EDITORIAL: The Competitive Trading Bilateral Contract Market (CTBCM), which was supposed to be rolled out in 2019, is finally taking shape in 2026. According to a Business Recorder exclusive, a summary has been sent to the Prime Minister for final approval to launch 200MW of electricity trading under the CTBCM model. It is important to note that the biggest impediment to the delay was irrational wheeling charges imposed by the government, as it was loading all inefficiencies on to it in the form of capacity payments for underutilised plants, transmission losses due to degrading infrastructure, and theft resulting from poor governance in distribution across the value chain into the wheeling charges. From an initial Rs22 per unit, the price has finally come down to below Rs9 per unit, as cross-subsidies are now being removed. The government may see some initial success, and in early auctions, the eventual users are likely to be bulk consumers — mainly industrial users. The plan is to roll out 200MW of electricity in 2026 and reach 800MW by 2030 through four auctions. A slow start is preferable to address teething problems during the pilot phase. For the model to succeed, regulators must remain vigilant and operate in an autonomous environment — something that is currently lacking. The state-owned dispatch company, NTDC, must move away from the mindset of covering legacy costs. Distribution companies should also be privatised. Even after all this — which is by no means an easy task — the broader development of a secondary energy market may not succeed without eliminating uniform and regulated pricing. No market in the world can function efficiently when price fixation is driven by political considerations. Pakistan maintains uniform power prices across the board, with different slabs for domestic users and differential pricing for commercial and industrial consumers. The same structure applies to gas and petroleum products. Prices are regulated in every segment and incorporate varying taxes and additional costs. Pakistan has some of the highest power prices in the region, while petroleum products are among the cheapest. Energy allocation is not based on actual supply-demand fundamentals but on arbitrary pricing structures. Energy efficiency and environmentally sustainable provisioning cannot improve without moving away from uniform pricing and allowing prices to vary across energy sources. Energy should be priced based on underlying cost structures. In a free market, electricity (and even fuel) prices would be lower in the South, where higher capacity is being added at lower marginal cost. If electricity is transmitted to the North, the additional cost should be reflected in prices. Just as imported goods are cheaper in Karachi than in Lahore due to inland freight costs, energy pricing should reflect geographic realities. There should be no additional subsidies embedded in the model. The petroleum sector operates without such cross-subsidies, and similar treatment is required in the power sector. The assumption of 100 percent recovery should also be rationalised, as operational margins of error exist. Providers must also have the authority to disconnect supply to defaulters. Once pricing and related structural issues are corrected, more industrial units are likely to be established in South, while other markets develop in the North, allowing the electricity market to mature. However, these are politically tough decisions. Without addressing them, the broader development of the energy market under the CTBCM framework will remain a pipe dream. Copyright Business Recorder, 2026