Govt to Let Big Power Users Choose Their Electricity Supply Company
Key Takeaways
- Pakistan will open its electricity market starting January 2026 for consumers using 1 MW or more to select their power supplier.
- The primary goal of this deregulation is to introduce competition to achieve more reasonable electricity pricing.
- The reform breaks the existing structure of regional monopolies, allowing consumers to choose suppliers beyond their local DISCO.
- A major challenge to the reform is Pakistan's high circular debt burden, despite recent minor reductions in sector losses.
- Implementation in cities with entrenched systems, like Karachi, faces potential delays and requires careful regulatory oversight.
Pakistan is set to fundamentally change its electricity sector by opening the market to competition starting January 2026, allowing consumers consuming 1 MW or more to choose their power supplier, breaking long-standing regional monopolies. The Power Division Secretary confirmed this shift, which is intended to drive down prices and increase utility responsiveness, aligning with other ongoing energy sector reforms like direct sales between producers and bulk consumers. Despite the optimistic outlook, major obstacles persist, notably the substantial circular debt burden, which has only slightly decreased from Rs. 600 billion to Rs. 397 billion. Concerns were also raised regarding the implementation challenges in entrenched systems like Karachi, served primarily by K-Electric. Success hinges on robust regulatory oversight, infrastructure readiness, and maintaining investor confidence while managing risks related to system stability and contractual liabilities.
