Pakistan has taken its biggest step yet toward ending decades of state-controlled electricity procurement, with the launch of a competitive power market that lets large industrial consumers buy electricity directly from suppliers rather than through the national grid’s single-buyer system.
The Power Division issued a request for proposal this week for the first wheeling auction under the Competitive Trading Bilateral Contract Market, or CTBCM. The auction covers 400 megawatts, part of a planned 800 megawatts to be opened up over the next five years.
What changes for industry
Under the current system, the government buys almost all electricity generated in the country and resells it to consumers through distribution companies at centrally set tariffs. The new framework lets eligible industrial and large commercial consumers negotiate power purchases directly with generation companies, paying only a wheeling charge to use the national grid.
Energy Minister Awais Leghari said the government was “practically moving out of electricity procurement,” according to the Express Tribune, adding that producers and consumers would now “directly buy and sell power among themselves.”
He said the system would be “based on transparency” and would initially apply to industrial and large consumers before eventually expanding to smaller ones.
The initial phase sets a minimum consumption threshold of one megawatt for participating consumers, meaning the change first reaches heavy industrial users such as textile mills, cement plants and steel manufacturers, before any wider rollout.
The regulatory groundwork
The auction became possible after the National Electric Power Regulatory Authority, or Nepra, approved uniform use-of-system charges covering transmission, distribution, grid fees and cross-subsidies. According to Dawn, the approved charges range from roughly Rs6.23 per unit for some industrial categories to nearly Rs20 per unit for others, depending on consumer class and voltage level.
Consumers who choose not to participate in the competitive auctions will continue paying standard distribution company rates, which Nepra has set considerably higher for that group, an incentive built into the framework to encourage uptake.
More than 3,000 bulk power consumers currently operate across Pakistan’s distribution network, giving the new market a substantial pool of potential early participants once the first auction concludes.
Why it matters
Pakistan’s power sector has struggled for years with circular debt, expensive imported fuel and idle generation capacity that consumers still pay for through capacity charges. Wire Examiner previously reported on Nepra’s decision to raise electricity tariffs by Rs2.58 per unit for September, part of a pattern of rising costs that has squeezed both households and industry.
Officials argue that direct bilateral contracts will pressure generation companies to compete on price and efficiency rather than relying on guaranteed government offtake agreements. That, in theory, should lower costs for industrial buyers and make Pakistani exports more competitive at a time when the textile and manufacturing sectors have repeatedly cited high energy costs as a drag on international orders.
The reform also marks a structural shift long recommended by international lenders, including the International Monetary Fund, which has pushed Islamabad to unwind the single-buyer model and reduce the government’s direct financial exposure to the power sector.
Whether the shift delivers lower bills in practice will depend on how many generation companies participate and how competitive the first 400 megawatt auction proves to be. The Independent System Market Operator is expected to run that auction within the coming months, with pricing arrangements fixed for an initial one-year term.
For now, the announcement gives Pakistan’s government a rare piece of good economic news to point to, even as consumers elsewhere in the system continue to absorb higher monthly bills.
