Summary of Support to CPPA-G in the Establishment of a Competitive Energy Market in Pakistan – Final Completion Report

(CPPA-G) to establish a competitive energy market in Pakistan. The project, which began in August 2017 and concluded in April 2021, aimed to support CPPA-G in developing and implementing a new competitive energy market. The technical assistance provided by MRC Consultants, under subcontract to Tetra Tech ES, Inc., focused on supporting CPPA-G in meeting requests by the National Electric Power Regulatory Authority (NEPRA) or the Government of Pakistan (GoP). The assistance was related to the development and implementation of a new competitive energy market, which is highly complex and involves a wide variety of stakeholders. The project achieved significant growth in the knowledge of CPPA-G staff on topics related to the electricity market. This is demonstrated by increased knowledge about various electricity market structures and organization, enhanced ability to identify specific system characteristics or constraints that can lead to the selection of one type of market structure over another, improved criteria for the selection of effective options for the power sector in Pakistan, and higher capacity to articulate realistic plans that have better chances of succeeding. Through enhanced capacity, CPPA-G has been able to develop solutions for phased market implementation and support NEPRA in the development of regulations for the electricity market. The financial support provided by USAID through this technical assistance has been important in enabling CPPA-G to perform this function. The way forward is still expected to be challenging, as the introduction of structural reforms in any power sector around the world has always proven to be difficult. Pakistan does not appear to be an exception, and the existing, rigid environment in the country offers an additional set of challenges. Therefore, MRC has continued to recommend the need for a gradual move towards a new power market, allowing key players time to absorb and digest the changes. Capacity-building has been a key component in all the activities carried out as part of this technical assistance. Capacity-building remains one of the most important areas where follow-up activities must continue, to maintain the momentum of CPPA-G's progress and ensure that the knowledge acquired by CPPA-G is also shared with other players in the market. The success of a newly created market is not solely dependent upon the quality of its design but, more importantly, on the capacity of the people operating and participating in the market. The technical assistance provided by MRC Consultants focused on providing CPPA-G with theoretical and practical information about issues of market implementation. The assistance ensured that CPPA-G staff not only understand and take ownership of this process but are also prepared to work independently, when external support is no longer available. This approach proved to be useful and its effectiveness is demonstrated by the high level of competence among CPPA-G staff, their improved ability to make implementation-related decisions, and their focus on achieving targets. The project has made significant progress in developing a competitive power market in Pakistan. CPPA-G has been able to develop solutions for phased market implementation and support NEPRA in the development of regulations for the electricity market. The financial support provided by USAID through this technical assistance has been important in enabling CPPA-G to perform this function. The project's success is a testament to the importance of capacity-building and the need for a gradual move towards a new power market. The project's achievements demonstrate that with the right support and capacity-building, CPPA-G can develop and implement a competitive energy market in Pakistan.