Government exits power buying: 1MW users first, 400MW up for auction

The federal government says it is out of the electricity buying business from today. Power Minister Awais Leghari, speaking to the media in Islamabad, said the government will no longer have the right to buy electricity from power producers or to require them to sell to it, and will no longer be able to force that electricity on consumers at government-set rates.

What actually changes, and for whom

Not your bill this month. The new trading system starts with large consumers: in the first phase, anyone drawing more than 1 megawatt can buy power directly from a generator on competitive terms. That is industry, large commercial users and big institutional loads, not a house in Johar Town.

The volumes are small to start with. Leghari said the government plans to auction 800 megawatts over five years, with 400 megawatts offered in the first phase. For scale, that is a fraction of national demand, which is the point of a pilot.

The minister said ordinary consumers would eventually be able to choose where they buy their electricity too, under the same market. No date was given for that phase.

Why it matters even if you are not a 1MW consumer

The complaint behind every electricity bill argument in Pakistan is capacity payments: the government contracted to buy power from independent power producers whether or not the power was used, and those contracts sit inside your per-unit rate. Leghari acknowledged that IPPs have become controversial and said the new market is meant to bring competition in their place.

If large industrial users move off the government's purchase book and onto direct contracts, the arithmetic behind the tariff changes. Whether that lands as a lower rate for households or as a smaller base to spread the same fixed costs across is the question, and nothing announced today answers it.

The bill you are actually getting

None of this touches the request already in front of the regulator. CPPA has asked NEPRA for Rs 1.73 a unit more under the monthly fuel charges adjustment, with the hearing set for 29 September. That one does hit household bills: the details and the hearing date are here.

Work out what your own bill comes to at the current slabs on the electricity bill calculator, and if you have been weighing panels, the solar payback calculator uses the current per-watt price.

What to watch

Three things will show whether this is a market or an announcement: the rules NEPRA issues for the first auction, whether any of the 400 megawatts actually clears at a price below the current industrial tariff, and what happens to the capacity payments already contracted. Until a generator and a factory sign a bilateral contract and the power flows, the old system is still the one sending you a bill.