The caretaker government took a policy reform decision to get rid of capacity payments in future and establish a wholesale market in the electricity sector.
The Energy Committee of the Cabinet gave approval.
How wholesale market will work?
In the first phase, the wholesale market will be introduced for bulk and up to one MW consumers. Domestic consumers will be transferred to the wholesale market in the final phase.
Ministry of Energy said the experiment of trial software for wholesale was successful and now cabinet’s energy committee approved establishment of wholesale markets.
In the first phase, a wholesale market will be established for 16 percent of consumers. In the second phase, industrial users will be transferred while domestic consumers will be shifted to the wholesale market in the final phase.
IPP contracts and wholesale market
Domestic consumers will be migrated to the wholesale market after the long-term contracts of IPPs would expire. It is pertinent to note that Pakistan has been paying hefty amount in foreign currencies to Independent Power Producers (IPPs).
The issue of capacity payment will be eliminated from the wholesale market and many direct buyers will come in the market while Discos will be able to buy power directly from IPPs.
“Due to the trend of competition in the market, the electricity will be cheaper,” he said.
“The issue of capacity payment has been surfaced due to government's long-term contracts with IPPs,” the officials said.
