Amir Saeed

In a landmark development in the energy sector, the National Electric Power Regulatory Authority (NEPRA) has approved the transfer of key power sector licences to the Independent System and Market Operator of Pakistan (ISMO), reports WealthPK.

The transfer of system and market operator licences to ISMO marks a critical milestone advancing electricity sector reform, enhancing transparency, efficiency, and competitive market operations. The electric power regulator undertook the move at the request of the National Transmission and Despatch Company Limited (NTDC).

The decision includes the provision of a revised face sheet for the system operator licence, officially designating ISMO as the new operator.  NEPRA also approved the transfer of Market Operator Licence (No. MOL/01/2022) from the Central Power Purchasing Agency (CPPA-G) to ISMO.

The authority has updated the licence to reflect ISMO as the new licensee, including changes to the company’s Certificate of Incorporation and Corporate Universal Identification Number.  These regulatory actions are seen as critical steps in the ongoing reforms to unbundle and modernize the power sector, aiming to increase transparency, efficiency, and accountability in the electricity market operations. 

The transfer of these licences positions ISMO at the centre of system and market operations, previously managed by NTDC and CPPA-G. With these changes, ISMO is now formally responsible for overseeing both system and market operations – a move expected to pave the way for a more competitive and transparent electricity market in Pakistan.

Talking to WealthPK, Shafqat Hussain Memon, an energy researcher at the Mehran University of Engineering and Technology (MUET), said the transfer of market operator and system operator licences to the ISMO was a watershed moment for the country’s power sector.

This regulatory milestone is a clear signal of Pakistan’s commitment to energy sector reforms and modernization. “This step is fundamental for the operationalization of a wholesale electricity market in the country. By unbundling these critical functions from legacy entities and entrusting them to an independent body, the government is laying the groundwork for a more transparent, efficient, and competitive electricity market.

Such reforms are in line with the international best practices and are essential for attracting investment, encouraging innovation, and ultimately delivering value to the consumers.” Memon added that ISMO’s role will be pivotal in ensuring a smooth and reliable operation of the national grid. As an independent operator, ISMO is now responsible for grid management, system planning, and facilitation of fair market practices and settlements.

“This separation of roles will help eliminate conflicts of interest, foster a level playing field for all market participants, and ensure that the market operations are conducted with integrity and professionalism.” “Successful implementation of this transition will depend on robust regulatory oversight, capacity building at ISMO, and continued collaboration among all sector stakeholders.

If managed effectively, this move will unlock significant benefits for the sector, improving service reliability, enhancing market confidence, and paving the way for competitive pricing,” Memon said.

Credit: INP-WealthPk