On Wednesday, the Cabinet Committee on Energy approved the establishment of an independent entity aimed at reforming Pakistan’s energy market, enabling consumers to purchase electricity from various suppliers. This decision signifies a shift from the current government-controlled system, where the government is the exclusive buyer of electricity.
Pakistan’s energy sector has been plagued by serious financial issues, including circular debt, power theft, and transmission losses, leading to frequent blackouts and soaring electricity costs. The introduction of an independent market is viewed as a crucial step in addressing these challenges by fostering competition, increasing transparency, and attracting foreign investment, ultimately easing the financial strain on both the government and consumers.
The committee provided principal approval for the formation of the Independent System and Market Operator (ISMO) during a meeting chaired by Prime Minister Shehbaz Sharif, although final implementation requires endorsement from the federal cabinet.
The PM Office stated that “ISMO will gradually replace the government as the sole buyer of electricity, transforming the market into a competitive, multi-supplier environment.” This new system will allow consumers to purchase electricity from sources beyond just distribution companies.
The initiative aims to establish a more efficient, transparent, and competitive electricity market in Pakistan. Moreover, the creation of ISMO is expected to reduce circular debt and stabilize electricity prices. The board of ISMO will include experts from the energy sector to ensure smooth operations.
During the meeting, the prime minister emphasized the need to promptly tackle issues of theft and losses within the electricity sector, asserting, “We are implementing priority-based measures to reform Pakistan’s energy sector.”
