Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), has acknowledged the government’s reduction of the industrial electricity tariff from 16 cents to 12 cents per unit over the last two years. He said that a further reduction to below 9 cents, extended to all industrial consumers, is the definitive way to raise exports and reduce imports. He cautioned that the 12-cent rate and selective schemes are temporary fixes, and that only a uniform reduction for all industry, including B3 and B4, can lift exports and cut imports.
Mr. Atif Ikram Sheikh thanked Prime Minister Muhammad Shehbaz Sharif and Federal Minister for Power Sardar Awais Ahmad Khan Leghari for the relief. He also acknowledged the Minister’s efforts, under the Prime Minister’s leadership, to advance two measures to meet industrial demand: an Incremental Consumption Package and an Optional Two-Part ToU Tariff. He also thanked the Minister for holding three industry sessions on them.
The FPCCI Chief said the Incremental Consumption Package offers a concessional rate on electricity consumed above a consumer’s baseline, which is its previous consumption. Existing load is billed as before, and the incentive applies only to additional units. The Two-Part ToU Tariff splits the bill into a fixed capacity charge per kW per month and a variable charge per unit that differs by time of use – with separate rates for non-solar, solar and peak hours. It aims to encourage industry to consume more during the day, when solar generation is abundant, and ease the duck curve.
Mr. Atif Ikram Sheikh stressed that the industry had raised reservations with the Power Division over the last six months about the Two-Part ToU Tariff, maintained that the fixed charges were too high, and said that, with logistics disrupted by the war, the tariff was not workable for industry under current conditions.
FPCCI President recommended that a benefit to one industry would also be recovered from all consumers; so, the gain of one would become the burden for another. Industry has already optimized around daytime and solar hours, leaving little room to shift demand from night to day; and, even at the proposed solar-hour rates, solar remains cheaper than grid supply in all calculations. The tariff would therefore neither bring industry back to the grid in solar hours nor resolve the duck curve. He hoped future proposals would give industry’s input due weight at the design stage.
Mr. Atif Ikram Sheikh described the 12-cent rate, the incremental package and the two-part tariff as temporary measures. He added that a lasting remedy requires a lower tariff for all industrial consumers.
Mr. Atif Ikram Sheikh explained that B3 and B4 consumers still carry a cross-subsidy, even though they take supply at higher voltage and cost less to serve. Their tariff can be reduced along with the rest of the industry, benefiting both consumers and the system. He added that the IMF should have no problem with reducing the industrial tariff, since it raises industrial output and exports.
Mr. Atif Ikram Sheikh said FPCCI is ready to support future tariff policy with expertise from private-sector energy professionals. He added that the collective objective must be to increase Pakistan’s total industrial output, not merely redistribute production and electricity costs from one industry to another.
