ISLAMABAD: Pakistan’s government has sought bids from interested parties for its first-ever competitive auction of 400 megawatts (MW) of electricity, Power Minister Sardar Awais Leghari said on Sunday, stressing that the move would enable users to buy electricity at cheaper rates.

Pakistan is aiming to move away from a single-buyer system, where the end user has no choice but to purchase electricity from the government, to a more competitive model. Pakistan has capped the market demand of the auction at 800 MW for five years, with 400 MW to be auctioned initially and 100 MW in each subsequent auction.

The auctions will be open to competitive suppliers and captive generators using the grid to wheel power for their own use.

“For the first time in the country’s history, proposals have been invited from interested entities for a wheeling auction,” the Power Division said in a statement. “The Power Division has issued a Request for Proposals (RFP) for the electricity auction.”

It said that through the auction, businesses and industries will be able to purchase electricity from power plants on a competitive basis.

In a televised message, Leghari said the masses have always raised questions at the conditions under which they had to buy power from the government. He noted that Independent Power Producers (IPPs) had been discredited over the past couple of years.

“From today, the government is practically withdrawing from the business of purchasing electricity,” he said. “No one will have the right to sell electricity to the government, nor will the government be able to purchase electricity.”

The minister said that the competitive power market system will be implemented initially for industrial and other large consumers, adding that the general public will be added to it later.

“Under this system, even an ordinary consumer will eventually be able to purchase electricity according to their own choice,” he said.

The minister said that cheaper electricity will help Pakistani producers and exporters compete with their competition worldwide and generate more foreign exchange for the country.

A senior energy official told Arab News earlier this month that the auction is expected to be held in the fourth quarter of the current year.