Federal Minister for Power Sardar Awais Ahmed Khan Leghari has announced that Pakistan is set to finalise its first 200-megawatt (MW) electricity deal through a competitive wheeling auction by June, marking a significant step toward restructuring the country’s power market.
Addressing a ceremony in Islamabad, the minister revealed that a summary seeking formal approval to initiate the auction under the newly implemented Competitive Market Operations Date (CMOD) framework has been submitted to Prime Minister Shehbaz Sharif. Once approved, authorities will move ahead with the country’s first auction-based electricity transaction under the new regime.
First Phase: 200MW Auction
Under the proposed mechanism, buyers will be selected through a transparent bidding process for up to 200MW of electricity in the initial phase. The process will be supervised by the Independent System and Market Operator, which is responsible for overseeing market operations and ensuring compliance with regulatory standards.
Officials said this initial transaction will serve as a test case for competitive trading in Pakistan’s electricity market. If successful, it will pave the way for further expansion of auction-based power sales.
800MW Target for 2026
Leghari further disclosed that the federal government plans to auction a total of 800MW of electricity through the wheeling mechanism during the current year. The move signals an accelerated shift toward market-based electricity trading after decades of operating under a single-buyer model dominated by government entities.
The wheeling framework will allow large-scale consumers — including industrial units and corporate buyers — to sign direct power purchase agreements (PPAs) with electricity producers. Instead of buying power solely through state-run distribution companies, these consumers will pay a grid usage fee to transmission and distribution companies for delivering electricity through the national network.
End of the Single-Buyer Model?
Under the existing structure, a centralised entity purchases electricity from power producers and sells it onward to distribution companies. The introduction of competitive bilateral contracts is expected to gradually reduce reliance on this model and encourage price discovery through market forces.
The minister described the operationalisation of CMOD as a “historic milestone,” noting that the concept of a competitive electricity market was first introduced in Pakistan in the early 1990s but faced repeated delays due to regulatory, technical, and structural hurdles.
Regulatory Work Underway
While the framework has been formally activated, certain regulatory matters — including the final determination of wheeling charges — are still being processed. Authorities remain confident that auction-based transactions will commence after April, with the first 200MW deal expected to be concluded by June.
