KARACHI: In a major step toward liberalising its power sector, Pakistan is set to hold its first-ever auction to sell electricity at a competitive price to bulk consumers by November this year under the newly introduced Competitive Trading Bilateral Contract Market (CTBCM), with the name of winning power suppliers to be announced by January 2026.
“We will hold the auction [and announce its results] by end of January 2026,” Independent System and Market Operator (ISMO), Executive Director (Market Operations), Omer Haroon Malik, told Business Recorder on the sidelines of a workshop titled ‘The Stakeholders Workshop: Understanding the Competitive Trading Bilateral Contracts Market’ held on Thursday.
In his address to the workshop, Ministry of Energy (Power Division), Additional Secretary, Syed Imtiaz Ali Shah, said the targeted transparent auction and proper functioning of CTBCM would enable consumers to select electricity suppliers like they choose cellular service providers.
“We are moving on to multi-buyer and multi-seller model, breaking the hegemony of single-buyer [that is the government at present],” he said, adding CTBCM is going to benefit the entire power sector and industrial sector.
ISMO is a public sector organisation that was established in 2024. It is partially responsible to run CTBCM efficiently.
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According to a senior representative of ISMO, who talked on the condition of anonymity, power distribution companies (Discos) presently operating in both the public and as well as in the private sectors are prohibited – at least for now – to participate in the multiple buyers and multiple sellers’ auction.
They also confirmed that the government has planned to hold the first-ever auction in late November 2025. “The names of winning power suppliers will be announced in December 2025 or latest by January 2026.”
The auction is expected to mark the beginning of the long-awaited transition away from the existing single-buyer, government-regulated power system, phasing out expensive and polluting power plants and introducing low-cost, renewable energy solutions.
These steps are expected to help Pakistani exporters lower production costs, improve price competitiveness, and meet the growing global demand to adopt clean and green energy to stay in world markets, speakers argued at the workshop.
The ISMO senior representative further said at least 15 entities operating in the private sector had applied for power suppliers/sellers’ licence at the National Electric Power
Regulatory Authority (NEPRA) to participate in the auction for CTBCM. The entities may be including Engro, Fatima, and Shams from the power sector.
“The government has allocated only 800 megawatts to be sold by the new power producers at competitive price through the auction. Otherwise, there exists demand for over 4,000MW in CTBCM (which comes to about 16% of the existing demand at 26,000MW under the outdating sing-buyer regulated power system)”, ISMO official said.
The sale of 800MW under CTBCM would not increase capacity payment burden on remaining buyers under the regulated system, but a sale beyond that volume might impact them. Moreover, this would help closing inefficient and most expensive plants worth 800MW, they added.
The opening of market to muti-buyers/sellers would allow bulk and industrial consumers to acquire power at notably lower price – Rs15/unit lower in CTBCM compared to the one cost under the single-buyer regulated system at Rs30-32/unit (excluding taxes and duties) at present.
If the private sector players set up the low-cost solar plant (carrying zero fuel cost), the power production along with wheeling charges would cost seller at Rs15/unit (e.g. Rs9/unit production cost and another Rs6-7/unit wheeling charges). Therefore, power producers in CTBCM would have cushion of Rs15/unit to negotiate price with buyers like industries and offer them competitive price. Consumers would get cheaper power, while producers would be having a cushion of earning a profit of maximum of Rs15/unit. This is how it (CTBCM) will work for both.
The maximum wheeling charges under CTBCM is estimated at Rs12.55/unit. NEPRA is yet to announce its determination in this regard soon. However, it would effectively be around Rs6-7/unit, as per ISMO official. “This is perhaps the only work left to be done by NEPRA soon for CTBCM.”
The new entrants in power production sector can set up solar, wind, run of the river, nuclear and bagasse-based power plants (with or without batteries). They, however, are not allowed to produce power using outdated thermal technology run on fuels including oil, gas and coal.
“NEPRA and the federal government have made seven rules, 16 regulation, develop commercial code to operate, revise grid and distribution codes, technology and related infrastructure deployed and more than 300 professionals have been trained to run the new market,” Ahmad Tanvir Qazi, Additional Senior Director (Market
Operation), ISMO told Business Recorder.
Authorities concerned have successfully made test run of CTBCM for about one-year to one-and-half-year in the recent past. “NEPRA has also approved the final test run report,” he said.
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The selected suppliers through the auction can start power transaction immediately under the understanding developed with buyers. Those new entrants who have already set up power production plants can start transaction immediately. Others may take time.
“The suppliers are bound to set up production plants maximum in three years of their win through the auction. Buyer would already know the timelines,” Qazi maintained.
