A market in name only

EDITORIAL: The Power Division’s latest invitation for stakeholder comments on the long-touted Competitive Trading Bilateral Contract Market (CTBCM) would be laughable, were the state of Pakistan’s power sector not so dire. For years, the same reforms have been announced, reannounced, and endlessly recycled through public consultations and draft directives.

Now, yet again, the country is being told that competitive electricity trading is just around the corner — with a token 800MW to kick-start liberalisation. The irony is staggering. In a sector drowning in circular debt, inefficiencies, and wilful defaulters, this obsession with process over outcome has become a cruel joke.

The National Electricity Plan (NEP) 2023–27 was never going to be a silver bullet. But when some of its key directives, like #87, are being reworded not to enable reform, but to better structure cost recovery for legacy failures, the intent becomes transparent: this isn’t liberalisation; it’s rearranging the furniture while the house burns. The Power Division’s proposed amendment now seeks comments on how to allocate stranded costs — the inevitable fallout of prior bad planning — onto new market participants. This, at a time when the International Monetary Fund is pressing for efficiency in distribution companies, not further bureaucratic entanglements.

Why is this model, already discussed to death, being thrown back into public consultation? What more is there to extract from stakeholders who, in many cases, are the very reason the sector is where it is today? The answer lies in a systemic addiction to appearances. These consultations serve primarily to project the illusion of progress, of inclusion, of reform through consensus. But consensus with whom? Several of these “stakeholders” are themselves serial defaulters, culprits behind the power sector’s financial rot, and habitual opponents of reform whenever it threatens their rent-seeking arrangements.

The circular debt continues to spiral, now breaching Rs2.4 trillion, while technical losses remain high and recovery ratios pitiful. Despite all the planning documents, task forces, and workshops, the fundamentals refuse to improve. This should prompt a reckoning with the assumptions underpinning the CTBCM itself. Instead, we get redrafted directives and a fresh round of comments — this time with a five-year window for liberalisation and complex caveats for cost recovery, hedging, and hybrid sourcing. Meanwhile, the market stays inert, confidence erodes, and industrial consumers remain hostage to poor governance and predatory pricing.

The Power Division’s new language emphasises “balancing financial viability, affordability, and competition.” These are admirable goals, but impossible to achieve in a sector where the price of electricity includes embedded costs for idle capacity contracted under take-or-pay agreements, pilferage, bloated payrolls, and cross-subsidies. Penalising new entrants into the market by saddling them with stranded costs is not liberalization — it’s a deterrent. It creates disincentives for investment, distorts price signals, and entrenches the worst aspects of the current system under the guise of reform.

The concerns raised by the Korangi Association of Trade and Industry (KATI) are therefore not incidental. They strike at the core contradiction of the CTBCM process: a competitive market cannot function when its rules are retrofitted to protect incumbents. Making new entrants shoulder the costs of past mismanagement — particularly when they had no hand in creating it — undermines the very purpose of transitioning to open access. It’s little surprise that the private sector remains wary of participation, and even less surprising that reform fatigue has set in.

What’s even more worrying is the Power Division’s willingness to caveat reforms with broad exemptions, conditionalities, and budget-dependent subsidies that render the new model barely distinguishable from the old. If open access is contingent on fiscal space, third-party consultants, and future frameworks yet to be written, then it is neither open nor accessible. It’s policy theatre.

Pakistan’s power sector does not need more discussions. It needs decisions — backed by enforcement. It needs accountability for the billions in capacity payments, theft, and non-recovery. And it needs a clear break from the model of state-managed dysfunction dressed up as market reform. Until that happens, the CTBCM — however well-packaged — will remain a market in name only.

Copyright Business Recorder, 2025