The government of Pakistan has initiated a significant shift in its power sector by announcing the first wheeling auction for 400 megawatts of electricity. This marks a move towards the Competitive Trading Bilateral Contracts Market (CTBCM), allowing large consumers, primarily industrial, to choose their power suppliers nationwide instead of being tied to a single state-owned distributor.
Details of the Wheeling Auction
The announcement was made by the Independent System and Market Operator (Ismo), a part of the Power Division. Ismo has invited interested parties to submit proposals for the wheeling auction under the CTBCM, with the deadline for submissions set for November 20, 2026.
This initiative is seen as a transformative step by Power Minister Awais Ahmad Khan Leghari, who highlighted its role in transitioning Pakistan’s power sector from a single-buyer system to a more competitive market. The new mechanism enables businesses and industrial consumers to purchase electricity directly from producers.
Phased Power Procurement Plan
The government plans to phase out state-led power purchases, with 800MW of electricity to be auctioned over five years. In this initial phase, 400MW is available for competitive procurement. Each auction participant can acquire a maximum of 160MW, cumulatively over the five-year period.
Participants may develop or procure power plants up to 160MW of firm capacity or multiple smaller plants, provided their total allocation does not surpass 160MW over the five years. The 160MW cap is cumulative, not applicable separately to each plant or annual auction.
Impact on the Power Sector
Minister Leghari emphasized this development as a milestone, marking the government’s withdrawal from power capacity procurement. He noted the government’s current centralised electricity purchase and distribution system had faced scrutiny regarding its terms and conditions.
The new system, initially targeting industrial and large consumers, aims to foster transparency and competition. It will gradually expand to include ordinary consumers, offering them greater choice in electricity purchases. The minister expressed optimism that competitive electricity rates would enhance the competitiveness of Pakistani industries in global markets.
Future Prospects and Investment
The CTBCM initiative aligns with the government’s broader reform commitments in the power sector. It follows the recent conditional approval of the indicative generation capacity expansion plan (IGCEP 2025-35), which includes a capacity addition of 26,045MW and retirement of 2,577MW, leading to a total installed capacity of 62,657MW.
Additional capacity, including 8,120MW from net metering, is projected to cost $47.08 billion. Transmission projects, both ongoing and newly proposed, require an investment of $10.65 billion over the planning horizon, as per the National Electric Power Regulatory Authority’s announcement.
