Pakistan takes first major step towards a competitive electricity market

For decades, Pakistan’s electricity market has largely operated under a single-buyer structure in which the Central Power Purchasing Agency

For decades, Pakistan’s electricity market has largely operated under a single-buyer structure in which the Central Power Purchasing Agency (CPPA-G) purchased electricity on behalf of distribution companies. That structure is now entering a new phase as the government has launched the country’s first competitive electricity wheeling auction under the Competitive Trading Bilateral Contract Market (CTBCM).

On September 20, 2026, Federal Minister for Energy Sardar Awais Ahmad Khan Leghari announced that the Power Division had issued a Request for Proposals for the first 400-megawatt wheeling auction. He described the development as a move towards a competitive electricity market in which producers and eligible consumers can transact directly.

What was the old system?

Under the traditional single-buyer model, CPPA-G acted as the central purchaser of electricity for ex-WAPDA distribution companies. NEPRA’s own explanation of CTBCM says the existing structure was based on this single-buyer arrangement, while the competitive model was designed to give eligible bulk consumers greater choice in purchasing electricity.

The new system is intended to change that relationship by allowing eligible consumers to purchase electricity from competitive suppliers rather than relying exclusively on the traditional procurement structure.

What is CTBCM?

CTBCM stands for Competitive Trading Bilateral Contract Market. In simple terms, it is designed to allow electricity generators and eligible consumers to enter into bilateral arrangements while using the existing transmission and distribution infrastructure.

The first phase is aimed at industrial and other large consumers using more than 1MW. Instead of being limited to a single procurement channel, these consumers will be able to participate in a competitive market and select suppliers under the applicable regulatory framework.

What does wheeling mean?

Wheeling allows electricity generated at one location to be supplied to a consumer at another location through the national electricity network. The transmission and distribution infrastructure continues to provide the physical route for delivery, while the parties pay the applicable Use of System Charges.

NEPRA’s recent determination on Use of System Charges was described by the Power Division as the final critical regulatory step required to operationalise open access under CTBCM.

How will the auction work?

The first auction covers 400MW. Under the broader framework, an aggregate 800MW of demand has been approved for allocation through competitive wheeling auctions. NEPRA’s approved auction process states that the 800MW quantum may be allocated through auctions administered by the Independent System and Market Operator, or ISMO.

ISMO will administer the auction process, including the bidding mechanism and allocation of the available wheeling quantum. This creates a structured process through which suppliers can compete for access to eligible demand.

Why does it matter?

For industry, the reform could create greater choice in electricity procurement and potentially allow businesses to seek more competitive supply arrangements. The government has argued that access to competitively priced electricity can improve the international competitiveness of Pakistani industries and support exports.

For the power sector, the larger objective is to gradually move from a centrally procured electricity market towards a bilateral and competitive wholesale market.

What about ordinary consumers?

The first phase does not give every household the ability to choose a power supplier. It is initially focused on industrial and large consumers, particularly those with loads above 1MW. The government has indicated that the competitive market could gradually expand to a wider group of consumers in the future.

The challenges ahead

The success of the reform will ultimately depend on implementation. Questions remain over how quickly suppliers and consumers participate, how efficiently the grid accommodates open access, and whether competition produces meaningful savings for eligible consumers.

The launch of the 400MW auction therefore represents the beginning of a transition rather than the completion of power-sector reform.

Pakistan has spent years developing the CTBCM framework. With the first competitive wheeling auction now launched, the country is moving from a policy design towards actual market implementation. The next test will be whether competition can translate into greater choice, efficiency and more competitive electricity procurement for businesses.