'Competitive Trading Bilateral Contract Market': Nepra approves detailed design, implementation plan

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has approved detailed design and the implementation plan of Competitive Trading Bilateral Contract Market (CTBCM) to make the competitive wholesale electricity market operational by April 2022.

The development of the wholesale competitive electricity market in Pakistan was envisioned at the outset of power market reforms of the 1990s and was further provided in the Regulation of Generation, Transmission, and Distribution of Electric Power Act, 1997 amended 2018. Further, the ECC in its decision of April 2015 mandated CPPA-G to prepare and submit the model of the CTBCM to Nepra in consultation with the stakeholders. In compliance with its functions prescribed under the market rules and pursuant to the decision of ECC, CPPA-G submitted a high level conceptual design of the proposed CTBCM model and the roadmap on March 5, 2018, for review and approval of the Authority.

The main aim behind embarking upon power sector's massive unbundling was to transform the industry into functionally more efficient entities through introducing competition in the market, and CTBCM will finally help accomplish this critical goal.

According to the regulator, CTBCM will initially cater to the wholesale market but will eventually pave the way for progressive opening up of retail sector as well as trading with the regional markets.

Nepra has also claimed that CTBCM will usher a new era of transparency, predictability and credibility whereby electricity shall be traded like any other commodity. It has the potential to turn-around the overall technical, financial, commercial, and legal climate resulting in the much needed improvements in the overall governance of the wholesale market.

The updating of the CTBCM Implementation Roadmap required effective coordination to bring all the stakeholders on a platform where they could provide their contribution in updating the roadmap. For this, CPPA-G organised and convened several consultative sessions and meetings at multiple organisational hierarchies of the participating entities i.e. MOE (PD), NEPRA, Discos, NTDC, NPCC, PPIB, AEDB, KE and IPPs.

CTBCM will provide the large consumers with the much needed options to actively trade electricity founded on competitive market based principles. This eventual systemic improvement in the wholesale market will consequently have the trickle-down effect for other consumers, resulting in more competitive prices in the days to come. CTBCM's implementation plan, as approved by Nepra is itself a huge undertaking and a challenge to be completed within the next 18 months to roll out the CTBCM by April 2022.

The window of 1.5 years targeted for CTBCM implementation will be effective from the time of receipt of Nepra approval on the roadmap, translating into the indicative Commercial Operations Date (COD) of November 2021 when the competitive wholesale market in Pakistan shall become operational.

This reform plan entails actions ranging from institutional strengthening to augmenting legal and regulatory framework. Interventions covering people, processes and technological aspects will provide a non-discriminatory open access to all market players. CTBCM will also contribute to improve the security of supply, enhancing efficiency, amplifying payment discipline in the wholesale market operations and advancing conditions to move away from the historical sovereign guarantees-based regime.

Copyright Business Recorder, 2020