ISLAMABAD: In a significant step towards reforming the country’s energy sector, the Cabinet Committee on Energy (CCoE), chaired by Prime Minister Shehbaz Sharif, has approved the creation of an independent electricity market in Pakistan.
As per details, this decision was made during a high-level meeting of the Cabinet Committee on Energy, chaired by Prime Minister Muhammad Shehbaz Sharif, aimed at addressing the long-standing issues of circular debt, inefficiency, and lack of competition in the power sector.
At the meeting, the Cabinet Committee gave its principal approval for the formation of an Independent System and Market Operator (ISMO), a crucial entity that will serve as the foundation of a competitive electricity market in Pakistan. The ISMO will gradually phase out the government’s role as the sole buyer of electricity and transition the sector into a multi-player independent market, allowing for more competition and greater transparency.
Once fully operational, the ISMO will enable consumers to purchase electricity from multiple suppliers rather than being restricted to the existing power distribution companies (DISCOs). The move is expected to introduce healthy competition among energy providers, resulting in lower electricity prices and improved service for consumers. The Prime Minister highlighted that this is a major step toward enhancing efficiency and transparency in the power sector.
The ISMO will be registered under the Companies Act of 2017 with the Securities and Exchange Commission of Pakistan (SECP). Its creation marks the first step towards decentralizing the power market, which has long been dominated by government monopolies.
During this important meeting, the Prime Minister underscored that establishing a competitive and transparent electricity market is crucial to ensuring the sector’s sustainability and addressing long-standing inefficiencies.
In addition to providing consumers with the ability to choose their electricity suppliers, the ISMO will play a pivotal role in long-term planning for the generation and distribution of electricity at the lowest possible cost. The system will facilitate efficient energy production and a cost-effective transmission network, helping to reduce overall costs for consumers.
One of the most important objectives of the ISMO is to tackle the country’s mounting circular debt, which has been a persistent issue plaguing the energy sector. The Prime Minister stressed that the new system is expected to bring about a substantial reduction in circular debt and lower electricity tariffs. By promoting competition and reducing inefficiencies, the government anticipates significant cost savings and improved financial health in the power sector.
The ISMO will be governed by a board comprising experts from the energy sector, ensuring that decisions are made by professionals with extensive knowledge and experience. This approach is designed to maintain transparency and professionalism in the management of the electricity market.
During the meeting, Prime Minister Shehbaz Sharif directed officials to intensify efforts to curb power theft and reduce losses in the electricity sector. He emphasized the need for swift and effective measures to address these issues, calling for departmental action against any employees of distribution companies found to be involved in electricity theft.
The Prime Minister also underscored the importance of leveraging modern technology to tackle power theft and improve overall efficiency in the sector. He instructed that advanced technological solutions be implemented to ensure transparency and accountability.
In addition to Prime Minister Shehbaz Sharif, the meeting was attended by several key government officials, including Finance Minister Muhammad Aurangzeb, Federal Minister for Planning and Development Ahsan Iqbal, Federal Minister for Economic Affairs Ahsan Cheema, Federal Minister for Energy Sardar Owais Ahmed Khan Leghari, Federal Minister for Petroleum Musadik Masood Malik, Minister of State for Power and Finance Ali Pervaiz, and other members of the Cabinet Committee on Energy.
The meeting also included a detailed briefing on the current state of circular debt in the power sector and the government’s ongoing efforts to implement reforms. The Prime Minister reaffirmed his administration’s commitment to making priority-based reforms to stabilize the energy sector.
It is pertinent to mention that the approval of the ISMO represents a significant milestone in Pakistan’s journey toward a more efficient and competitive energy market. As the country faces growing demand for electricity and challenges in managing costs, the establishment of this independent electricity market is expected to drive long-term benefits for consumers and the overall economy.
