ISLAMABAD: The government on Sunday announced the first wheeling auction of 400 megawatt electricity under the much delayed Competitive Trading Bilateral Contracts Market (CTBCM), enabling large, mostly industrial, consumers to opt for power suppliers of their choice anywhere in the country instead of relying solely on state-owned distribution companies.

The announcement came from the Independent System and Market Operator (Ismo), a subsidiary of the Power Division.

Ismo “hereby announces the publication of Request for Proposals (RFP) for the first wheeling auction and invites all potential auction participants to submit proposals for undertaking transactions under the CTBCM”, it said.

The last date for submission of RFPs is November 20, 2026.

Power Minister Awais Ahmad Khan Leghari termed the development a historic major step towards transforming Pakistan’s power sector from a single-buyer model to a competitive electricity market.

Under the Competitive Trading Bilateral Contract Market (CTBCM) mechanism, businesses and industrial consumers will be able to purchase electricity directly from power producers on a competitive basis.

This is part of the government’s plan to phase out state-led power purchases, under which 800MW of electricity is to be auctioned over the next five years. In the first phase, 400MW of electricity has been offered for competitive procurement.

The maximum allocation per auction participant is 160MW, cumulatively across all annual auctions over the five-year period.

According to Ismo, aggregate wheeling quantum is 800MW, which is to be auctioned. Four hundred megawatt has been offered in the first phase of auction, with a cap of 20pc for each participant.

A participant may develop or procure a single generation plant of up to 160MW firm capacity or multiple plants of different capacities across successive annual auctions, provided its aggregate allocated capacity does not exceed 160MW over a five-year period. Each plant must meet the applicable capacity obligations and auction requirements.

The 160 MW ceiling applies to the participant’s cumulative allocation, not separately to each plant or annual auction.

Describing the initiative as an important milestone in the country’s power sector, Leghari said the government would not be involved in power capacity procurement in future.

He said the government currently purchased electricity under a centralised system and supplied it to consumers, adding that questions had often been raised regarding the terms and conditions governing electricity procurement.

“The government is practically moving out of electricity procurement from today,” the minister said.

He said under the new system, the government would neither have the right to sell electricity nor would it purchase electricity from power producers in the traditional manner.

“Those who generate electricity and those who consume it will be able to buy and sell electricity directly,” he added, stressing that the electricity trading mechanism would be based on transparency and competition.

The minister said the system would initially be implemented for industrial and large consumers, particularly those consuming more than one megawatt.

He said the competitive electricity market would gradually expand and, in the coming years, develop into a broader power market where consumers would have greater choice in purchasing electricity.

“Under this system, even an ordinary consumer will eventually be able to purchase electricity according to their choice,” he said.

The minister said the new mechanism would prevent the government from purchasing electricity and subsequently selling it to consumers at rates determined through the existing centralised arrangement.

He expressed the hope that the availability of electricity at competitive rates would enable Pakistani industries to remain competitive in international markets and enhance their capacity to export products.

Referring to the power sector’s past procurement arrangements, the minister said the term independent power producers (IPPs) had become controversial in public discourse, adding that the new competitive mechanism would bring greater transparency to electricity procurement and trading.

He said the government was fulfilling the commitments it had made regarding reforms in the power sector and congratulated the prime minister and the nation on the commencement of the new process.

This follows conditional approval last week of an indicative generation capacity expansion plan (IGCEP 2025-35) that envisages capacity addition of 26,045MW — 17,485MW committed and 8,560MW optimised — along with the retirement of 2,577MW of existing capacity, resulting in total installed capacity of 62,657MW.

This also includes 8,120MW of net metering. The total projected cost of the additional capacity is $47.08bn.

Alongside this, ongoing or committed transmission projects entail an estimated investment requirement of $4.6bn while newly proposed transmission expansion projects require an additional investment of approximately $6.05bn, resulting in a cumulative transmission requirement of approximately $10.65bn over the planning horizon, according to a decision announced by the National Electric Power Regulatory Authority.