Islamabad, October 09,2024- The federal government has approved an independent multi-player market for electricity production and procurement in Pakistan. The decision was made during a meeting of the Cabinet Committee on Energy, chaired by Prime Minister Shehbaz Sharif. This initiative is seen as a major step towards reforming the country’s energy sector.
During the meeting, the committee gave in-principle approval for the formation of the Independent System and Market Operator (ISMO), which will later be confirmed by the cabinet. Officials briefed the committee on the issue of circular debt in the power sector, explaining that ISMO will be registered with the Securities and Exchange Commission of Pakistan (SECP) under the Companies Act of 2017. The introduction of ISMO is intended to gradually phase out the government’s role as the sole electricity buyer, transforming the energy market into a competitive, multi-player independent system.
The briefing highlighted that this system will allow consumers to purchase electricity from suppliers other than the existing distribution companies, paving the way for a more transparent and efficient competitive electricity market. The institution will also enable long-term planning for cost-effective electricity production and distribution.
Additionally, the briefing emphasized that the establishment of ISMO will significantly reduce circular debt and electricity tariffs. Experts from the energy sector will be included on ISMO’s board to ensure smooth operations. Prime Minister Shehbaz Sharif, speaking at the meeting, reiterated the government’s commitment to prioritizing reforms in the power sector. He stressed the need for swift and effective measures to reduce theft and losses in the electricity sector. He further directed those strict departmental actions be taken against employees of distribution companies involved in electricity theft, and modern technology should be used to curb theft and advance reforms.
