Client Name

HUBCO

Faculty Advisor

Dr. Mujeeb U Rehman Bhayo

SBS Thought Leadership Areas

Entrepreneurship and Innovation

SBS Thought Leadership Area Justification

This Experiential Learning Project falls under the “Entrepreneurship and Innovation” area. The project addresses the inefficiencies in Pakistan’s power market by ensuring smooth transition to liberalized market through innovative policy reforms – such as phasing out cross-subsidy, well-targeted cash transfer programs and enabling private investment through the BOOT (built, operate, own, Transfer ) model in transmission system. The opening of the electricity market for competition provides the young entrepreneurs the opportunity to invest in the generation sector and produce cost-efficient electricity through innovation. Moreover, the lower electricity cost resulting from the implementation of proposed policy creates a business-friendly environment providing great potential for new ideas to flourish. In addition, the CTBCM model provides a new institutional framework for private sector participation. The implications of our project for “Entrepreneurship and Innovation” thought leadership are broad and transformative. The transition to CTBCM showcases institutional innovation reshaping how Pakistan’s power sector operates. Through bilateral contracts, competitive auction-based procurement, and market-based pricing, the market model provides opportunities for energy entrepreneurs, competitive suppliers and new market forces to participate in a sector historically a state-owned monopoly. From a public innovation view, our project proposes an innovative model for subsidy provision that essentially has better penetration and a potential to reduce federal budget allocation to subsidies without distorting the pricing mechanism. Moreover, our BOOT based model for transmission investments creates an opportunity for private-public sector synergy, encouraging entrepreneurship in infrastructure development and reducing fiscal constraints

Aligned SDGs

GOAL 7: Affordable and Clean Energy

Aligned SDGs Justification

Our project is directly aligned with SDG 7: Affordable and Clean Energy and SDG 9: Industry, Innovation, and Infrastructure. The main objective of the project is to ensure successful transition to competitive power market to lower the electricity tariff, making the energy affordable for the user. The focus is also on attracting state of the art technology through foreign investments in the transmission sector which will make the supply of electricity reliable and efficient. The optimal energy designed under this project advocates for high renewable sources integration for cleaner and affordable electricity.

NDA

No

Abstract

The power sector plays a pivotal role in driving economic growth and modernization. However, Pakistan's electricity market remains mired in structural inefficiencies, largely due to the limitations of the prevailing single buyer model. This study explores the transition toward a liberalized power market under the Competitive Trading Bilateral Contract Market (CTBCM) framework. The research is divided into two phases: first, diagnosing the root causes of inefficiencies within the current market structure; second, evaluating how the implementation of CTBCM can address these issues. A tariff forecasting model was developed to assess the impact of bilateral contracts and competitive auctions on electricity tariffs for both regulated and bulk power consumers. The methodology included a review of NEPRA's State of Industry Reports, expert consultations, analysis of DISCO petitions for Use of System Charges, and international case studies from countries that have undergone similar transitions. Findings suggest that while CTBCM lays the groundwork for competition, it must be complemented with broader regulatory reforms—such as the removal of cross-subsidies, DISCO autonomy, and transmission sector competition—to ensure long-term sectoral efficiency. The study concludes that with these complementary measures and macroeconomic stability, Pakistan can achieve a sustainable, competitive power market.

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

Download

Share

COinS