FPCCI Calls for Uniform Industrial Electricity Tariff Below 9 Cents
The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has called for reducing Pakistan’s industrial electricity tariff to below 9 cents per unit for all industrial consumers, arguing that affordable energy is essential to boosting exports, strengthening domestic production and reducing reliance on imports.
FPCCI President Atif Ikram Sheikh acknowledged the government’s efforts to lower the industrial electricity tariff from 16 cents to 12 cents per unit over the past two years. However, he described the current rate and targeted relief schemes as temporary measures, stressing that a uniform tariff reduction across the industrial sector is needed for a lasting improvement in competitiveness.
He emphasised that the proposed relief should cover all industrial consumers, including B3 and B4 categories, rather than benefiting selected groups.
FPCCI Appreciates Government’s Industrial Relief Measures
Atif Ikram Sheikh thanked Prime Minister Muhammad Shehbaz Sharif and Federal Minister for Power Sardar Awais Ahmad Khan Leghari for efforts to provide relief to industrial consumers.
He also acknowledged the introduction of two measures aimed at encouraging industrial electricity consumption: the Incremental Consumption Package and the Optional Two-Part Time-of-Use (ToU) Tariff.
The FPCCI president appreciated the power minister for holding three consultation sessions with industry representatives to discuss the proposals.
While recognising the government’s efforts, he maintained that the schemes should be assessed against the broader objective of reducing energy costs and improving industrial competitiveness.
How the Incremental Consumption Package Works
Under the Incremental Consumption Package, eligible industrial consumers receive a concessional electricity rate on consumption exceeding their individual baseline, which is based on their previous electricity usage.
Electricity consumed within the existing baseline continues to be billed under the prevailing arrangement. The incentive applies only to additional units consumed above that level.
The mechanism is intended to encourage factories to increase production and use more electricity without extending the concession to their entire consumption.
However, FPCCI believes that such targeted incentives cannot replace a permanent reduction in the electricity tariff for the entire industrial sector.
Two-Part ToU Tariff Aims to Shift Industrial Demand
The Optional Two-Part ToU Tariff separates electricity bills into a fixed capacity charge per kilowatt per month and a variable charge based on electricity consumed.
The variable component differs according to the time of use, with separate rates for non-solar periods, solar hours and peak hours.
The proposed structure aims to encourage industries to increase electricity consumption during daylight hours, when solar generation is more readily available. This is also intended to help manage the electricity demand pattern commonly described as the “duck curve,” in which solar generation reduces net grid demand during the day before demand rises again later.
Despite these objectives, FPCCI has raised concerns about whether the proposed tariff would deliver the intended results under current industrial and economic conditions.
High Fixed Charges and Logistical Disruptions Raise Concerns
According to Atif Ikram Sheikh, industry representatives have communicated their reservations about the Two-Part ToU Tariff to the Power Division over the past six months.
He said the proposed fixed capacity charges were too high and that logistical disruptions caused by the war had made the tariff structure difficult for industry to manage under present conditions.
He also cautioned that a concession for one industrial segment could ultimately shift costs to other electricity consumers. In such circumstances, the benefit received by one group could become an additional burden for another.
FPCCI further argued that many industries have already optimised their operations around daytime electricity availability and solar power. Consequently, there may be limited scope to shift additional demand from night-time hours to daytime periods.
The organisation also maintained that solar power remains cheaper than grid electricity across the proposed solar-hour rates. This could limit the incentive for industries to return to grid electricity during daylight hours, potentially undermining the tariff’s intended impact on the duck curve.
Sheikh urged the authorities to give meaningful consideration to industry feedback while designing future electricity tariff proposals.
FPCCI Seeks Relief for B3 and B4 Industrial Consumers
The FPCCI president specifically highlighted the position of B3 and B4 industrial consumers, saying these categories continue to bear cross-subsidies despite receiving electricity at higher voltages and generally costing less to serve.
He argued that their tariffs could be reduced alongside those of other industrial consumers, benefiting businesses while improving the efficiency of the wider electricity system.
According to FPCCI, a uniform reduction would provide a more consistent basis for industrial planning and investment than selective incentives or temporary consumption-based packages.
Sheikh also argued that reducing industrial electricity costs should support higher industrial output and exports, which he believes would strengthen the case for a broader tariff reduction.
Lower Industrial Power Costs Seen as Key to Export Growth
Atif Ikram Sheikh described the existing 12-cent industrial tariff, the Incremental Consumption Package and the proposed Two-Part ToU Tariff as interim measures rather than a permanent solution.
He maintained that bringing the industrial tariff below 9 cents per unit for all industrial consumers would help Pakistani manufacturers compete more effectively, expand production and increase exports while reducing import dependence.
He also expressed the view that the International Monetary Fund should have no objection to a reduction that supports industrial output and export growth.
FPCCI has offered to contribute the expertise of private-sector energy professionals to future tariff policy discussions. Sheikh said the central objective should be to increase Pakistan’s overall industrial production rather than simply shifting production and electricity costs between industries.
For the business community, the debate centres on whether targeted electricity incentives can deliver sustainable gains or whether a uniform, lower industrial tariff would provide a stronger foundation for competitiveness, investment and export-led growth.