The Overseas Investors Chamber of Commerce & Industry (OICCI) proposals on Pakistan’s move toward a liberalized electricity market go beyond expressing concern about how reforms are being carried out. They also test the government’s commitment to establishing a fully functional Competitive Trading Bilateral Contract Market (CTBCM) and a robust power-wheeling system. The proposals highlight a gap between the goals of reform and its implementation, revealing a power sector plagued by unclear regulations, lack of transparency, unpredictable pricing, and weak market institutions. This gap is what worries investors, reflected in OICCI’s call for “actionable reforms.” Poorly executed liberalization—marked by opacity, weak institutional capacity, and policy reversals—risks further eroding investor confidence and reducing sector competitiveness.
At the heart of the proposals is a demand for a transparent and cost-efficient wheeling framework, with charges clearly broken down into transmission, distribution, system operations, and system loss components. This clarity is essential to ensure predictable pricing for long-term contracts. OICCI also recommends gradually expanding wheeling allocations based on improvements in grid performance, settlement efficiency, and regulatory readiness. Expanding prematurely in a struggling system could destabilize distribution companies’ finances and undermine market confidence. Charges must strike a balance between investor affordability and the financial sustainability of Discos and the wider power sector, as excessive fees would reduce competitiveness, while under-recovery would lead to surcharges.
The proposals also emphasize the importance of modernizing the grid and integrating climate and trade considerations into power reforms. By enabling green bilateral contracts under the CTBCM, foreign and export-oriented investors can access renewable energy and manage carbon exposure. In this sense, electricity market reform is not just an energy issue—it is crucial for maintaining export competitiveness.
Finally, the proposals call for a single-window, time-bound regulatory approval system across government bodies, without which even well-designed reforms risk failure. OICCI presents the government with a clear choice: pursue structured, rules-based liberalization or continue piecemeal reforms that discourage investment.
