Govt to End Single-Buyer Power Model Soon
Federal Minister for Power, Sardar Awais Ahmad Khan Leghari, held a meeting with delegation led by Ms. Anna Bjerde, Managing Director Operations of the World Bank.
During the meeting, the Minister shared that Pakistan is set to introduce a competitive electricity market in the near future. All preparatory work for this transition is being completed. He noted that an Independent System and Market Operator (ISMO) has been established to manage the market operations, and experienced professionals are being appointed to ensure its effective functioning. The government will no longer act as the sole purchaser of electricity.
Highlighting key financial reforms in the power sector, the Minister informed the delegation that there has been a significant improvement in revenue recovery. He emphasized the importance of ensuring that electricity subsidies are directed only to those who truly need them and requested the World Bank’s support in implementing targeted subsidy mechanisms.
Ms. Bjerde endorsed the Minister’s approach, affirming that the World Bank fully supports the idea of better targeted subsidies and is committed to assisting Pakistan’s power sector in this regard.
The Minister also pointed out that Pakistan currently has a surplus of approximately 7,000 megawatts of electricity. He proposed that providing this excess power to industries, even at marginal rates would make it the cheapest industrial electricity in the region. He stressed the need for support from the World Bank and other development partners to capitalize on this opportunity, which could significantly boost industrial production in the country.
Ms. Bjerde agreed with the proposal, noting that utilizing surplus electricity at marginal cost is far more beneficial than allowing it to go unused.
The Minister mentioned that during the winter season, electricity was already supplied at these lower rates without any subsidy, and the goal now is to extend this model throughout the year. He added that the power sector is moving towards the implementation of digital and smart systems from the feeder to the transformer level, and emphasized the crucial role of World Bank support in this digital transformation.
The delegation was also briefed on the ongoing privatization efforts in the power sector. The Minister shared that the privatization process for three electricity distribution companies is currently underway and is expected to be concluded by the end of this year.
He also discussed broader restructuring efforts within the sector, highlighting that procurement and tendering systems have been upgraded to meet international standards, enhancing transparency and merit. Additional measures have been introduced to expedite the completion of ongoing projects.
The delegation was informed about the successful auctioning of old and non-operational government power plants.
The Minister also introduced the Power Planning and Monitoring Company (PPMC), describing it as the technical backbone of the power sector where leading industry experts are engaged in strategic planning and oversight.
The World Bank Country Director Najy Benhassine praised the ongoing reforms and noted the impressive pace of progress. He shared that an additional $55 million in funding is being processed in recognition of the sector’s progress.
