The ministerial committee approved the independent multi-player market for the energy sector

• Cabinet energy committee approves ISMO’s recommendation.
• Board of directors of new entity to have experts from the energy sector.
• ISMO to allow the purchase of energy from non-DISCO suppliers.

ISLAMABAD: The Cabinet Committee on Energy (CCoE) on Wednesday approved the creation of an independent multi-player market for generation and purchase of electricity to create a competitive environment and phase out the government’s role as the sole buyer of electricity.

In the meeting chaired by Prime Minister Shehbaz Sharif, the committee mainly approved the setting up of an Independent System and Market Operator (ISMO), which will later be approved by the federal cabinet and registered with the Securities and Exchange Commission of Pakistan under the Companies Act 2017.

“ISMO aims to gradually reduce the role of the government as the sole buyer of electricity and transform the electricity market into an independent, transparent and competitive multi-player market,” the Prime Minister’s Office (PMO) said in a statement.

In addition, the independent operator will also allow electricity consumers to purchase electricity from suppliers other than electricity distribution companies.

Under ISMO, long-term planning will be done for low-cost electricity generation and transmission, besides reducing electricity prices and cyclical debt. The ISMO board will consist of experts from the energy sector.

The meeting participants were informed about the electricity sector debt circular.

Speaking on the occasion, Chief Minister Shehbaz said that priority measures are being taken for power sector reforms and directed for expedited action to reduce power theft and losses besides taking disciplinary action against the employees of the distribution companies involved. to theft.

The chief minister also directed the relevant authorities to use modern technology to bring about reforms and curb power theft.

The high cost of electricity has become a contentious political issue, with opposition parties taking advantage of public discontent to criticize the current government’s handling of the power sector and deals with independent power producers (IPPs).

The burden of high electricity tariffs falls disproportionately on the middle and lower incomes of society, fueling public anger and eroding confidence in the government’s ability to manage the economy.

Analysts noted that a successful renegotiation with both local and international TPPs would drastically reduce tariffs, boost industrial competitiveness and increase public confidence in the government’s ability to manage the economy effectively.

On the other hand, a failed renegotiation could multiply tariffs, putting the government and consumers under additional financial pressure, crippling industry and sparking public unrest.