Islamabad, October 9, 2024 – In a transformative step towards revolutionizing Pakistan’s electricity market, the Cabinet Committee on Energy has officially approved the establishment of an Independent System and Market Operator (ISMO).
This initiative aims to foster a competitive environment in power generation and purchasing, effectively phasing out the government’s role as the sole purchaser of electricity.
The decision was made during a meeting chaired by Prime Minister Shehbaz Sharif, where the committee reached a consensus on the principal formation of the ISMO. This proposal will undergo further endorsement by the federal cabinet and subsequently be registered with the Securities and Exchange Commission of Pakistan (SECP) under the Companies Act 2017, as outlined in a press release from the Prime Minister’s Office.
The ISMO is designed to dismantle the existing monopolistic structure in the electricity sector, paving the way for a more competitive, transparent, and independent market. This will empower consumers to purchase electricity from various suppliers beyond the traditional power distribution companies, enhancing consumer choice and potentially reducing costs.
Under the ISMO framework, comprehensive long-term planning will be instituted to ensure the generation of low-cost electricity and its efficient transmission. This approach is expected to play a significant role in reducing electricity prices and mitigating the alarming circular debt that has plagued the power sector for years.
The governance of the ISMO will be overseen by a board comprising seasoned experts from the power sector, ensuring that the initiative is guided by knowledgeable professionals dedicated to the sector’s advancement.
During the meeting, participants were apprised of the current status of circular debt in the power sector, which has emerged as a significant challenge to sustainable energy provision. Prime Minister Shehbaz Sharif emphasized the urgent need for power sector reforms and instructed the committee to accelerate measures to combat power theft and losses. He called for stringent disciplinary actions against employees of distribution companies found involved in such malpractices.
Furthermore, the Prime Minister urged the adoption of modern technology as a crucial element in reforming the sector and curbing electricity theft, which has significantly hampered efficiency and financial stability within the industry.
The meeting was attended by key federal ministers, including Muhammad Aurangzeb, Ahsan Iqbal, Ahad Khan Cheema, Sardar Awais Ahmed Leghari, and Dr. Musaddik Malik, as well as Minister of State Ali Pervaiz Malik. This collective effort signifies a robust commitment to overhaul the power sector, aiming to enhance electricity accessibility and affordability for all Pakistanis.