ISLAMABAD: Pakistan will introduce the Competitive Trading Bilateral Contracts Market (CTBCM) in May 2022 to deregulate the power sector, allowing private generators and consumers to purchase and sell electricity.
National Electric Power Regulatory Authority (Nepra) Chairman Tauseef H Farooqi said that CTBCM would prove to be a game-changer for the power industry of Pakistan.
“Implementation plan of the CTBCM model will usher in a competitive environment in the power sector benefiting the country. We have a successful telecom sector model that we are attempting to emulate. We are providing customers with a choice. Now they have the ability to buy and sell power on their own. We’re attempting to deregulate the market. The goal is to transition from multi-seller-single-buyer model to multi-seller-multi-buyer model,” he stated.
In the power market, competitive trading and bilateral contracts allow for more competition between the participants in the generation, transmission and distribution of electricity. Business entities are permitted and given an enabling environment in which to earn returns on their investments through competition with other market participants. The instances of “oligopoly” in the market are being minimised where the free-market forces would decide the tariff settlements, economic dispatch, demand forecast and generation costs of the units. All these participants and operators would be licensed under Nepra in the new regime. The operators would facilitate the energy trade between the participants. “Pakistan has created a framework for market reforms in the country,” according to Imtiaz Hussain Baloch, director general, licensing department, Nepra.
“Beginning with a relatively concentrated market of specific bulk power customers, Pakistan would have a market and broad guidelines based on which it may evolve,” he said.
According to a former governor State Bank of Pakistan, the government has to move away from being a single buyer of electricity. “This is essential since governments are always changing. We require an energy supply that is self-sufficient and an integrated picture of the energy sector is required.”
Talking to WealthPK, Nepra spokesperson said that the power sector in Pakistan remained one of the country’s key stumbling blocks due to the ever-rising circular debt.
“The power sector requires a shift to get competitiveness in production, transmission and distribution of electricity.”
“The new Nepra model can help stabilise the exponential increase in circular debt, boost transparency, reliability and competitiveness in terms of energy provision, efficiency enhancement and infrastructure development,” he elaborated. –INP
