Pakistan is moving closer to launching its first deregulated electricity market, taking a major step toward fulfilling another condition set by the International Monetary Fund (IMF). The new competitive electricity market is expected to open in March and will initially offer 200 megawatts of electricity for auction.
The deregulated system will primarily target large industrial consumers categorized under B-3 and B-4. A major change under this new framework is the removal of capacity charges within the competitive market structure, potentially reducing the overall cost burden on industrial users.
An independent market operator has already been established to manage electricity trading and ensure transparency. In the first phase, electricity will be sold to major consumers with a minimum demand of one megawatt. Over the next four years, the market is projected to expand its supply capacity to 800 megawatts.
Under the new model, large consumers will only pay installation charges to electricity companies. Distribution companies (DISCOs) will earn wheeling charges for the use of transmission and grid infrastructure. These wheeling charges have been set at 6 rupees per unit for B-3 consumers and 9 rupees per unit for B-4 consumers.
One of the most significant aspects of this reform is that industrial consumers will have the flexibility to purchase electricity from suppliers offering the most competitive rates. This shift is expected to promote competition, improve efficiency, and create a more transparent pricing mechanism within Pakistan’s power sector.
The launch of the deregulated electricity market represents a structural transformation in Pakistan’s energy landscape and could play a crucial role in stabilizing the power sector while encouraging industrial growth.
