Industrial consumers buy power directly under a new arrangement, as Pakistan has moved a step closer to opening up its electricity market to competition after the National Electric Power Regulatory Authority (NEPRA) finalized the Use of System Charge, a determination the Ministry of Energy is calling a major milestone for the power sector.
Federal Minister for Energy Sardar Awais Ahmad Khan Leghari welcomed the development, describing it as the last significant regulatory requirement standing in the way of the Competitive Trading Bilateral Contract Market (CTBCM) auction. With this charge now determined, the auction process can move forward, paving the way for a fundamentally different way of buying and selling electricity in the country.
How Industrial Consumers Buy Power Under the New Market
Under the current arrangement, Pakistan operates largely on a single-buyer model, where power distribution companies purchase electricity centrally and pass it on to consumers. Once the competitive market becomes operational, eligible industrial consumers will no longer be tied to this single-buyer structure. Instead, they will be able to negotiate and sign bilateral agreements directly with power suppliers of their choosing.
Leghari explained that this shift is expected to introduce real competition among electricity suppliers for the first time. Industries will be able to shop around for better rates and terms, rather than accepting a fixed cost determined through the existing centralized system.
Why the Government Sees This as a Breakthrough
According to the Ministry of Energy, encouraging competition among suppliers should push power producers to operate more efficiently, since they will now need to compete for industrial customers rather than relying on guaranteed offtake. Officials believe this could translate into more competitive electricity prices for industrial users over time.
The minister also pointed out that a competitive market structure could help Pakistan make better use of power plants that are already built and operational, reducing the inefficiencies that have long been blamed for high electricity costs. A more efficient use of existing generation capacity is seen as key to controlling capacity payments, which have been a major driver of rising power tariffs in recent years.
Leghari further noted that the new system could support greater adoption of renewable energy and battery storage technologies, since suppliers offering cheaper, cleaner power may become more attractive to industrial buyers in a competitive setting. This aligns with Pakistan’s broader push to integrate more solar, wind and storage capacity into its energy mix.
Reduced Reliance on Imported Fuel
Another expected benefit is a gradual reduction in Pakistan’s dependence on expensive imported fuels for power generation. By encouraging more cost-effective and efficient generation choices, the competitive market is designed to nudge the system toward cheaper, locally available energy resources rather than costly imported oil and gas.
A Structural Shift for the Power Sector
Leghari described NEPRA’s determination as providing the regulatory groundwork necessary for direct electricity access, calling it a major structural change for Pakistan’s power market. If implemented successfully, the CTBCM could mark one of the most significant reforms to how electricity is bought and sold in Pakistan in recent years, moving the country away from a rigid centralized model toward one shaped by market competition.
The coming months will be closely watched as regulators and industry stakeholders prepare for the CTBCM auction process, which is expected to determine how quickly industrial consumers can begin taking advantage of direct power purchasing arrangements. The reform comes at a time when Pakistan’s power sector is also seeing rising interest in rooftop solar and net metering, with the share of net metering in overall power generation climbing in recent months even as authorities work through a backlog of pending applications.