Cabinet approves plan for independent energy market in Pakistan

The federal cabinet has taken a landmark decision to establish an independent energy market in Pakistan, signalling a major shift in the country’s electricity sector.

According to sources, the government will no longer enter into new electricity contracts or directly purchase electricity. Instead, electricity will now be sold through a competitive market-based process.

The decision introduces a transparent and competitive bidding system, starting with an auction for 800 megawatts of electricity. The Power Division, along with the Independent Market Operator (IMO), has been tasked with managing the auction process. Officials say the new system will allow broader participation and ensure fair competition in the energy sector.

In addition to market reforms, the cabinet approved a long-term strategy for integrated energy planning. Under this framework, both federal and provincial energy needs will be planned jointly, covering production, consumption, and overall energy management. A dedicated secretariat will be established within the Pakistan Power Management Company (PPMC) under the Power Division to coordinate integrated planning.

Previously, multiple federal and provincial institutions planned separately, often leading to fragmented policies. The new centralized approach will provide comprehensive support to policy-making bodies and ensure more efficient and coordinated energy planning across the country.

Sources described the cabinet’s decisions as a major step toward modernizing Pakistan’s energy sector, promoting transparency, and strengthening long-term energy security.