The government will no longer be able to “force” consumers to buy electricity at rates determined by it, Federal Energy Minister Awais Ahmed Khan Leghari said as Pakistan begins moving toward a competitive electricity market.
Speaking to reporters in Islamabad, Leghari said the government was effectively stepping out of the electricity procurement process from today. He said neither power producers would be required to sell electricity to the government nor would the government continue buying power under the existing model.
Under the new arrangement, electricity producers and consumers will increasingly be able to transact directly, allowing businesses to choose power suppliers on competitive terms.
The minister said the current system involves the government purchasing electricity and supplying it to consumers, while the terms of power procurement have remained a source of public concern.
The new market will initially target large consumers. Industrial and other users consuming more than 1 megawatt will be eligible to participate in the first phase.
Leghari said businesses and industries will be able to purchase electricity directly from power plants through a competitive process.
The government plans to auction 800 megawatts of electricity over the next five years, with 400 megawatts being offered during the first phase.
He said the electricity trading framework would be based on transparency and would gradually develop into a full-fledged power market.
According to the minister, the system could eventually allow ordinary consumers to select their electricity suppliers according to their preferences.
He said the government would no longer purchase electricity and then sell it to consumers at rates determined by the state.
Leghari said reducing electricity costs remains a key government priority, adding that cheaper power would help Pakistani industries remain competitive internationally and support exports.
He also said the Independent Power Producers (IPPs) have become controversial, while the planned market-based system is intended to introduce greater competition into electricity procurement.
