Pakistan has taken a major step toward creating a competitive electricity market after the National Electric Power Regulatory Authority (NEPRA) determined the Use of System Charge.
The Ministry of Energy described the decision as an important development for the country’s power sector.
Federal Minister for Energy Sardar Awais Ahmad Khan Leghari welcomed the decision and said it marks a major milestone in electricity market reforms.
According to the minister, determining the Use of System Charge was the final major regulatory requirement for the Competitive Trading Bilateral Contract Market (CTBCM) auction.
The decision now clears the way for the auction process to move forward.
Industrial Consumers to Choose Their Power Suppliers
Under the proposed competitive electricity market, eligible industrial consumers will be able to purchase electricity directly from suppliers of their choice.
They will no longer have to rely solely on the existing single-buyer model.
Industrial consumers will be able to enter into bilateral agreements with electricity suppliers. This is expected to introduce greater competition into the power market.
The government believes competition among suppliers could improve efficiency in electricity generation and potentially provide better prices for industrial consumers.
The new arrangement is also expected to encourage suppliers to compete on cost and service, giving eligible consumers greater flexibility in sourcing electricity.
Government Eyes Cheaper and More Efficient Power Generation
Leghari said the competitive market could improve the utilisation of existing power plants and reduce inefficiencies across the electricity supply chain.
The government also expects the new system to encourage greater use of renewable energy and battery storage.
According to the minister, the market could help Pakistan make better use of cheaper domestic energy resources.
It may also reduce dependence on expensive imported fuels by encouraging more efficient and cost-effective electricity generation.
The reforms are intended to create a more flexible electricity market where consumers and suppliers can negotiate power purchases through bilateral arrangements.
NEPRA Decision Clears Path for Market Reform
The Use of System Charge provides the regulatory framework required for eligible industrial consumers to access electricity directly from suppliers.
Leghari described NEPRA’s determination as a major structural change for Pakistan’s electricity market.
The decision represents an important step toward implementing the CTBCM auction and moving Pakistan away from a traditional single-buyer electricity structure.
The government expects the competitive market to improve power-sector efficiency, promote investment in alternative energy sources and create greater opportunities for industrial consumers to choose cost-effective electricity supplies.
