Amir Saeed

The Independent System Market Operator (ISMO) will mark an important milestone in the energy sector by fostering market liberalization and encouraging industrial expansion through increased competition in the power sector.

Talking to WealthPK, Ali Nawaz, Director General Thermal at the Private Power and Infrastructure Board, said the ISMO will operate as a separate entity to manage the electricity market and system operations. This consolidation of obligations brings together the current roles of the Market Operator of the Central Power Purchasing Agency (CPPA-G) and the National Power Control Center (NPCC) of the National Transmission and Dispatch Company (NTDC). “By integrating these functions, the ISMO aims to establish a more efficient and effective governance structure, thereby enhancing transparency and reliability in electricity management. One of ISMO’s most essential functions will be managing and balancing supply and demand in the electricity grid.” He explained that by ensuring that the generation capacity satisfies the consumption demands, the ISMO will help reduce the country’s long-standing problem of load-shedding. In addition to benefiting the consumers, this improved reliability would boost investor confidence and promote further private-sector involvement in the energy market.

“Developing an effective regulatory structure is crucial to supporting the ISMO’s operations while addressing potential market manipulation or monopolistic practices and ensuring fair competition. Integrating advanced technologies, such as smart grids and digital platforms, would enhance monitoring, reporting, and trading efficiencies within the electricity market,’’ he suggested. Talking to WealthPK, Dr Khalid Waleed, Research Fellow at SDPI, highlighted that there was no denying the ISMO’s potential to propel industrial growth. With a more liberalized market, the industries will have easier access to competitively priced, reliable electricity, a vital production input. This would result in increased output, lower the operating expenses, and eventually, a stronger industrial sector that would compete on local and international stages. “Additionally, the ISMO will assist the consumers, distributors, and generators in trading electricity in an open, market-based manner. This new strategy would implement competitive pricing mechanisms and eliminate the inefficiencies linked to fixed pricing structures.

Because of this, the power prices would more accurately represent the market’s state, encouraging producers to maximize their output and consumers to control their consumption.” “Furthermore, the creation of ISMO is consistent with global trends toward integration of renewable energy sources and decentralization. An independent market operator would play an even more important role as the country looks to diversify its energy mix and raise the proportion of renewables.” He suggested that by promoting a competitive landscape, the ISMO would facilitate the integration of renewable sources, promoting innovation and investment in sustainable energy technologies. “Public awareness campaigns can significantly educate the consumers about the benefits of market liberalization, helping them understand how to optimize their electricity usage and take advantage of competitive pricing.”

Credit: INP-WealthPk