The government has announced plans to introduce a new electricity pricing system aimed at solving problems in the electricity sector.
The new system will launch later this year, according to a briefing provided by the Secretary of the Energy Division to the Senate Energy Committee, Express News reported.
Currently, electricity is purchased by the Central Power Purchasing Agency (CPPA) and sold to distribution companies (DISCO), a system which has posed several operational problems.
Under the new plan, a new body, the Independent System Market Operator (ISMO), will be created to regulate electricity trading. This body will be formed by the merger of National Transmission and Dispatch Company (NTDC) and CPPA, which will streamline operations and reduce inefficiencies, the ruling secretary said.
In a bid to restructure 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 transport infrastructure.
The secretary added that all future energy projects will be planned with an emphasis on cost reduction, and any additional expenses will be borne by the federal or provincial governments, not consumers.
Power sector reforms also include the development of a 10-year transmission plan, which will be aligned with generation plans.
The secretary mentioned that the NTDC board, headed by Dr Faiz Chaudhry, would work on the reforms, with recommendations expected by March 2025.
Additionally, the Power Division is taking steps to reduce electricity rates, with significant reductions expected by June 2025.
The proposed reforms have been met with some skepticism from lawmakers.
Senator Shibli Faraz expressed concerns over the performance of the NTDC, pointing out that it had been operating without a permanent leader for years. He also questioned the government’s ability to lower tariffs, given the high cost of electricity.
Senator Mohammad Akram suggested the government should address the growing shift to solar energy, which many citizens are adopting due to high electricity costs.
In response, the Secretary assured that the government was fully focused on resolving these challenges and that a reduction in electricity tariffs would be pursued in the coming months.
The government also wants to improve efficiency and reduce 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 problems in the electricity sector, including inefficiencies, high costs and the growing shift to renewable energy sources.
The government is optimistic that these reforms will lead to a more sustainable and cost-effective energy future for the country.
