Experts call for end to monopolistic power sector model

KARACHI: The Multi-Stakeholder Conference on Competitive Electricity Market in Pakistan has demanded a move away from a single-buyer model to a transparent and competitive electricity market.

The conference set out a clear goal to move beyond the monopolistic, single-buyer model towards a transparent, multi-stakeholder competitive regime, where electricity can be directly traded between producers and consumers through bilateral electricity trade.

The conference was organised by Renewables First and the Pakistan Business Forum (PBF), with the support of the Private Power & Infrastructure Board (PPIB). The conference began with a keynote speech from Chief Organiser PBF Ahmad Jawad, CEO Renewables First Zeeshan Ashfaq, and Tauseef H Farooqi, ex-chairman Nepra, who highlighted the significance of moving towards a competitive electricity market for affordable electricity and Pakistan’s economy.

The Competitive Trading Bilateral Contracts Market (CTBCM) is a 30-year-old reform programme which has been approved by the Economic Coordination Committee and Nepra. However, it has yet to be operationalised.

Sindh Energy Minister Nasir Hussain Shah said that the provincial government has already established Sepra for provincial electricity matters and is planning to discuss the business community’s issues at the provincial level as well as the federal level.

During the conference, Salman Amin, member of the Competition Commission of Pakistan, highlighted that the monopolistic structure of Pakistan’s power sector remains a major concern and that, with the help of CTBCM, the country can finally move towards competition and efficiency.

Abdul Rehman, associate at Renewables First, explained the elements and history of the CTBCM reform, noting that the government has decided to launch the competitive electricity market with an initial 800MW, to be increased in the future. His remarks were followed by the first panel discussion featuring former MD PEPCO Tahir Basharat Cheema, CEO Thar Energy Ltd HUBCO Amjad Ali Raja, and a representative from the Independent System and Market Operator (ISMO).

All emphasised the need to open the market for bilateral electricity trade to ensure fair competition and transparency. Cheema stated that poor institutional decisions had crippled the power sector.

Farooqi highlighted that the government failed to attract a single bid for a 600MW solar plant, while KE successfully completed an auction for 640MW. Both stressed that if the government eased its control and allowed private sector participation, it could generate funds and create business opportunities.

Another key point raised was that the government must be transparent in its planning and operations. The second panel discussion observed that without serious reforms, the national electricity grid was headed for collapse and the government must consult industrial stakeholders to figure out the way forward and identified the distribution companies as the weakest link in the power sector chain.

Ramsha Panhwar, researcher and energy specialist from Renewables First, highlighted the importance of clean, cheap and reliable supply of electricity for the industries which the government has so far failed to deliver. She informed the audience that over 80 per cent of the proposed wheeling is composed of stranded costs and cross-subsidies, making open access prohibitively expensive. Instead, the government must opt for a phased and transparent recovery mechanism.

Researchers and industrialists collectively demanded that the government provide a clear, consistent and long-term plan for the recovery of stranded assets and ensure market growth under CTBCM. They also demanded that the government not limit the market size to 800MW, which they argued is too small.