Power Division orders halt to off-merit power purchases by DISCOs, launches inquiry

The Ministry of Energy (Power Division) has ordered an immediate suspension of off-merit electricity purchases by Distribution Companies (DISCOs) from Small Power Producers (SPPs) and Captive Power Plants (CPPs), after concerns emerged over procurement at rates exceeding the national merit order.

The directive was issued after Federal Minister for Power Sardar Awais Ahmed Khan Leghari took serious notice of the issue during a routine stock-taking review of DISCO operations held in Islamabad.

Authorities said the matter involves potential deviations from the Economic Merit Order (EMO), prompting the minister to order a formal inquiry into whether DISCOs have complied with cost-based dispatch principles in their electricity procurement.

Under the fresh instructions, all DISCOs have been directed to ensure strict compliance with the National Electric Power Regulatory Authority (NEPRA) Grid Code and Distribution Code, as well as all relevant regulatory directives governing power procurement.

The Power Division further mandated that no electricity be procured from SPPs without prior approval from the Integrated System and Market Operator (ISMO), except in cases where supply strictly falls within the national merit order based on incremental generation cost.

Officials said the inquiry will examine adherence to EMO principles across DISCO procurement processes and identify any irregularities in off-merit contracting practices.

Leghari also stressed the need for improved coordination with ISMO to integrate SPPs and CPPs into the national dispatch framework, ensuring least-cost electricity generation and optimized system-wide efficiency.

The measures, according to the ministry, are intended to strengthen transparency in procurement decisions, enforce regulatory discipline, and reduce unnecessary cost pressures on electricity consumers.