ISLAMABAD   -  The federal government approved in principle the formation of an Independent System and Market Operator (ISMO) for generation and purchase of electricity in Pakistan.

The approval was granted in a meeting of Cabinet Committee on Energy presided over  by Prime Minister Shehbaz Sharif in Islamabad on Wednesday. Its approval will also be sought from the federal cabinet. ISMO will be registered with SECP under Companies Act 2017.

ISMO will gradually eliminate the role of the government as the sole buyer of electricity in the country and transform the electricity market into a multiplayer independent market.

The system will enable electricity consumers to purchase electricity from suppliers other than distribution companies. This institution will enable long-term planning for cost-effective power generation and transmission systems.

With the establishment of ISMO, there will be a substantial reduction in the circular debt and electricity rates in the power sector.

The inclusion of experts will be ensured in the board of ISMO.

In his remarks on the occasion, Prime Minister Shehbaz Sharif said steps are being taken on priority basis for reforms in the power sector.

He directed the authorities concerned to take prompt and effective steps to reduce theft and losses in the power sector.

He said departmental action should be taken against the employees of distribution companies involved in electricity theft.

The Prime Minister said use of modern technology should be ensured for the reforms of the power sector and to prevent theft.