Historic Shift from Single-Buyer Model
Pakistan is poised to finalize its first 200-megawatt (MW) electricity transaction through a competitive wheeling auction by June 2026, a landmark move to dismantle the decades-old single-buyer model in the power sector. Federal Minister for Power Sardar Awais Ahmed Khan Leghari announced the government’s plan to auction a total of 800MW through wheeling in the current year, signaling a decisive push toward market-based trading.
How the New Wheeling Framework Works
Under the newly operational Competitive Market Operations Date (CMOD) regime, large power consumers, such as industrial and commercial entities, will be able to enter into direct power purchase agreements with generation companies. This system bypasses the traditional central purchasing model where the government is the sole buyer.
- An independent market operator will conduct the competitive auctions.
- Consumers will pay only a network usage charge to state-owned transmission and distribution companies for grid access.
- The government has forwarded a summary to the Prime Minister for final approval to launch the initial 200MW auction.
A Long-Awaited Milestone
Minister Leghari described the launch of CMOD as a “major milestone,” noting that competitive market reforms were first conceptualized in the early 1990s but faced prolonged structural delays. The move is expected to enhance efficiency, transparency, and cost optimization in a sector long burdened by circular debt and inefficiency.
Regulatory Process and Future Outlook
While regulatory matters, including the final determination of wheeling charges, are still under process, officials expressed confidence that auction-based transactions would commence after April. The successful implementation of this framework is expected to gradually transform Pakistan’s power market into a more open and competitive structure, attracting investment and providing consumers with more choice and potentially lower costs.
