Power Division Seeks Fresh Input for Electricity Market Overhaul
ISLAMABAD: Stakeholders are called to share insights on reforms aimed at electrifying competitive trading for a dynamic future.
The electricity market in Pakistan is on the cusp of a revolutionary change. The Power Division has reached out to stakeholders nationwide, urging them to provide their invaluable comments and insights as the country gears up for a radical transition. This change comes under the Competitive Trading Bilateral Contract Market (CTBCM) initiative, part of the larger National Electricity Plan. As per the arrangement, an initial allocation of 800-MW electricity is slated to run over five years, but this core figure remains flexible, ready for adjustments based on market reactions.
Empowering Change: Strategic Directive Amendments
To facilitate this shift, amendments to Strategic Directive #87 of the National Electricity Plan 2023–27 have been drafted. The intent is clear: align the country’s electricity practices with the mandates of the National Electricity Policy, 2021. Through these amendments, the federal government is poised to establish a robust framework geared towards the recovery of costs that naturally arise from open access and liberal market operations.
Challenge and Opportunity: Navigating Market Realities
With market liberalization and technological disruptions at the forefront, the stakes are high for ensuring financial stability in the sector. The Power Division emphasizes building a mechanism that balances affordability, competition, and financial viability, carving a sustainable path forward for the electricity sector. As stated in Business Recorder, stakeholders have a short window until May 18, 2025, to voice their opinions, impacting the adjustments that lie ahead.
Open Access Charges: A Mechanism for All
One key proposal involves the recovery of open access charges from consumers engaging competitive suppliers. This encompasses a wide range of charges, including grid, distribution, and metering service charges. Should the government adjust any aspect of these charges, it will be incumbent upon the Ministry of Finance to meticulously assess the fiscal impacts, ensuring decisions align with the budget and do not unfairly burden default supplier consumers.
Overcoming Opposition and Building Consensus
The initiative hasn’t been without its critics. The Korangi Association of Trade & Industry (KATI) has voiced strong objections against the proposal of recovering stranded costs from competitive market operatives. They argue such measures are counterproductive, hindering the spirit of open access and swaying investment confidence negatively.
Setting the Stage for Increased Competition
While KATI objects, they have shown support for integrating Discos and K-Electric as competitive suppliers. The association also champions a dual tariff model for industrial consumers, alongside stringent adherence to compliance and grid codes. These measures can preempt potential electricity challenges like those recently experienced in Spain and Portugal.
As Pakistan positions itself for this ambitious transformation, proposed mechanisms, stakeholder feedback, and government policies will play pivotal roles in crafting an electricity market aligned with modern demands, fuelled by competitive dynamics and technological innovation.