Wheeling: Power Division approves annual auction quantum for 800MW in 5 years

ISLAMABAD: The Power Division has reportedly approved an annual auction quantum of 800 megawatts (MW) of electricity through wheeling, to be conducted over the next five years, starting with an initial auction of 200 MW, well-informed sources told Business Recorder.

Under SD-87 of the National Electricity Plan and Rule 5 of the Supplier Rules, the federal government is required to issue guidelines for wheeling auctions of 800 MW. The federal government has now approved these guidelines.

Clause 5.1 (ii) of the guidelines stipulates that the Independent System and Market Operator (ISMO) must submit the auction process to Nepra for approval within seven days of the notification of the guidelines in the official gazette.

READ MORE: Electricity wheeling: PD readies auction process draft

To expedite the process, ISMO has already developed a draft auction process and initiated consultations with Nepra.

Multiple consultative meetings were held in December 2025. After considering discussions and written comments from Nepra, the draft auction process was finalised.

The draft auction process, inter alia, provides for: (i) an annual calendar;(ii) a step-wise procedure for conducting auctions; (iii) mode and manner for submission of proposals (in response to the RFP issued by the ISMO); (iv) the period during which the successful auction participants shall be required to start the transaction for a particular auction along with the requirements and limitations for extending such period; (v) method for allocation of the auction quantum in case of over under subscription; (vi) form and manner for submission of the bid bond and the performance guarantee by the auction participants, as applicable; (vii) composition of the Auction Committee; (viii) additional eligibility requirements for auction participants; (ix) post award obligations of auction participants; and (x) monitoring and facilitation of auction participants.

The draft auction process was presented to the Market Monitoring Committee (MMC) of the Board on January 19, 2026 and the MMC recommended that Board may approve the final draft auction process and allow the management to submit it to Nepra for approval.

Accordingly, clause 2.7 of the revised draft auction process states that “Power Division has approved the annual auction quantum for all auctions to be conducted under this process over the next year(s). Any revision in the approved annual auction quantum will require prior approval from the Power Division”.

In view of this, the proposed annual auction quantum for the first and subsequent wheeling auctions to be conducted over the next five years (aggregate: 800 MW) is as follows; (i) first auction 2026- 200 MW; (ii) 1st annual auction 2027- 150 MW; (iii) 2nd annual auction 2028- 150 MW; (iv) third annual auction 2029- 150 MW; and (v) 4th annual auction, 2030- 150 MW.

According to sources, the rationale of approved quantum is as follows: (i) for the first auction, the proposed quantum is considered to be sufficient to cater for the demand of the auction participants who have submitted the competitive supplier applications to Nepra. This quantum has also been deliberated in several meetings with the Power Division and during stakeholder consultations; and (ii) the remaining quantum of 600 MW is equally distributed across subsequent years.

However, this represents only the minimum quantum to be auctioned each year. Accordingly, as provided in clause 2.8 of the auction process, the ISMO may submit a request to the Power Division for enhancement of this quantum based on the demand of auction participants.

Copyright Business Recorder, 2026