Pakistan has taken a major step toward changing the way electricity is bought and sold in the country. The federal government has announced that it is moving away from the old system in which electricity was mainly purchased through a central government-led arrangement and then supplied to consumers.
Under the new system, eligible businesses and industrial consumers will be able to buy electricity directly from power producers through a competitive market. The government has also invited proposals for Pakistan’s first electricity wheeling auction, marking an important stage in the country’s move toward an open and competitive electricity market.
Federal Minister for Power Sardar Awais Ahmad Khan Leghari announced the development on September 20, saying the government was effectively stepping out of the traditional electricity procurement process. The new arrangement will allow electricity producers and consumers to deal with each other under a transparent market-based system.
The change is being introduced through the Competitive Trading Bilateral Contract Market, commonly known as CTBCM. The system is designed to give eligible consumers more choice when deciding where they want to purchase their electricity.
Government Moves Away From Single-Buyer Model
For many years, Pakistan’s electricity market has largely worked under a single-buyer structure. Under this model, electricity is purchased centrally and then supplied through distribution companies to consumers.
The government now wants to change this structure and create a market where electricity producers and large consumers can enter into direct agreements.
The new approach means that eligible consumers will no longer have to depend completely on one traditional source for their electricity supply. Instead, they can potentially select a competitive supplier based on the available terms.
The National Electric Power Regulatory Authority, or NEPRA, has been working on the CTBCM framework for several years. According to NEPRA, the model was approved in 2020 and was designed to give bulk electricity consumers with a load of 1 megawatt or above the option to buy electricity from their distribution company or another competitive supplier.
The latest announcement shows that the government is now moving this long-planned reform into a more practical stage.
First Electricity Wheeling Auction Announced
A key part of the latest development is the launch of Pakistan’s first electricity wheeling auction.
The government plans to auction a total of 800 megawatts of electricity over the next five years. In the first phase, 400 megawatts will be offered for competitive procurement.
Electricity wheeling allows power generated by one producer to reach a consumer through the existing transmission and distribution network. Instead of forcing the consumer to buy electricity only from the traditional utility, the system makes it possible for electricity to move through the grid under an approved market arrangement.
This can create more options for large electricity users, particularly factories and other businesses that need a reliable supply of power.
The government has invited interested parties to submit proposals for the auction. The process is expected to be handled under the CTBCM framework, with the aim of making electricity procurement more competitive and transparent.
Who Will Benefit First?
Although the headline suggests that electricity buying is being opened to everyone, the system will initially focus on industrial and large consumers.
Power Minister Awais Leghari said the first phase would apply particularly to consumers using more than one megawatt of electricity. Ordinary household consumers will not immediately be able to choose any electricity producer they want.
This means the reform will start with large users before potentially expanding to a wider section of the market.
Industries are expected to be among the first major beneficiaries because electricity is a key part of their production costs. A factory that uses a large amount of power could have more flexibility in selecting a supplier under the competitive market.
Over time, the government expects the market to expand and provide greater choice to other categories of consumers.
Direct Deals Between Producers and Consumers
One of the biggest changes under the new arrangement is the possibility of direct transactions between electricity producers and consumers.
Under the traditional system, consumers generally receive electricity through their distribution companies. The new model creates space for eligible consumers to negotiate electricity purchases from competitive suppliers.
This does not mean that the national electricity grid will no longer be needed. The existing transmission and distribution infrastructure will continue to play an important role. The difference is that electricity can be purchased through a more open market while using the existing network.
NEPRA’s CTBCM framework provides for bulk consumers to choose between their distribution company and a competitive electricity supplier. It also includes arrangements for open access to the transmission and distribution system.
What Is Electricity Wheeling?
Electricity wheeling may sound complicated, but its basic idea is simple.
Suppose a power plant produces electricity in one location while a large factory needs electricity somewhere else. Under a wheeling arrangement, the factory can purchase electricity from that producer and use the national transmission or distribution network to receive it.
The grid effectively provides the route through which electricity travels.
The consumer pays the required charges for using the network while buying the actual electricity under the approved market arrangement.
This system can create more competition because consumers are not limited to buying electricity from only one traditional supplier.
For Pakistan, electricity wheeling is also part of a broader effort to introduce competition into the power sector.
Government Says Competition Can Help Industries
The government believes the new electricity market can help Pakistani industries become more competitive.
Power Minister Awais Leghari has said that access to electricity at competitive rates could help industries reduce their costs and compete more effectively in international markets. This could also support exports and industrial activity.
Electricity prices have remained a major concern for businesses in Pakistan. High energy costs can increase the price of locally produced goods and make it harder for companies to compete with producers in other countries.
A competitive electricity market is intended to give large consumers more options and encourage suppliers to offer better terms.
However, the actual impact will depend on how the market works in practice, including electricity prices, network charges, supply availability and the number of suppliers participating in the system.
More Choice for Electricity Consumers
The central idea behind the reform is greater consumer choice.
In the existing structure, consumers generally have limited options because electricity supply is linked to the distribution company serving their area. Under the competitive market model, eligible large consumers can have access to other suppliers.
NEPRA says the CTBCM system is intended to allow bulk power consumers to purchase electricity from competitive suppliers at negotiated rates. The regulator has also said that the system can improve efficiency and reliability across the power sector.
More suppliers competing for customers could also encourage companies to improve their services.
For example, a supplier may try to attract industrial customers by offering better prices, reliable electricity or contracts that better match the needs of a particular business.
Renewable Energy Could Also Get More Space
The move toward a competitive electricity market could also create more opportunities for renewable energy.
The Power Division has said that the competitive market can support greater participation from renewable energy projects, battery storage and other flexible energy resources.
Pakistan has seen growing interest in solar power, particularly among households, businesses and industries. A more flexible electricity market could create additional opportunities for renewable power producers to sell electricity to eligible consumers.
This could become increasingly important as businesses look for ways to control energy costs and reduce their dependence on expensive conventional power sources.
At the same time, renewable energy will need proper grid planning and reliable transmission facilities to become a larger part of the electricity market.
A Long-Planned Power Sector Reform
The latest announcement is not a completely new idea. Pakistan has been working on the competitive electricity market for years.
NEPRA approved the CTBCM model in 2020. The framework was designed to gradually move the electricity sector away from the single-buyer structure and toward a wholesale market where eligible consumers could choose their electricity suppliers.
The government also announced in March 2026 that 800MW of demand would be shifted to bilateral contracting through competitive auctions over the coming years.
The latest wheeling auction therefore represents another major step in implementing that long-term plan.
The government has also said that it will not enter into further traditional electricity procurement agreements as it moves toward the competitive market system.
What It Means for Ordinary Consumers
For household consumers, the change is unlikely to bring an immediate option to select any electricity producer.
The first stage is focused on industrial and large consumers, especially those using more than one megawatt of electricity.
However, the government has indicated that the competitive market could gradually expand in the future.
The idea is that as the market develops, more consumers could eventually have greater choice in how they purchase electricity.
This means the current announcement should be seen as the beginning of a wider market reform rather than an immediate change for every electricity bill in Pakistan.
Households will continue to receive electricity under the existing consumer supply arrangements unless and until the rules are expanded to include them.
Potential Impact on the Power Sector
Pakistan’s electricity sector has faced several long-standing challenges, including high costs, financial pressure, excess capacity concerns, transmission problems and difficulties in making the system financially sustainable.
The government believes competition can help address some of these problems by changing the way electricity is purchased.
If producers compete for customers, they may have greater pressure to provide electricity at competitive rates. Consumers, meanwhile, could have more options when selecting suppliers.
The government also expects better use of existing power plants and greater efficiency across the electricity supply chain.
Still, the success of the system will depend on proper regulation and implementation. Electricity markets are complex, and open competition requires clear rules, reliable transmission networks, fair charges and strong monitoring.
NEPRA has already developed rules covering suppliers, market operations, consumer eligibility and open access.
A New Direction for Pakistan’s Electricity Market
The government’s decision marks an important change in the way Pakistan plans to manage electricity procurement.
For decades, the power sector has largely depended on a central purchasing model. The new system aims to introduce more direct interaction between electricity producers and consumers.
The first phase will focus on large electricity users, while the government plans to gradually expand the market in the future.
With 400MW being offered in the first phase and a total target of 800MW over five years, the wheeling auction will provide an early test of how competitive electricity trading can work in Pakistan.
If the system develops as planned, industrial consumers could have greater control over their electricity procurement, while producers could gain access to a wider customer base.
For Pakistan’s power sector, the move represents a shift from a government-led purchasing system toward a market where competition, consumer choice and direct contracts play a much bigger role.
The immediate benefits will mainly be available to eligible industrial and large consumers. For ordinary households, the impact is likely to come later as the market expands.
The government now faces the task of making sure the new system works fairly, transparently and efficiently. How well the first auctions perform, how many producers participate and what prices emerge will be important indicators of the reform’s progress.
For now, Pakistan has taken another major step toward creating a competitive electricity market, with the long-term goal of giving consumers more choice while improving the efficiency and financial health of the power sector.
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