The federal government has announced a landmark shift in the country’s energy landscape by opening up the electricity market, allowing consumers to choose their preferred power suppliers starting January 2026. This decision marks the beginning of a competitive energy marketplace, breaking away from decades of regional monopolies that left consumers with little or no choice in how their homes and businesses were powered.
The announcement was made during a briefing to the National Assembly’s Standing Committee on Power by Fakhar Alam Irfan, Secretary of the Power Division. He explained that the government is moving toward an open electricity market aimed at boosting competition, improving service delivery, and making prices more competitive over time.
Under the new policy, consumers with a demand of one megawatt or more will be the first to benefit from this change. They will be allowed to buy electricity from any company of their choice rather than being bound to a single regional provider. Over time, this market model is expected to expand to smaller consumers, including households, creating an entirely new dynamic in how electricity is bought and sold in Pakistan.
Dr Alam highlighted that this transition is part of a broader reform agenda to address chronic inefficiencies in the power sector. One of the most pressing challenges is circular debt, which, although stabilized in recent years, continues to pose risks to the energy system. He noted that the financial losses in the power sector, which stood at Rs600 billion in 2024, have been reduced to Rs397 billion this year, with further reductions planned.
He clarified that losses exceeding the National Electric Power Regulatory Authority (NEPRA) targets don’t immediately impact consumers but eventually feed into the circular debt burden, which the government covers through the federal budget. To protect consumers and system integrity, he instructed that feeders with up to 20 percent losses should not be shut down as such actions negatively affect both end-users and government finances.
Karachi’s ongoing power crisis also came under discussion during the committee meeting. Committee member Shahida Rehmani expressed concerns over the lack of alternative providers in the city. She noted that despite being a megacity, Karachi is entirely dependent on K-Electric, resulting in chronic electricity and infrastructure problems. Her remarks reflected growing frustration among residents who have endured years of outages and billing issues without the option to switch providers.
The session also touched on the rapid expansion of solar power in the country. Officials shared that net-metering capacity has now exceeded 6,000 MW, with off-grid solar systems surpassing 1,200 MW. However, this growth has introduced new challenges for the national grid. Electricity supplied through the grid includes around Rs14 in capacity charges and Rs9 in taxes per unit, making it costlier than solar-generated power.
Despite these pressures, the government remains committed to energy reforms aimed at ensuring stable and affordable electricity. The planned liberalization of the power market is expected to give consumers the ability to choose providers just as they choose mobile networks, transforming the country’s power sector landscape.
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