By Muhammad Luqman

In a bid to help industries in the province obtain electricity at competitive rates, the Punjab government is considering participating in the country’s first 400-megawatt power wheeling auction, which is expected to take place in the near future.

According to a spokesman for the Punjab Energy Department, the possibility of participating in the auction was discussed at a meeting of the department held in the provincial capital on Tuesday, with Provincial Energy Minister Faisal Ayub Khokhar in the chair.

Senior officials of the Punjab Energy Department, he said, have been assessing expected electricity tariffs, grid usage charges, financial viability, potential risks and bidding arrangements.

He said that, to ensure smooth entry into the auction process, the government had also engaged an external financial adviser to assess whether participation would be commercially and economically feasible.

Punjab Energy Department officials believe that open-access wheeling could help establish a more transparent and competitive electricity market by creating opportunities for industrial and commercial consumers to obtain power from alternative suppliers.

The Federal Energy Ministry recently launched the first wheeling auction by issuing a request for proposals (RFP), marking a major step towards shifting the electricity market from a single-buyer model to a competitive wholesale electricity system.

The initiative is being undertaken under the Competitive Trading Bilateral Contract Market (CTBCM).

Under the Wheeling Auction Guidelines 2025, a total of 800MW will be auctioned over the next five years, with 400MW being offered in the first auction.

The auction will allow eligible participants to access the national transmission and distribution network and engage in bilateral electricity transactions in the competitive market.

Consumers using more than one megawatt of electricity would benefit in the initial phase, while the benefits of the competitive system would gradually extend to general consumers.

According to power experts, the Punjab government, which owns a number of power plants in the province, including the Quaid-e-Azam Solar Park in Bahawalpur and LNG-fired power plants, is eligible to participate in the electricity wheeling auction.

Prominent Punjab-owned or provincial government-backed LNG/regasified liquefied natural gas (RLNG)-fired power projects include the Bhikki LNG Power Plant and the Trimmu Power Station (Punjab Thermal Power).

“With a number of power plants, the Punjab government can act as a supplier of power at competitive tariffs to consumers, especially those in the industrial sector, after participating in the auction,” Syed Faizan Ali Shah, Adviser to the Power Division, told Wealth Pakistan.

He said that through the auction, Punjab would be able to provide electricity to the industrial sector at rates cheaper than those currently being offered through the national grid.

However, former Federal Energy Secretary Irfan Ali said Punjab should avail itself of the opportunity only if generation costs and other overhead expenditures remained within acceptable limits.

“Supply of power for the sake of supply should not be the objective of the provincial government,” Irfan Ali said.

He said consumers should be the beneficiaries of every new government initiative.

Industrialists, meanwhile, believe wheeling charges should not be too high.

“These should not be more than Rs2 or Rs3 per unit, as payment of Rs9 to Rs10 per unit would make it impossible for the provincial government to provide electricity to industries at affordable tariffs,” Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Zaki Aijaz told Wealth Pakistan.

He said the government should revive the Sahiwal Coal Power Plant and place it under the control of the business community so that the facility could operate in an economically viable manner.

Kashif Anwar, former president of the Lahore Chamber of Commerce and Industry (LCCI), expressed reservations about the Punjab government’s role as an electricity supplier, citing the associated overhead expenditures.

“The Punjab government should convince the Power Division that electricity should not be charged with a host of taxes. Otherwise, there will be no point in undertaking such an exercise,” he said.

Credit: INP-WealthPk