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ISLAMABAD: The Cabinet Committee on Energy (CCoE) gave approval to a detailed design and implementation plan of the Competitive Trading Bilateral Contract Market (CTBCM) to make the competitive Wholesale Electricity Market (WEM) operational in Pakistan by April 2022.

A meeting of the CCoE was held under the chairmanship of Federal Minister for Planning, Development, and Special Initiatives Asad Umar, here in Islamabad on Thursday.

The Power Division presented the design of Competitive Trading Bilateral Contract Market (CTBCM) for consideration and review of the CCoE.

The Division also apprised the committee of its implementation plan.

The Power Division briefed the committee that in the first phase, the consumers with a load of 1MW or above will participate in the competitive market.

These consumers represent around 16 percent of the total electricity sales.

More consumers will be added to the market subsequently once the market stabilizes and matures.

According to sources, the government will achieve its Commercial Operation Date (COD) in April 2022; earlier, its COD was in November 2021.

Once it achieves the COD, there will be multiple buyers and sellers and they will be free to make their independent sale-purchase agreements.

Currently, the government is the sole buyer of power.

This will make the wholesale electricity market competitive, they said.

Moreover, it will usher in a new era of transparency, predictability and credibility whereby electricity shall be traded like any other commodity.

The CTBCM will provide large consumers with the much-needed options to actively trade electricity founded on competitive market-based principles.

The sources said that the Power Division also told the Committee that the payment mechanism to the independent power producers (IPPs) has been finalised.

However, Finance Minister Dr Abdul Hafeez Shaikh had last week offered payment of about Rs450 billion to the IPPs in three equal (one-third of total) installments through a combination of cash and tradeable bonds next month, June and December 2021.

Each installment was to comprise a one-third (about Rs50bn) in cash and two-thirds (about Rs100bn) in bonds.

The sources said the Power Division also told the Committee that the MoUs signed by the IPPs (Solar and Bagasse) have been converted into agreements.

They said that the issues relating to the power sector with Balochistan, Azad Jammu and Kashmir (AJK) and K-Electric have been resolved.

The MoUs signed by four dozen IPPs, including thermal, wind, solar and bagasse, required upfront payments (about Rs425bn) stuck in about Rs2.3 trillion circular debt. The IPPs receivables against the government entities as of June 2020 are estimated at about Rs1.15tr.

The Power Division also updated the committee on implementation of the circular debt reduction plan.

The committee reviewed the implementation status and directed the Power Ministry to conclude the open items, and submit formal proposals to the ECC for decision.

The meeting was attended by Minister for Energy Omar Ayub Khan, Federal Minister for Information and Broadcasting Shibli Faraz, Interior Minister Sheikh Rashid Ahmed, Advisor to Prime Minister on Finance Abdul Hafeez Sheikh, SAPM on Petroleum Nadeem Babar, Abdul Razak Dawood Adviser to the Prime Minister on Commerce and Investment, and official of various divisions.

Copyright Business Recorder, 2021