ISLAMABAD: Pakistan will be implementing its first-ever Competitive Energy Market (CEM) within the next two months as it seeks to streamline its power sector, Energy Minister Awais Leghari said on Thursday, in a bid to shift the power sector toward open-market competition.
Leghari said this during his meeting with a World Bank delegation led by Ousmane Dione, the Bank’s regional vice president for the Middle East, North Africa, Afghanistan and Pakistan, according to the Pakistani energy ministry.
Once in effect, the policy will end government-led electricity purchasing and allow its free trade producers and consumers under a Competitive Trading Bilateral Contract Market (CTBCM) model, which introduces mechanisms such as wheeling charges.
“Pakistan is set to launch its first-ever competitive Energy Market Policy within two months, marking a major shift toward competitive electricity trading under the CTBCM model,” Leghari was quoted as saying by the energy ministry on X.
The policy aims to limit the government’s role to regulation only.
“The government will step back from power procurement, focusing instead on a strong regulatory framework,” the minister said.
The development comes as the government, which owns or controls much of the power infrastructure, grapples with ballooning “circular debt,” unpaid bills and subsidies, that has choked the power sector and weighed on the economy.
Pakistan relies heavily on fossil fuels and generates 56 percent electricity from thermal power plants, 24.4 percent from hydel, 8 percent from nuclear and 12.2 percent from renewable energy sources, while the nation’s total installed electricity generation capacity stood at 46,605 megawatts from July 2024 till March 2025, according to Pakistan’s latest economic survey.
The liquidity crunch has disrupted supply, discouraged investment and added to fiscal pressure, making it a key focus under the International Monetary Fund’s (IMF) $7 billion loan program secured in Sept. last year.
In June, Pakistan also signed term sheets with 18 commercial banks for a 1.275 trillion Pakistani rupee ($4.50 billion) Islamic finance facility to help pay down mounting debt in its power sector, government officials said.
The government expects to allocate 323 billion rupees annually to repay the loan, capped at 1.938 trillion rupees over six years.
Leghari apprised the World Bank delegates of the key reforms his government was planning in various fields, including the power sector.
“The World Bank reaffirmed its support for building a sustainable and investor-friendly energy ecosystem in Pakistan,” the Pakistani energy ministry said.
