The government has announced plans to introduce a new electricity pricing system aimed at addressing issues within the energy sector.
The new system will be launched later this year, according to a report provided by the Secretary of the Energy Division to the Senate Permanent Committee on Energy, Express News reported.
Currently, electricity is purchased by the Central Power Purchasing Agency (CPPA) and sold to distribution companies (DISCOs), a system that has caused several operational challenges.
Under the new plan, a new body, the Independent System Market Operator (ISMO), will be established to regulate electricity trading. This body will be formed through the merger of the National Transmission and Dispatch Company (NTDC) and CPPA, which will streamline operations and reduce inefficiencies, stated the Secretary of Power.
In a bid to reform the sector, the government will also privatize GENCOs (generation companies) and DISCOs, and NTDC will be divided into three separate companies.
The restructuring will aim to improve performance and modernize transmission infrastructure.
The Secretary added that all future energy projects will be planned with a focus on cost reduction, and any additional expenses will be borne by the federal or provincial government, not consumers.
The electricity sector reforms also include the development of a 10-year transmission plan, which will be aligned with the generation plans.
The Secretary mentioned that the NTDC Board, headed by Dr. Faiz Chaudhry, would work on the reforms and recommendations are expected by March 2025.
Additionally, the Energy Division is taking steps to reduce electric rates, with significant reductions planned for June 2025.
The proposed reforms were met with some skepticism by lawmakers.
Senator Shibli Faraz expressed concern over the performance of the NTDC, noting that it has been functioning without a permanent head for years. He also questioned the government’s ability to reduce rates, considering the high cost of electricity.
Senator Mohammad Akram suggested that the government should address the growing shift towards solar energy, which many citizens are adopting due to high electricity costs.
In response, the Secretary assured that the government is fully focused on solving these challenges and that a reduction in electricity rates will be sought in the coming months.
The government is also interested in improving efficiency and curbing system losses, which have contributed to financial pressure on the energy sector.
The new electricity market system is part of Pakistan’s broader strategy to address power sector problems, including inefficiencies, high costs and the growing shift towards renewable energy sources.
The government is optimistic that these reforms will lead to a more sustainable and profitable energy future for the country.
