Govt begins to move out of power business

ISLAMABAD: The government has taken a major step towards transforming Pakistan’s power sector from a single-buyer model to a competitive electricity market, under which it would neither sell electricity nor purchase power from producers in the traditional manner.

Federal Minister for Power Sardar Awais Ahmad Khan Leghari made this announcement in a video message on Sunday. He said that under the new system, the government would neither have the right to sell electricity nor purchase electricity from power producers in the traditional manner.

The Minister said the system would initially be implemented for industrial and large consumers, particularly those consuming more than one megawatt.

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He said that under the Competitive Trading Bilateral Contract Market (CTBCM) mechanism, businesses and industrial consumers will be able to purchase electricity directly from power producers on a competitive basis.

He said those who generate electricity and those who consume it will be able to buy and sell electricity directly. He said that the electricity trading mechanism would be based on transparency and competition.

The Minister highlighted that the government currently purchases electricity under a centralized system and supplies it to consumers. Now the government is practically moving out of electricity procurement from today, he said.

“The government is practically moving out of electricity procurement from today,” the minister said.

He said that a major step has been taken towards transforming Pakistan’s power sector from a single-buyer model to a competitive electricity market, with the Power Division issuing a Request for Proposals (RFP) for the country’s first-ever electricity wheeling auction.

He said the competitive electricity market would gradually expand and, in the coming years, develop into a broader power market where consumers would have greater choice in purchasing electricity.

The Minister expressed the hope that availability of electricity at competitive rates would enable Pakistani industries to remain competitive in international markets and enhance their capacity to export products.

He said that the Power Division has sought proposals for Pakistan’s first-ever electricity wheeling auction.

The Minister said that under the Competitive Trading Bilateral Contract Market mechanism, businesses and industrial consumers would be able to purchase electricity directly from power producers on a competitive basis.

“The Power Division has invited proposals from interested entities for the auction, under which 800 megawatts of electricity are planned to be auctioned over the next five years. In the first phase, 400 megawatts of electricity will be offered for competitive procurement,” he said.

Referring to the power sector’s past procurement arrangements, the minister said the term Independent Power Producers (IPPs) had become controversial in public discourse, adding that the new competitive mechanism would bring greater transparency to electricity procurement and trading.

About the auction process, the Minister said that the auction would follow a structured five-step process: (i) Issuance of auction documents, (ii) Evaluation of eligibility, (iii) Evaluation of bids, (iv) Approval of auction results, and (v) Award of quantum.

He said that the first Wheeling Auction is the first practical step in this direction, enabling electricity producers and large consumers to buy and sell electricity directly through a transparent mechanism.

He said that access to relatively cheaper electricity on a competitive basis will provide industry with opportunities to reduce production costs, enhance competitiveness in international markets and increase exports.

The Federal Minister said that the issuance of the RFP is an important step towards establishing a transparent and credible Wheeling Auction process. Every stage, from evaluation of eligibility to the award of quantum, has been clearly defined, and the entire process will be conducted through a dedicated auction platform.

In line with the Federal Minister’s directions, the Independent System and Market Operator (ISMO) has invited all eligible participants to actively participate in the process and will support them at every stage through guidance materials and other supporting resources. On the Federal Minister’s direction, ISMO will also release a series of explainer videos to facilitate participants in understanding the auction procedure, proposal submission requirements and use of the auction platform.

He said that the RFP sets out the eligibility criteria, proposal submission requirements, prescribed formats, auction procedure and complete timeline. “Interested eligible participants are encouraged to review the RFP carefully and submit complete proposals within the stipulated deadline,” he said.

He said that the RFP and associated documents are available on ISMO’s website at www.ismo.gov.pk. He said that queries or requests for clarification may be directed to [email protected].

Copyright Business Recorder, 2026