The government has unveiled plans to implement a new electricity pricing system aimed at addressing challenges within the power sector.
According to a briefing to the Senate’s Standing Committee on Power by the Secretary of the Power Division, the new system is expected to roll out later this year.
Currently, electricity is purchased by the Central Power Purchasing Agency (CPPA) and sold to distribution companies (DISCOs), a system that has led to various operational difficulties.
Under the new plan, the government intends to create the Independent System Market Operator (ISMO), a body that will oversee electricity trading. This will involve merging the National Transmission and Dispatch Company (NTDC) with CPPA, streamlining operations and minimizing inefficiencies, the Secretary of Power explained.
As part of the overhaul, the government will privatize GENCOs (generation companies) and DISCOs, and split NTDC into three separate entities. The restructuring aims to boost performance and modernize the transmission infrastructure.
The Secretary also highlighted that future power projects will be designed with cost reduction in mind, with any extra costs borne by the federal or provincial governments, rather than consumers.
The reforms include a 10-year transmission plan aligned with generation plans. The NTDC’s Board, led by Dr. Faiz Chaudhry, is tasked with overseeing the reforms, with recommendations expected by March 2025.
The Power Division is also working to reduce electricity tariffs, with significant cuts anticipated by June 2025.
However, the proposed reforms have raised some concerns among lawmakers. Senator Shibli Faraz expressed doubts about NTDC’s performance, pointing out that it has lacked a permanent head for years. He also questioned whether the government could lower tariffs given the high electricity costs.
Senator Mohammad Akram suggested that the government should address the growing adoption of solar energy, as many citizens are turning to it due to high electricity prices.
In response, the Secretary reassured that the government is committed to tackling these issues and aims to reduce electricity tariffs in the near future.
The government is also focused on improving efficiency and reducing system losses, which have been contributing to the financial difficulties within the energy sector.
This new electricity market system is part of Pakistan’s broader strategy to resolve issues like inefficiencies, high costs, and the rising shift toward renewable energy sources.
Officials are optimistic that these reforms will pave the way for a more sustainable and cost-effective energy future for the country.
