Delays, poor design, and lack of consultation with industries risk turning CTBCM into a missed opportunity for Pakistan’s power sector and its industries.

For years, Pakistan’s power sector has operated on a single-buyer model that leaves industrial consumers with little to no choice, rising costs, and no meaningful competition in the sector. The Competitive Trading Bilateral Contracts Market (CTBCM) was supposed to change that. Approved by NEPRA in 2020, it promised to open the market so Bulk Power Consumers (BPCs), those using more than 1 MW, could buy electricity directly from generators at negotiated or cheapest prices. The vision was simple: competition would drive efficiency, private investment would flow, and tariffs would become more competitive.

Billions have since been spent on training, IT systems, and legal frameworks to make this happen. Donors, consultants, and the market operator have put in years of work. Yet, five years later, the market is still not there. Therefore, the industry confidence is wearing thin.

One of the biggest frustrations from businesses is the almost complete lack of awareness and engagement. Gurus sitting and making tariffs and decisions are absolutely unaware of ground realities of how industries in Pakistan operate, they seldom leave their air-conditioned offices to actually go and check the working and functionality of the industry.  Beyond a handful of isolated efforts, a seminar at NED University led by then-Chairman Tauseef H. Farooqi, seminars, and efforts from Renewables First, and an analysis by Arzachel, there has been no sustained outreach. No consultation No regular workshops, no clear timelines, no detailed explanation of how the market will actually work. Many factory owners still don’t know what CTBCM or Electricity is, let alone how to participate in it.

There was one online consultation held in which the government and regulator’s own officials kept throwing illogical comments and ideas at each other and industry was not even allowed to speak.

While policymakers talk, industry is acting. In the last four years alone, Pakistan has imported over USD 4 billion worth of solar panels, with a record USD 2.1 billion in just the first half of 2024. Solar now often delivers electricity for under Rs 10 per unit, compared to Rs 30 or more from the grid. Large industrial zones, especially in Karachi, are covered in rooftop and ground-mounted solar arrays. And every month that CTBCM is delayed, more megawatts are locked into captive generation, shrinking the future customer base for the market before it even begins.

This lack of urgency is paired with a lack of consultation. The Power Division never sits with industry when designing tariffs or market rules. ISMO is online, but there are 5 other agencies and departments overlapping the function of ISMO in different ways. That’s how we end up with illogical structures like high-voltage industrial consumers (B3, B4) paying more per unit than low-voltage B2 consumers, which the Gurus of Power Division are still unable to understand, even though the former invest in their own transformers and save the grid significant costs. In the CTBCM process, the first real invitation for feedback only came in May 2025, when key rules and cost recovery mechanisms were already drafted.

One such mechanism, forcing open-access consumers to pay for legacy capacity charges from old DISCO contracts, has been heavily criticized by industry groups like the Korangi Association of Trade & Industry. It violates the principle of open access and removes the very savings that would make the market attractive.

Then, surprisingly, there’s the proposed 800 MW cap for CTBCM’s first phase. It’s not in the NEPRA Act, the National Electricity Policy 2021, or the approved CTBCM design, yet it risks locking the market at barely 5% of national capacity. NEPRA has already warned that such a fixed limit could cause confusion and delay, and stakeholders think it will even lead to corruption. If there must be a cap, it should be auctioned transparently by NEPRA and expanded quickly if demand is strong.

Wheeling charges are another red flag. The government’s amended structure adds up to Rs 12.55 per unit before even adding a generator’s bid price, largely because it includes policy and fiscal charges like the Rs 3.23 Debt Servicing Surcharge and Rs 3.47 cross-subsidy. These have nothing to do with using the network and, in many cases, are already being collected through other means. Internationally, such costs are kept out of wheeling to ensure open-access buyers aren’t penalized for choosing competition. If Pakistan insists on loading them into wheeling, CTBCM will start life uncompetitive. There is a higher risk involved if this cross subsidy and DSS are made part of wheeling charges, they will be increased later on when open access becomes a reality because of the legendary and historic underperformance of the Power sector.

There’s also a missing piece in the current design: giving DISCOs and K-Electric the ability to compete as licensed suppliers. Power Division experts think it might become an obstruction for other competitive suppliers, but the reality is they can easily be managed with regulatory controls and checks.  Right now, they’re being boxed and forced into the role of “supplier of last resort.” That might sound harmless, but it means they’ll be left with only the least profitable consumers as the best-paying customers leave, which will blow up subsidy requirements and further erode performance. This is the biggest obstruction in Disco Privatization as well, as no one would want a disco with only loss-giving or subsidy-dependent consumers. In India and other markets, DISCOs compete for customers while also fulfilling last-resort obligations, creating an incentive to improve service and retain clients, thus requiring less subsidy. This is one of the biggest issues where the Minister of Power himself must take notice and even SIFC must intervene, ignoring the hue and cry of Power Division officials.

Independent Power Producers (IPPs) also need more flexibility. If their contracts were amended to allow partial capacity sales into the competitive market, it would boost liquidity and give buyers more choice. DISCOs could play a larger role too, becoming active competitive suppliers. The more players in the market, from large generators to retail suppliers, the more competition, and with competition comes efficiency.

If CTBCM is to succeed, the government must move from promises to delivery. That means announcing a clear go-live date, stripping non-network costs out of wheeling charges, fixing irrational tariffs, making any capacity caps transparent and flexible, empowering DISCOs and KE to compete, allowing IPPs to sell into the market, and involving industry in every step of the design. Without these changes, CTBCM risks becoming an expensive formality in a power sector already splintering into captive and off-grid solutions. With them, it could still deliver cheaper, more reliable power and finally put Pakistan’s electricity market on a competitive footing.

(The writer is an avid power sector expert and a leading industrialist from Karachi. He can be reached at rehanjawed@gmail.com)

Note: This article first appeared the Business Recorder on Aug 12, 2025.