CTBCM implementation: Likely exit of Discos' good consumers worries Waqar

ISLAMABAD: Special Assistant to Prime Minister on Revenue, Dr Waqar Masood has expressed concern over the possibility that good consumers of power Distribution Companies (Discos) may exit after implementation of Competitive Trading Bilateral Contract Market (CTBCM) due to which companies will not be able to compete, well-informed sources told Business Recorder.

On January, 14, 2021, The Power Division informed the CCoE that the ECC in its decision dated April 30, 2015 mandated Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) to prepare a comprehensive CTBCM design and plan for transition of the power market. Consequently, CPPA-G in consultation with the stakeholders prepared the detailed design of the CTBCM model and implementation plan. The same was approved by Nepra on November 12, 2020. The CTBCM model was also discussed in a meeting of the CCoE on April 20, 2020.

During the meeting, SAPM on Petroleum raised certain queries. Consequently, CCoE constituted a committee led by Minister for Power Division to review the model in light of the queries. Several meetings were held to achieve consensus and design. The detailed design and plan of CTBCM provided a complete framework that entail interventions to achieve the objectives of competitive, wholesale market. The meeting was apprised about objectives and principles for establishing competitive wholesale market in the country. It was stated that the Prime Minister directives dated 16th September 2020 stipulated 12 months' timeline. NEPRA however, had approved an implementation plan with a timeframe of 18 months. Considering the requirement of fast-track implementation, CPPA-G in consultation with stakeholders, plans to achieve Commercial Operation Date (COD) by Feb 2022 with expected completion timeline of 15 months. This included three months reserved as float or cushion to cater for any possible delays. The 15-month plan covering the major milestones along with timelines has been prepared.

Power Division requested the CCoE for approval of principles for establishing competitive wholesale market, essential design features of CTBCM and timelines for its implementation.

The CCoE held threadbare discussion on CTBCM and observed that it was going in the right direction - towards restructuring of power sector. Had it been adopted six to seven years earlier the huge circular debt would not have piled up. This initiative would provide a broader choice to power consumers (mainly industries and commercial units) to procure power from multiple power sellers.

The meeting was apprised about global trends from wholesale to retail market openings. It was stated that as per international best practices, approach was to open the wholesale market first and stabilize it as planned under CTBCM and then gradually open the retail market for the aggregators of demand to procure from wholesale market and sell it to end consumers.

It was further stated that other countries like Brazil, India, UK and Turkey took 10 years to reach towards full retail competition. The meeting was also informed that initially the initiatives would focus on the consumers of one MW and above (approximately 16 % of the power consumers in the country).

The SAPM stated that while introduction of said reform in the power sector was indeed a welcoming initiative however, it may also be kept in mind that in case of exit of the compliant/good consumers from Discos, they might not be able to compete.

In response it was pointed out that Discos are already on the privatization list. Moreover, it was need of the hour to make power a saleable commodity, which will ultimately reduce public expenditure in the power sector.

Copyright Business Recorder, 2021