FPCCI seeks industrial power tariff below 9 US cents per unit

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called for electricity tariffs to be reduced below 9 US cents per unit across all industrial consumer categories, arguing that lower energy costs would help raise exports and reduce imports.

FPCCI President Atif Ikram Sheikh said the government had brought the industrial electricity tariff down from about 16 US cents to 12 US cents per unit over the past two years, but maintained that further relief should extend uniformly to industry, including B3 and B4 consumers.

Why does FPCCI want industrial tariffs below 9 US cents?

FPCCI says the current 12-cent rate and targeted electricity incentives provide only temporary relief. Sheikh argues that a tariff below 9 cents per unit for all industrial consumers, including B3 and B4 categories, would provide a broader reduction in production costs and help Pakistan increase exports while reducing reliance on imports.

Sheikh thanked Prime Minister Shehbaz Sharif and Federal Minister for Power Sardar Awais Ahmad Khan Leghari for the tariff relief provided so far.

He also referred to the existing Incremental Consumption Package and the proposed Optional Two-Part Time-of-Use tariff as measures aimed at encouraging greater industrial electricity consumption.

How do the industrial power measures work?

The Incremental Consumption Package provides a concessional tariff on qualifying electricity use above an applicable benchmark. The official scheme measures incremental consumption against a reference period running from December 2023 to November 2024 rather than simply against a consumer’s immediately preceding consumption.

Consumption that does not qualify as incremental continues to be billed under the applicable tariff structure.

The proposed Optional Two-Part ToU tariff would combine a fixed monthly capacity charge with a variable per-unit charge that changes according to the time electricity is consumed.

The proposed structure includes different variable rates for solar, non-solar and peak periods and is intended to encourage greater industrial demand during daylight hours, when solar generation is abundant and net demand on the grid is lower. The Power Division has said participation would be optional.

FPCCI questions proposed two-part tariff

Sheikh said industry had raised concerns over the Two-Part ToU proposal with the Power Division during consultations over the past six months.

He argued that the proposed fixed charges were too high and that war-related disruptions to logistics made the tariff difficult for industry to adopt under current conditions.

Sheikh also warned that targeted concessions could shift costs to other electricity consumers rather than reduce the overall burden across industry.

According to FPCCI, many industrial consumers have already adjusted operations around daytime and solar-generation hours, leaving limited room to move additional electricity demand from nighttime to daytime.

The chamber also argued that self-generated solar power would remain cheaper than grid electricity at the proposed solar-hour rates. As a result, it said the tariff might fail to draw industrial consumers back to the grid during daylight hours or materially address the so-called duck curve, in which net grid demand falls during periods of high solar generation before rising later in the day.

Sheikh said industry’s views should receive greater weight when future tariff structures are designed.

He also argued that B3 and B4 consumers continued to carry a cross-subsidy despite receiving supply at higher voltage levels and costing less to serve, saying their tariffs should be reduced alongside those of other industrial consumers.

Sheikh maintained that a broader industrial tariff reduction should not conflict with Pakistan’s IMF commitments if it results in higher industrial output and exports.