generation costs under the proposed package; (iii) accelerate implementation of key grid and metering infrastructure; and (iv) launching a structured dialogue with industry to co-develop a roadmap for energy policy and investment predictability.
Copyright Business Recorder, 2025
