On 20 September 2026, the Independent System and Market Operator of Pakistan (ISMO) published the Request for Proposals (RFP) for the country’s first wheeling auction. The auction offers 400 megawatts (MW) under the Competitive Trading Bilateral Contract Market (CTBCM). Federal Minister for Energy Sardar Awais Ahmad Khan Leghari announced the launch the same day. According to Dawn, he said: “The government is practically moving out of electricity procurement from today.”
Reports by the Associated Press of Pakistan (APP), Radio Pakistan, The Nation, Daily Times and The Standard said the Ministry of Energy (Power Division) issued the RFP. However, the public notice states that ISMO “hereby announces the publication” of the RFP, and the documents sit on the ISMO website. ISMO, a Power Division company, will also administer the auction. Proposals are due by 20 November 2026.
Why it matters
The wheeling auction is the first practical step away from the single-buyer model. Under that model, the Central Power Purchasing Agency buys electricity on behalf of the state-owned distribution companies (DISCOs). Successful bidders will instead sell electricity directly to the more than 3,000 bulk power consumers that Dawn counts nationwide, using the national grid to deliver it.
For industry, this opens a route to negotiated power prices outside regulated tariffs. For DISCOs, however, it means the loss of some of their largest paying customers. An Energy Regulatory Sandbox study by the Sustainable Development Policy Institute (SDPI), presented by researcher Muhammad Umer, estimated that a 200MW first phase alone could cause “an estimated Rs. 30.9 billion in revenue loss for DISCOs”.
Legal framework
The National Electric Power Regulatory Authority (NEPRA) approved the CTBCM design in November 2020. The Cabinet Committee on Energy then approved the Framework Guidelines for Wheeling Auctions, 2025 (Guidelines) in December 2025. The federal government notified the Guidelines on 22 January 2026, and NEPRA declared the same date as the Competitive Market Operations Date.
The Guidelines cap the total wheeling quantum at 800MW over five years. ISMO submitted its Wheeling Auction Process to NEPRA on 28 January 2026, and NEPRA approved it in March 2026. In September 2026, NEPRA approved amendments that doubled the first auction from 200MW to 400MW, with the Power Division’s consent. The amendments also added a battery storage requirement.
Eligibility
The Guidelines open the wheeling auction to companies registered with the Securities and Exchange Commission of Pakistan that are eligible for a NEPRA competitive supplier licence. Other open access users, such as captive generators, may also bid. Bidders give an undertaking of eligibility at the proposal stage and obtain licences after award. The buyers are bulk power consumers with a load of 1MW or more. In addition, no participant may hold more than 160MW, or 20% of the 800MW total, across all annual auctions.
Auction stages
The process runs in five stages: issuance of auction documents, eligibility evaluation, bid evaluation, approval of results and award of quantum. An Auction Committee first assesses eligibility. Bidders then have five business days after the provisional eligibility list to file grievances with a three-member Grievance Redressal Committee. Eligible bidders submit bid values on ISMO’s online platform, and the committee ranks them in descending order. NEPRA must approve the results before ISMO awards any quantum.
Battery storage requirement
Solar and wind projects must include co-located battery energy storage systems (BESS). The storage must have firm capacity of at least 10% of the generation facility’s firm capacity. ISMO estimates that this equals around 40MW of firm storage capacity and approximately 160MWh of storage energy across the 400MW auction, according to NEPRA’s determination. NEPRA treated the 10% threshold as an initial measure, despite broader support for 20% in a consultation in which 10 stakeholders, including FESCO, GEPCO, MEPCO and the Punjab Energy Department, submitted comments, Business Recorder reported.
Use of system charges
On 7 September 2026, NEPRA set uniform Use of System Charges (UoSC) for open-access bulk power consumers. Bulk power consumers supplied through the auction will pay between Rs6.23 and Rs19.62 per unit, depending on tariff category. A fixed grid charge of Rs1 per kilowatt per month also applies. By contrast, consumers taking open access outside the auction face Rs19.17 to Rs32.56 per unit. The All Pakistan Textile Mills Association (APTMA) had earlier criticised an indicative wheeling charge of Rs12.55 per unit and the 800MW cap.
Implications for business
The auction leaves several commercial questions open. Bidders pay their bid value for one year after a transaction starts, but they must fix that value before they secure final supply terms. Successful bidders then have up to three years from the auction date to begin transactions. Industrial buyers must still weigh whether a negotiated tariff, plus UoSC and storage costs, will undercut the regulated rate.
Provincial governments are also assessing their position. The Punjab Energy Department has started reviewing whether to take part. The Sindh government argued in 2025 that capacity allocation should rest with NEPRA rather than the federal government. Meanwhile, the bid bond and performance guarantee amounts in the RFP will affect who can compete.
Next steps and outlook
NEPRA made the two-month submission window non-extendable, so the 20 November 2026 deadline is fixed. ISMO’s timeline shows a provisional list of eligible participants on 4 December 2026 and bid values due on 15 January 2027. NEPRA approval of the results is scheduled for 28 February 2027. After this round, ISMO will offer the remaining 400MW in later annual auctions.
Looking ahead
The first wheeling auction will show whether the current grid charges leave enough margin to attract bidders. Its results will also inform any decision to lift the 800MW cap. In addition, the Power Division has said that the system’s benefits “will gradually extend to general consumers in the coming years”.
For more information on Pakistan’s wheeling auction, contact partners Bilal Shaukat, Hasnain Naqvee and Nadir Altaf.
This article is not legal advice; it provides information of general interest about current legal issues.
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