Latest news with #CTBCM
Business Recorder
3 days ago
- Business
- Business Recorder
Power wheeling policy for export industry: MoC seeks update from PD ahead of NEDB meeting
ISLAMABAD: The Ministry of Commerce has sought an update from the Power Division on the long-awaited electricity wheeling policy for the export industry, ahead of the National Export Development Board (NEDB) meeting scheduled for Thursday (July 17), to be chaired by Prime Minister Shehbaz Sharif. On July 22, 2024, during a previous NEDB session, the Prime Minister had directed that the wheeling policy for the export sector be finalized without further delay. According to the Commerce Ministry, the upcoming 4th NEDB meeting on July 17, 2025, will include a review of the updated status of the wheeling policy, with a particular focus on recommendations from the technical committee headed by the Special Assistant to the Prime Minister. These include proposals for viable wheeling charges. Accelerating Pakistan's livestock exports in global halal markets Sources said the success of the Competitive Trading Bilateral Contracts Market (CTBCM) hinges on two critical factors: the volume of available capacity and the level of wheeling charges. Wheeling charges are now expected to be reduced to Rs12/kWh, down from the earlier proposed Rs26/kWh. The All Pakistan Textile Mills Association (APTMA) has strongly advocated for electricity availability through business-to-business (B2B) contracts at wheeling charges between 1 to 1.4 cents/kWh, excluding cross-subsidies and stranded costs. APTMA argues that in the current economic climate, boosting exports must be a top national priority. The industry warns that uncompetitive power tariffs and emerging green energy regulations in export markets are serious threats to Pakistan's textile and apparel exports. A competitive wheeling mechanism under CTBCM is considered essential for the industry's recovery and long-term sustainability. The association has criticized the Central Power Purchasing Agency-Guarantee (CPPA-G) and distribution companies (Discos) for proposing an 'absurd' wheeling charge of 9.6 cents/kWh, saying it defeats the purpose of CTBCM and market liberalization. APTMA notes this rate is even higher than the full electricity tariffs for export sectors in competing countries such as: (i) Bangladesh: 8.6 cents/kWh; (ii) India: 6 cents/kWh; and (iii) Vietnam: 7.2 cents/kWh APTMA has also raised concerns about Rule 5 of the Eligibility Criteria (Electric Power Supplier Licence) Rules, 2023, which it claims undermines NEPRA's authority to independently determine fair wheeling charges. The rule reportedly allows the Power Division to dictate both the structure and amount of wheeling charges. Reiterating its long-standing demand, APTMA has called for a regionally competitive power tariff of 9 cents/kWh, citing both regional benchmarks (5–9 cents/kWh) and domestic cost-of-service studies, which show that tariffs for 83–84% of Pakistani consumers are already around that level. NEPRA's recent determination supports this demand, with industrial base rates for July 2025 set at: (i) Rs21.65/kWh (off-peak); and (ii) Rs30.76/kWh (peak). These rates roughly translate to 9.5 cents/kWh before the application of cross-subsidies. On renewable energy wheeling, APTMA claims that the current wheeling rate of 4.5 cents/kWh makes CTBCM implementation economically unviable. It notes that even for a textile unit operating three shifts a day, only about 20% of energy needs can be met through wheeling at a viable cost (~8 cents/kWh). Copyright Business Recorder, 2025
Business Recorder
4 days ago
- Business
- Business Recorder
Outsourced power: how aid agencies engineered Pakistan's energy bureaucracy?—I
In Pakistan's power sector, aid doesn't just fund wires and transformers—it writes policy, births institutions, and designs governance frameworks. From WAPDA's unbundling to today's regional micro-hydro initiatives, foreign donors and multilateral lenders have played a decisive role in shaping the country's entire energy architecture. What looks like a domestic public sector is, in fact, a landscape engineered through external influence often with little sustained success. It began in the 1990s, when the World Bank, Asian Development Bank (ADB), and USAID launched structural adjustment programs that led to the fragmentation of WAPDA. This was no organic reform. Under pressure from lending conditions, Pakistan was pushed to carve out the power sector into new corporate entities: generation companies (GENCOs), distribution companies (DISCOs), a transmission company (NTDC), and a regulatory authority (NEPRA). These institutions were seeded, shaped, and staffed under the watchful eyes of international consultants and donor-funded technical assistance. The Pakistan Electric Power Company (PEPCO), too, emerged not from local institutional need, but from the ADB's desire to create a transition vehicle to oversee the corporatization process. NEPRA, established in 1997, was designed with heavy influence from the World Bank and USAID, importing global regulatory frameworks that were alien to Pakistan's administrative and legal culture. Its tariff formulas, licensing structures, and oversight roles mirror donor templates more than they reflect local energy realities. This donor-led architecture didn't stop at institutional birth. ADB funnelled nearly a billion dollars into its Power Distribution Enhancement Investment Program, modernizing grid infrastructure and financing smart metering initiatives. The World Bank launched its own $195 million effort in 2021 to improve governance and efficiency in HESCO, MEPCO, and PESCO. JICA upgraded NTDC's load dispatch systems. IFC and OPIC helped design frameworks to attract private investment in wind, solar, and K-Electric. Even the electricity market itself—the Competitive Trading Bilateral Contract Market (CTBCM)—was conceived, drafted, and piloted through World Bank technical assistance. And when Pakistan recently attempted to unilaterally renegotiate renewable energy contracts signed with private investors, it was the IFC, ADB, and Islamic Development Bank that issued a sharp warning: don't undermine the sanctity of contracts or risk the collapse of $2.7 billion in clean energy investment. At the provincial level, the pattern repeats. Punjab and Sindh's DISCOs were granted $200 million in January 2025 by ADB to upgrade infrastructure and adopt smart systems. Sindh also benefited from the Sindh Cities Improvement Program, which coupled power and sanitation reforms under multilateral guidance. In Khyber Pakhtunkhwa and FATA, the EU-funded PEACE program and USAID-backed Sarhad Rural Support Programme have installed hundreds of micro-hydro plants in off-grid areas. Balochistan, too, saw GIZ and other donors support rural electrification and local governance models through BRSP. These efforts, while not without local champions, largely owe their scale, structure, and sustainability to external designs. Even post-18th Amendment devolution hasn't insulated the provinces from donor penetration. Technical assistance programs by WHO and ADB continue to shape provincial energy planning and system governance. The story is similar, and in many ways worse, in the gas sector. During the mid-1980s to late 1990s, the government agreed with the World Bank to link gas prices to oil; the international market price for fuel oil became the benchmark for domestic consumers and the landed cost (including duties, taxes and other import charges) for all other consumers. The balance between consumer prices linked to international oil prices and revenue requirements of the Suis accrued as fiscal revenues to the government, allowing full-cost-recovery and providing signals to consumers about the true value of gas, thereby encouraging efficiency. However, in 2006, again on advice of the World Bank the government established a ceiling price for gas, effectively delinking it from oil and politicizing the commodity, which caused producers to lose out on significant revenue when oil prices rose sharply in 2008. When gas was made a tool for exerting political influence, the ensuing distortions left no incentives to invest in domestic E&P and no significant gas discoveries were made as a result (Figure 1). The use of gas for power generation had been promoted, both for captive generation by industries and in the grid energy mix. The landmark 1994 Private Power Policy, which allowed and incentivized industries to invest in captive power generation was designed with World Bank support and advisory from the IFC and IBRD and implemented under a PPP framework via the newly created Private Power and Infrastructure Board, again established under the World Bank supported Second Private Sector Energy Development Programme (PSEDP II). Following drying up of investment and activity in E&P and rapidly depleting domestic gas reserves, DFIs provided full support for development of LNG import infrastructure. The USAID's Energy Policy Project, alongside World Bank, IFC and ADB feasibility studies, conducted the technical and financial analyses and PPP structuring that advised Pakistan to develop LNG import capacity. ADB and IFC provided over $160 million in financing and equity to set up the Port Qasim LNG terminal. The Planning Commission's proposals to enter long-term LNG SPAs were based on feasibility studies and policy advice funded or co-commissioned by USAID's Energy Policy Project and the World Bank/IFC and ADB teams. They stressed that only 15–20-year SPAs could unlock commercially-viable financing for both the import terminals and the downstream power plants, otherwise investors could not recover the billions in upfront liquefaction and shipping assets. (To be continued tomorrow) Copyright Business Recorder, 2025
Business Recorder
05-07-2025
- Business
- Business Recorder
CTBCM: Commercial operations may begin by Sept-end
ISLAMABAD: The Power Division has assured representatives of nearly a dozen development partners that commercial market operations of the Competitive Trading Bilateral Contract Market (CTBCM) are expected to begin by the end of September 2025. This development will enable bulk power consumers (BPCs) — those with demand of 1 MW and above — to procure electricity through independent bilateral contracts with competitive suppliers, sources told Business Recorder. According to the Power Division, the framework for viable open access charges (wheeling) and a transparent process for the allocation of wheeling quantum is at an advanced stage of finalization. The operationalisation of the Independent System & Market Operator (ISMO) will play a key role in facilitating CTBCM implementation. Electricity market under CTBCM: Power Div invites comments from stakeholders During a meeting with development partners, the following key issues were discussed: (i) updates on power sector reforms; (ii) proposed industrial and agriculture package, pricing reforms, and grid capacity/utilization strategy ; and (iii) distribution sector reforms, including private sector participation, investment readiness, and future action plans The Power Division informed participants that capacity costs—denominated in USD—have surged from Rs 11.1/kWh to Rs 18.8/kWh, primarily due to the depreciation of the Pakistani Rupee. However, fuel costs have remained stable due to the addition of lower-cost generation capacity. The government emphasized that de-linking capacity costs from currency depreciation and increasing reliance on indigenous energy sources are critical to long-term sustainability. Electricity tariffs remain inflated due to extraneous taxes and duties, increasing the financial burden on end-users. The growing circular debt is attributed to both inefficiencies in the power sector and suboptimal debt pricing. Inefficient pricing has increased debt servicing costs, further burdening consumers and dampening demand. A structured roadmap to reduce circular debt is currently under development. The government recently launched the 'Bijli Sahulat package' for winter months, offering electricity at marginal cost plus a nominal margin. Another similar mechanism, based on marginal pricing, is being evaluated for industrial consumers to incentivize incremental grid usage through a subsidy-neutral framework. This initiative is expected to stimulate industrial and overall economic growth. Nepra has determined total fixed charges at Rs 2.505 trillion based on 106 billion units. A 5–10% drop in demand does not significantly reduce these charges due to their fixed nature, underscoring the importance of increasing consumption to improve cost recovery. To stimulate demand, a three-year package (March 2025–December 2027) has been proposed for industrial and agricultural sectors. It projects an increase of 3,745 MW in demand between March–June 2025, 10,720 MW in 2026, and 11,018 MW in 2027. The package offers a rate of Rs 22.98 per unit, yielding a Rs 10.50/unit saving for industrial users (from Rs 33.48) and Rs 7.77/unit for agricultural users (from Rs 30.75). The unified rate for both sectors is proposed at Rs 22 per unit. On broader power sector reforms, the Power Division noted that, for the first time in years, the government is actively pursuing long-term generation and transmission planning. A 10-year forward-looking plan is being developed to align generation with projected demand and reduce reliance on costly peaking plants. The government highlighted the need for improved data utilization and performance tracking through tools such as SCADA and AMI, to support predictive and transparent operations. The proposed package is based on marginal cost pricing for incremental consumption, while ensuring fixed cost recovery through base tariffs. The World Bank emphasized the need for a clear sunset clause (e.g., a 3-year limit with annual reviews), transparent marginal cost tracking, and avoidance of regressive subsidies. It also suggested incentives for off-peak and solar-hour industrial consumption. Power Division further shared that transmission projects are underway to increase northward evacuation capacity by 2,000 MW over the next 3–4 years. Development partners stressed the urgency of fast-tracking grid investments to meet the anticipated 25% industrial demand growth. Several projects currently stalled at planning or early implementation stages were flagged, with calls to resolve legacy design and execution bottlenecks. The rollout of 35 million AMI (Advanced Metering Infrastructure) meters and effective big data utilization will require change management and enhanced digital literacy within DISCOs. The newly licensed ISMO is preparing to commence operations by September 2025, enabling market-based trading. A phased market opening will begin with the establishment of wheeling charges and regulatory frameworks. The Energy Infrastructure Development and Management Company (EIDMC) will assume responsibility for planning and executing PSDP-funded transmission projects by FY26/27. Board approvals are in process, and CEO recruitment is expected by year-end. ISMO—formed by integrating technical teams from NTDC and CPPA-G—is now operationally structured and will manage market operations following its separation from NTDC. Development partners underscored the need for pricing predictability over the next 3–5 years, advocating for technology-neutral support policies, and cautioning against price discrimination that protects inefficient domestic industries. They also recommended: (i) finalize and publish wheeling charges and market rules by September; (ii) tracking and publishing marginal generation costs under the proposed package; (iii) accelerate implementation of key grid and metering infrastructure; and (iv) launching a structured dialogue with industry to co-develop a roadmap for energy policy and investment predictability. Copyright Business Recorder, 2025
Business Recorder
02-07-2025
- Business
- Business Recorder
Power sector reforms or policy whiplash?
Pakistan's power sector appears to be caught between two conflicting impulses. On one hand, the government is pushing forward with a bold plan to privatize multiple electricity distribution companies (DISCOs), touting it as part of a long-term market liberalization strategy. On the other, it continues to multiply state-owned enterprises (SOEs), such as the newly-formed Hazara Electric Supply Company (HAZESCO), raising questions about whether there is genuine reform underway or merely an administrative reshuffling with little substantive change. In May 2025, the government moved to privatize three major Discos — IESCO, FESCO, and GEPCO — as part of its Phase I privatization program. These are some of the relatively better-performing utilities, which suggests a revenue-maximizing strategy rather than a structural reform approach. Phase II is expected to include LESCO, MEPCO, and – ironically — HAZESCO, a company only just brought into existence. This apparent contradiction lies at the heart of the confusion: while some entities are being handed off to the private sector, new SOEs are simultaneously being created, staffed, and resourced from scratch. Is this a strategy or a contradiction? HAZESCO was officially incorporated in October 2023 and granted NEPRA's distribution and supply licences in May 2025. It was carved out from PESCO to manage the electricity needs of the Hazara Division, ostensibly to improve regional accountability and operational efficiency. At the same time, however, the government has committed to eventually privatize HAZESCO, making it the rare case of an SOE being born with an expiry date. Some officials argue that this reflects a phased and modular reform strategy—disaggregating large utilities into manageable, region-specific companies that can later be offered to the private sector in more efficient, accountable forms. Supporters of this approach claim it aligns with the rollout of Pakistan's Competitive Trading Bilateral Contract Market (CTBCM), a reform being spearheaded by NEPRA. The CTBCM seeks to move Pakistan away from its legacy single-buyer model, where a centralized agency purchases all electricity, toward a decentralized system where generators and consumers can contract bilaterally. For this model to work, a clear separation between various entities—transmission, generation, distribution, and system operation—is necessary. In this context, the creation of regionally focused DISCOs like HAZESCO could be seen as laying the groundwork for a competitive marketplace. But not everyone is convinced. Critics see the proliferation of new SOEs, while existing ones are hemorrhaging losses, as a case of institutional redundancy. The power sector already comprises more than twenty state-owned companies, including four GENCOs, ten DISCOs, NTDC, CPPA-G, PITC, and various regulatory and project management bodies. The recent cabinet-approved unbundling of NTDC into three new entities—ISMO, NGCP, and EIDMC—further adds to the complexity. Layering new organizations atop a system already riddled with inefficiencies risks making coordination more difficult, not less. The concern is that instead of streamlining operations, the government may be creating more bureaucratic silos and administrative burdens. The broader power sector context makes this institutional expansion even more concerning. Electricity tariffs have reached record highs, partly due to rising capacity payments and a ballooning circular debt that now stands in the trillions of rupees. Both industrial and domestic consumers are struggling under this weight. High tariffs are stifling economic competitiveness, discouraging investment, and driving public frustration. While the government pursues structural reform, consumers see only mounting bills and persistent outages. Some observers argue that the contradiction is only apparent, not real. According to them, Pakistan is pursuing a dual-track strategy: restructuring and strengthening certain entities before privatization, while simultaneously creating a regulatory and market architecture (like CTBCM) to support a competitive power market ostensibly breaking away from the malaise of the single buyer model. This, they argue, is a globally practiced approach—India, for example, unbundled its electricity boards into state-wise distribution companies before gradually introducing private participation. In theory, a similar approach could work in Pakistan if implemented with transparency, discipline, and a clear roadmap. The problem, however, lies in execution. The government has yet to establish clear performance benchmarks for these new and existing companies, nor has it developed credible turnaround plans for those that are bleeding financially. In the absence of strong corporate governance and independent regulatory enforcement, creating new SOEs risks simply replicating the same inefficiencies under different names. Meanwhile, consumers are bearing the brunt of indecision, inefficiency, and inflated costs. Pakistan is not necessarily moving in circles, but the direction of movement is far from linear. The country is experimenting with a modular reform model: breaking down existing monopolies, piloting improved regional structures like HAZESCO, and paving the way for their eventual privatization within a competitive market structure. If executed well, this could lead to a leaner, more efficient, and more accountable power sector. But if the contradictions are not addressed and reforms are driven more by bureaucratic impulses than market logic, the country may end up with a more fragmented and costly system—without any of the promised gains of competition or efficiency. Whether this is method or madness will become clearer in the next 12 to 24 months. But one thing is certain: the stakes are rising along with the electricity bills, and Pakistan cannot afford to get this transition wrong. Copyright Business Recorder, 2025
Business Recorder
28-05-2025
- Business
- Business Recorder
Nepra clears KE's BERs for two solar, one hybrid projects
ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has cleared KE's Bid Evaluation Reports (BERs) of two solar - 50 MW and 100 MW power projects - and 220 MW site neutral Hybrid Project at Dhabeji Grid and its Competitive Trading Bilateral Contract Market (CTBCM) integration plan. KEL carried out separate competitive bidding processes for the two solar projects, and in accordance with Regulation 11 of the NCBTR and paragraph 28 of the Decision, submitted the BERs to the Authority on August 28 2024, for the approval of these BERs and the bidding process. KEL stated that upon approval of the BERs, it shall notify the successful bidder and proceed with the subsequent procedural steps. KEL submitted the BERs including therewith all the information as stipulated in Regulation 11(1) of NCBTR. KEL noted that Master Textile Mills Limited ('MTML') emerged as the lowest responsive bidder for both projects, having successfully cleared the technical evaluation and submitted the lowest financial bids. According to KEL's submission, notification to the successful bidder shall be issued upon receipt of the Authority's approval of the BERs. 220MW hybrid project: KE tells Nepra won't seek additional costs The Authority has directed KEL that any adverse financial impact resulting from the delay in execution of generation or transmission projects whether on account of KEL or the successful bidder shall not be passed on to the consumers in any form and this condition shall be appropriately reflected in the relevant project agreements. In view of the foregoing, the Authority was satisfied that the bidding process conducted by KEL complies with the applicable provisions of the NCBTR-2017 as well as the directions issued by the Authority from time to time. Given that the projects were duly optimized in the approved Indicative Generation Capacity Expansion Plan ('IGCEP') and included in the approved Power Acquisition Plan ('PAP'), the Authority approved the BERs submitted by KEL in respect of its 100 MWp Solar PV Project at Bela and 50 MWp Solar PV Project at Winder, Balochistan. This decision was to form the basis for regulatory processing of the tariff petition in accordance with the applicable laws, rules, and regulations. On the issue of 220 MW site neutral hybrid project at Dhabeji Grid the Authority said that it is satisfied that the bidding process conducted by KEL complies with the applicable provisions of the NCBTR-2017 as well as the directions issued by the Authority from time to time. The Authority noted that KEL had initially indicated the possibility of equity participation in the projects, which was approved in the Decision, subject to certain directions. However, upon review of the submitted BERs, it was noted that KEL opted not to participate in the projects, as an equity shareholder. Accordingly, the Authority's directions regarding equity participation do not apply in the present circumstances. It was noted that KEL's submissions regarding the transparency of the bidding process appeared to be well-founded. The timely communication with bidders, publishing the RFP on its website, requiring both hard and soft copy submissions via SAP ARIBA, and uploading all correspondences, clarifications, and amendments on both ARIBA and its website for equal access to information, showed that the bidding process was visible and transparent. Additionally, the Authority noted that no grievance or complaint was filed by any participating bidder during the entire bidding process before the designated GRC, and during the instant proceedings. Furthermore, all documentation, procedural steps, and disclosures required under the NCBTR-2017 were verified, and found to be in order by the Authority. In light of the foregoing, the Authority was satisfied that the competitive bidding process undertaken by KEL was carried out in a transparent manner and was in compliance with the provisions of the NCBTR-2017, as well as the directions issued by the Authority in the decision. KEL stated in the subject BERs dated 19 December 2024 that based on the evaluation criteria, MTML offered the lowest tariff of Rs 11.6508 /kWh (US Cents 4.0363/kwh) for 50MWp Winder project, and Rs 11.2071 /kWh (US Cents 3.8826/kwh) for 100MWp Bela project. KEL was informed that it has duly complied with the directions of the Authority in the approved RFP regarding prudence check and displacement of expensive units. And was asked to submit a revised displacement working reflecting the updated assumptions and parameters. The Authority noted that the revised analysis reflected a more holistic view of the system-level impact of the 150 MW renewable addition. The Authority reviewed those workings and observed that KEL had the responsibility of justifying the benefits of cost savings by procuring energy from these projects, and a sufficiently reasoned and data supported case has been presented to justify the procurement of these projects on the grounds of displacing costlier generation, demonstrating potential savings in energy costs and FOREX outflow through the replacement of expensive generation sources with lower-cost renewable energy. Given that the Projects were duly optimized in the approved Indicative Generation Capacity Expansion Plan (''IGCEP') and included in the approved Power Acquisition Plan ('PAP'), the Authority has approved the BER submitted by KEL in respect of 200 MWp -AC Peak (with a +20% allowance) Site Neutral Hybrid power project at Dhabejl Grid Station. This decision shall form the basis for regulatory processing of the tariff petition in accordance with the applicable laws, rules, and regulations. On integration plan, NEPRA said that keeping in view the material implications of commercial allocation of existing PPM / ERAs, Plan for KE's integration is subject to finalization of commercial allocation of existing PPAs/ EPAs and mechanism for capacity invoicing for supply from National Grid, at the time of commencement of CTBCM, as well as other areas which need to be firmed up as part of CTBCM implementation phase, detailed in the Plan. As detailed in Section 2.2.2 of the Plan, KR's current MYT is for a 7-year tariff control period, expiring on June 30, 2023. As per the CTBCM detailed design and also detailed in plan, ICE shall participate in CTBCM in various service providers as well as market participants. In order to align with the framework which proposes central despatch, KE, as part of the implementation phase shall evaluate appropriate tariff structure, agree on key principles with NEPRA and will accordingly file its tariff petition with NEPRA by July 2022. Copyright Business Recorder, 2025
