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An institutional framework for the development of sustainable and competitive power market in Pakistan

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  • Qazi, Usama
  • Jahanzaib, Mirza
  • Ahmad, Wasim
  • Hussain, Salman

Abstract

Pakistan is continuously striving for sustainable and competitive power market. Under the comprehensive power sector reform program, Pakistan shifted its power market from monopoly model to single buyer model by unbundling Water and Power Development Authority (WAPDA) and establishing National Transmission and Dispatch Company (NTDC). Current severe power situation in the country is triggering the Government of Pakistan (GoP) to accelerate the implementation of intended reform program and to readily undertake next planned transformation i.e. from single buyer model to wholesale market model. This research endeavors the future dynamics of power market after the structural spin-off by pre-assessment of upcoming wholesale power market. Market power of both public and private electricity generators has been computed using 8-largest firm concentration ratio, Herfindahl-Hirschman Index (HHI) and Residual Supply Index (RSI). The findings suggest that future power market will function with non-existence of market power except in the periods of peak electricity demand and maximum hydro generation. Furthermore, insufficient installed capacities and underutilization of public thermal units may enable some players to exercise market power. For sustainable and competitive power market an empirically supported framework has been proposed based on the analysis. The framework proposes utilization of huge available renewable energy potential for future which will protect the whole infrastructure from market power. It recommends respective roles and responsibilities for the smooth transition among market models. The framework will be supportive in terms of successful and smooth transition from single buyer model to wholesale market model and potential of wind, solar, biogas to be properly explored and utilized to reduce energy gap.

Suggested Citation

  • Qazi, Usama & Jahanzaib, Mirza & Ahmad, Wasim & Hussain, Salman, 2017. "An institutional framework for the development of sustainable and competitive power market in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 83-95.
    • Handle: RePEc:eee:rensus:v:70:y:2017:i:c:p:83-95
    DOI: 10.1016/j.rser.2016.11.152
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