Load shedding is back with a bang with the regulator, Nepra taking notice of the frequent power cuts in various cities around the country. Five years down and with billions of dollars invested in the power system, a fundamental shift is needed in the entire power system model in the country to make it operationally and financially viable.
The move to a competitive trading bilateral contract market (CTBCM) is a good start towards a shift in the current model. Doing away with inflexible long term PPAs structured as take-or-pay contracts and encouraging competition in new capacity procurement opportunities are some of the objectives presented in the Central Power Purchase Agency’s (CPPA) CTBCM plan presented to Nepra for stakeholder input.
Last week we talked about the merits and objectives of the plan. Now let’s take a look at the roadmap. According to the project document, the first step which is the sharing of the CTBCM with Nepra has been done in May this year. This will be followed by stakeholder and public consultations and approval by the regulator.
The next step would be to make the necessary amendments to the legal framework, which will mean modifying the Nepra Act to incorporate the approved market development policy. However, as this could be a time consuming process, the plan notes that the market could possibly start in a transitory mode before enactment of amendments is completed.
This will be followed by the Ministry of Water and Power (MoWP) modifying and replacing the relevant power policies such as generation and transmission policies to comply with the market development policy.
Then comes the modifications to the power sector regulatory framework and assignment of pre-existing power purchase agreements done by CPPA among the DISCOs. After these steps, the CPPA will then be able to be separated into a Market Operator and Special Wholesale Supplier Business Unit. However, this is only the sixth milestone in a roadmap comprising of seventeen steps. Stakeholders are encouraged to read the plan available in its entirety on the Nepra website.
While at least things have started moving somewhat, one should not expect the move to competitive electricity market in the next several years. However, this is the right direction to move in considering many regional peers including India and Turkey are already utilising a market based electricity model. The next government should focus on getting the necessary amendments to the Nepra Act through the Assembly as a priority.
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