Govt invites bids for first 400MW wheeling auction, says it is exiting power procurement

Govt invites bids for first 400MW wheeling auction, notes it is exiting power procurement.

Key points

• Khaleeq Kiani Published September 20, 2026 Updated September 20, 2026 08: 41pm.
• The announcement came from the Independent System and Market Operator (Ismo), a subsidiary of the Power Division.
• Power Minister Awais Ahmad Khan Leghari termed the development a historic major step towards transforming Pakistan's power sector from a single-buyer model to a competitive electricity market.
• Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and throughout the world.
• The last date for submission of RFPs is November 20, 2026.

Khaleeq Kiani Published September 20, 2026 Updated September 20, 2026 08: 41pm. Join our Whatsapp Channel. Add Dawn as a trusted source.

ISLAMABAD: The administration on Sunday unveiled the first wheeling auction of 400 megawatt electricity under the much delayed Competitive Trading Bilateral Contracts Market (CTBCM), enabling sizeable, mostly industrial, consumers to opt for power suppliers of their choice anywhere in the country instead of relying solely on a single state-owned distribution business supplying to their area.

In practice, the announcement came from the Independent System and Market Operator (Ismo), a subsidiary of the Power Division.

Ismo "hereby announces the publication of Request for Proposals (RFP) for the first wheeling auction and invites all potential auction participants to submit proposals for undertaking transactions under the CTBCM", it remarked. The last date for submission of RFPs is November 20, 2026.

Under the Competitive Trading Bilateral Contract Market (CTBCM) mechanism, businesses and industrial consumers will be able to purchase electricity directly from power producers on a competitive basis.

This is part of the government's plan to phase out state-led power purchases, under which 800MW of electricity is to be auctioned over the next five years. In the first phase, 400MW of electricity has been offered for competitive procurement.

Meanwhile, the maximum allocation per auction participant is 160MW, cumulatively throughout all annual auctions over the five-year period.

According to Ismo, the aggregate wheeling quantum is 800MW. It is to be auctioned. Four hundred megawatts have been offered in the first phase of the auction, with a cap of 20pc for each participant.

For context, a participant may develop or procure a single generation plant of up to 160MW firm capacity or multiple plants of different capacities throughout successive annual auctions, provided its aggregate allocated capacity does not exceed 160MW over a five-year period. Each plant must meet the applicable capacity obligations and auction requirements.

In practice, the 160MW ceiling applies to the participant's cumulative allocation, not separately to each plant or annual auction.

Describing the initiative as an significant milestone in the country's power sector, Leghari stated the administration would not be involved in power capacity procurement in future.

He remarked the administration at present purchased electricity under a centralised system and supplied it to consumers, adding that questions had often been raised regarding the terms and conditions governing electricity procurement.

"The government is practically moving out of electricity procurement from today, " the minister remarked.

He remarked under the new system, the administration would neither have the right to sell electricity nor would it purchase electricity from power producers in the traditional manner.

"Those who generate electricity and those who consume it will be able to buy and sell electricity directly, " he continued, stressing that the electricity trading mechanism would be based on transparency and competition.

For context, the minister remarked the system would initially be implemented for industrial and substantial consumers, particularly those consuming more than one megawatt.

He remarked the competitive electricity market would gradually expand and, in the coming years, develop into a broader power market where consumers would have greater choice in purchasing electricity.

"Under this system, even an ordinary consumer will eventually be able to purchase electricity according to their choice, " he remarked.

Meanwhile, the minister remarked the new mechanism would prevent the administration from purchasing electricity and subsequently selling it to consumers at rates determined through the existing centralised arrangement.

He expressed the hope that the availability of electricity at competitive rates would enable Pakistani industries to remain competitive in international markets and enhance their capacity to export products.

Referring to the power sector's past procurement arrangements, the minister remarked the term independent power producers (IPPs) had become controversial in public discourse, adding that the new competitive mechanism would bring greater transparency to electricity procurement and trading.

He remarked the administration was fulfilling the commitments it had created regarding reforms in the power sector and congratulated the prime minister and the nation on the commencement of the new process.

This development follows last week's conditional approval of an indicative generation capacity expansion plan (IGCEP 2025-35) that envisages capacity addition of 26, 045MW – 17, 485MW committed and 8, 560MW optimised – along with the retirement of 2, 577MW of existing capacity, resulting in total installed capacity of 62, 657MW.

This additionally includes 8, 120MW of net metering. The total projected cost of the extra capacity is $47.08bn.

While newly proposed transmission expansion projects require an extra investment of approximately $6.05bn, resulting in a cumulative transmission requirement of approximately $10.65bn over the planning horizon, according to a decision unveiled by the National Electric Power Regulatory Authority, alongside this, ongoing or committed transmission projects entail an estimated investment requirement of $4.6bn.

Khaleeq Kiani is an Islamabad-based reporter for Dawn, specializing in political economy, governance, business, finance, macroeconomics and energy. He can be discovered on X at @khaleeqkiani.

Taken together, the developments around govt invites bids for first 400MW wheeling auction, says it is exiting point to a situation that is still moving, and the coming days should bring more clarity.