Pakistan intends to finalize its first 200-megawatt electricity transaction through a competitive wheeling auction by June. Federal Minister for Power Sardar Awais Ahmed Khan Leghari announced the move during a recent ceremony in Islamabad. He confirmed that the ministry forwarded a summary to the Prime Minister for formal approval under the newly operational Competitive Market Operations Date regime.
Transitioning to Open Market Trading
This initiative marks a significant departure from the traditional single-buyer model that has governed the energy sector for decades. Under the proposed framework, the Independent System and Market Operator will manage the auction process. The government plans to auction a total of 800 megawatts through wheeling during the current year. This shift allows large power consumers to negotiate direct supply agreements with power plants instead of relying on state-controlled purchasing.
Furthermore, the wheeling framework simplifies the financial obligations for industrial users. Consumers will only pay a network usage fee to government-owned transmission and distribution companies to utilize the existing grid infrastructure. Minister Leghari described the launch as a major milestone, noting that while officials conceptualized these reforms in the early 1990s, structural delays hindered progress until now.
Driving Efficiency through Competition
Regulatory bodies are currently finalizing the specific wheeling charges to ensure transparency for all participants. The minister expressed confidence that auction-based transactions will proceed after April, leading to the successful completion of the initial 200-megawatt deal by the end of June. Consequently, the government hopes to promote competitive bilateral contracts that optimize costs and improve overall efficiency across the national power sector.
Officials expect this transition to transform the market into a more open and market-driven structure. By fostering competition, the state aims to reduce the burden on the national treasury while providing more reliable options for high-demand industries.
