By SKM
July 29, 2025
ISLAMABAD: The cabinet Committee on Energy (CCOE) headed by Prime Minister Shehbaz Sharif here on Tuesday paved the way for free power market— Competitive Trading Bilateral Contract Market (CTBCM) in the country to be functional by September end, 2025 by approving the wheeling charges of Rs12.55 per unit.
In the meeting, it was told that the power sector circular debt has been reduced from Rs2.381 trillion to Rs780 billion by paying the loans of Rs683 billion parked in Power Holding Company Limited PHL loans clearing the remaining stock of interest-bearing arrears to power producers (Rs 569 billion) from the loan of Rs1275 billion attained from 18 commercial banks. However, IMF had given the target to reduce the power sector circular debt to Rs561 billion by June 2025.
The Prime Minister appreciated the Federal Minister for Power Division and his team for bringing down the system losses by Rs193 billion and to this effect, the Premier directed Power Division to write the appreciation letters to the CEOs of the well-performing discos. In the meeting, it was also told that the MEPCO and LESCO remained the top among the well-performing DISCOs. Participants were also told that DISCOs have overall improved their losses by Rs242 billion through better recovery of electricity bills.
However, coming to the free power market, the official said that 800 MW of electricity has been allocated that is to be traded between electricity suppliers and bulk buyers in five years’ span. In the first year, 200MW will be traded, and in the second 150 MW and in the third year 150 MW, in the fourth year 150 MW and in fifth year 150 MW would be added for trading purposes.
In the free power market, the electricity would be auctioned based on the stranded cost—idle capacity which may be in the range of 50-100 paisas per unit.
This will be a paradigm shift in the existing power sector structure as the competitive wholesale electricity market or competitive trading bilateral contract market (CTBCM) regime is going to be introduced, top officials of the power regulator told The News.
“Under this competitive regime, there will be a system of multi-sellers and multi-buyers of electric power. However, buyers will pay the transmission and distribution use of system charges also for the electricity they will trade bilaterally. Currently, the power sector investments are dominated by the government that also owns the power plants and sells electricity to the end consumers under a monopoly structure through its Discos having control on the network and supply business.”
“The consumers currently have no choice but to purchase electricity from the government-owned Discos.”
“So under the new competitive market implementation, bulk electric power consumers will be able to buy electricity from any private supplier, traders and generation companies at the electric power rates bilaterally agreed by parties.”
The newly licensed ISMO (Independent System and Market Operator of Pakistan (Guarantee) Limited) is preparing to commence operations by September 2025, enabling market-based trading. A phased market opening will begin with the establishment of wheeling charges and regulatory frameworks.
However, in the summary of Power Division seeking approval of amendments in the National Electricity Plan Strategic Directive 87, CCOE approved here on Tuesday, the Commerce Ministry opposed the inclusion of the stranded cost in the wheeling charges will give unfair advantage to the existing power companies and the companies that will be in the competition, will suffer. More importantly, the Ministry of Planning, Development and Special Initiatives commented that the proposed cap may slow down market liberalization. Ends
