The National Electric Power Regulatory Authority (NEPRA) has made a landmark decision to usher in a new era of competition and address the woes of the power sector by granting the market operator license under the Competitive Trading Bilateral Contract Market (CTBCM) to the Central Power Purchasing Agency (Guarantee) Limited (CPPA).
The market operator will administer its operations, standards of practice, and business conduct of market participants under the market commercial code approved by the NEPRA, as per its news release.
The commencement of the CTBCM under the amended NEPRA Act, 2018, was a milestone achievement for the power sector. Introducing the CTBCM had originally conceptualized the wholesale electricity market under the WAPDA Strategic Plan prepared in 1992 for the unbundling of the power sector. However, the idea did not materialize until the NEPRA approved the CTBCM in December 2019 (High-Level Design) and November 2020 (Detailed Design).
Under the approved CTBCM implementation roadmap, the relevant regulations were approved and notified within due timelines of 18 months. Furthermore, all the critical actions, including the deployment of the IT system and the operationalization of market departments (MIRAD) in the distribution companies (DISCOs) were also completed within a record 18 months.
The CTBCM will greatly improve the governance of the power sector through institutional reforms, improved procurement and payment discipline, the utilization of merchant generators without take-or-pay contracts, bilateral contracting by DISCOs based on demand forecasts, and capacity obligations gradually moving away from sovereign guarantees, K Electric’s (KE) integration into central dispatch to result in billions of rupees of saving, the deployment of IT and OT tools, the automation of business processes, capacity building of human resources, etc, the news release details.
The successful implementation of the CTBCM had the potential to turn the power sector’s overall technical, financial, commercial, and legal climate around. Further, large consumers will now be able to purchase electric power from the suppliers of their choice at the cheaper and bilaterally agreed rates rather than purchase from the DISCOs at the regulated tariff.
The NEPRA said it appreciated the efforts of all the key implementation entities, including the Ministry of Energy (Project Director), CPPA-G, Private Power Infrastructure Board (PPIB)/Alternate Energy Development Board (AEDB), the National Transmission & Despatch Company (NTDC), DISCOs, K-Electric, and other stakeholders in achieving major milestones in the CTBCM Implementation Roadmap in a record 18 months.
The news release also read: “Initially, there will be a test run of the CTBCM for six months wherein all IT systems and processes will be put under stress test to check their reliability and efficiency so that necessary adjustments are made in the regulatory documents before the actual transactions take place under CTBCM”.
The NEPRA said that the test-run period will be followed by the financial transactions under the CTBCM to achieve the benefits of affordable, reliable, and sustainable electric power for the consumers of the power sector.
