Pakistan’s energy sector faces numerous challenges, including high tariffs, power shortages, transmission losses, and a lack of investment.
The government is obligated to pay a fixed amount to independent power producers (IPPs) even if their electricity is not utilized. Meanwhile, high grid electricity prices are causing reduced consumption, exacerbating the crisis.
The Competitive Trading Bilateral Contract Market (CTBCM) offers a potential solution. CTBCM is a market-based system that facilitates the bilateral trading of electricity between generators, distributors, and consumers.
Speaking to WealthPK, Tauseef H Farooqi, former chairman of the National Electric Power Regulatory Authority (Nepra), stated that the current government-dominated system has led to surplus grid generation capacity and costly take-or-pay contracts, undermining the sector’s efficiency. “A transition to the CTBCM system is needed, enabling bulk power consumers to purchase electricity directly from generators, which would drive competitive energy prices and reduce dependence on expensive contracts.”
He further explained that the CTBCM framework offers a viable solution for the country’s power sector by allowing businesses and consumers to procure electricity directly from suppliers at competitive rates. “This shift is crucial for export-oriented businesses to remain competitive globally. Additionally, it allows businesses to source clean energy directly from developers, reducing their carbon footprint and advancing towards net-zero goals.”
Tauseef emphasized that the government’s monopoly on energy sales and purchases is not only inefficient but also hinders sector development. He suggested that the government’s role should be limited to regulation, leaving pricing and supply decisions to the market.
He recommended that the government establish a competitive system charge and set a timeline for the first bilateral transaction to open up the electricity market to businesses. “The CTBCM regime presents an excellent opportunity for the country’s energy sector to reform and rejuvenate. By enabling businesses and consumers to purchase power directly from providers, this system would enhance competition, lower costs, and improve efficiency.”
