The government has shared a new electricity pricing plan with the International Monetary Fund (IMF) that would substantially increase fixed charges for industrial consumers using less than their sanctioned load, particularly those shifting to solar and other off-grid power sources.
The proposal, officially termed the “two-part industrial tariff policy,” aims to recover fixed costs and capacity payments from industrial consumers as more users migrate away from the national grid due to high electricity prices and weak economic growth.
Under the proposed policy, industries that consume more electricity from the national grid would receive lower per-unit rates, while those with lower grid usage would face heavier fixed charges. A spokesman for the Power Division confirmed that the policy is under consultation and could be implemented within the next two months.
According to a report by Express Tribune, Power Minister Sardar Awais Laghari recently shared the plan with the IMF. The policy is based on the assumption that increasing fixed charges while lowering energy rates can incentivise industrial consumers to remain connected to the national grid and increase usage.
Initially, the new tariff structure would apply to industrial consumers, though officials are considering expanding it to commercial and residential users at a later stage.
The move comes as the government struggles to stem the growing shift away from the national grid. High electricity costs have pushed many consumers toward cheaper alternatives, including solar systems and gas-based captive generation.
Officials believe the new pricing structure could spread fixed power sector costs over higher electricity sales and reduce unit prices. Preliminary assessments suggest the policy could generate around 1,000 MW in additional demand within six to 12 months of implementation, depending on market response.
Currently, energy charges make up a larger portion of electricity bills than fixed charges, although the latter have been rising steadily in recent years. The Power Division argues that the current structure provides little incentive for industrial consumers to raise grid consumption.
In one cited example, an industrial user in Karachi received a bill of Rs. 8,158 for consuming only four units of electricity, translating into an effective cost of Rs. 2,040 per unit due to a fixed charge of Rs. 6,750. Under the proposed framework, such fixed charges could increase further for low-usage consumers.
The IMF has also raised concerns about the rapid decline in industrial demand from the national grid during recent budget discussions. Officials fear that if more high-paying consumers leave the system, the already fragile power sector could face a deeper financial crisis, leaving distribution companies with fewer viable buyers.
IMF has asked the government to regularly share data on industrial consumption trends and the number of consumers exiting the grid before it gives final approval to the plan.
Speaking on Mohammad Malick’s show, the power minister said fixed costs account for 75% of power generation expenses, while only 25% relates to the actual cost of electricity. He said fixed costs fall during periods of high consumption but rise sharply when demand drops.
A Power Division spokesman said the new tariff would be optional rather than mandatory and is intended to improve utilisation of existing power infrastructure while supporting industrial growth.
He said many industrial users maintain high sanctioned loads or maximum demand capacity but consume relatively small amounts of electricity. Despite that, the power sector must maintain generation, transmission, and distribution capacity to ensure supply remains available, creating fixed costs regardless of actual usage.
Under the proposed model, industries using more than 50% of their sanctioned load could receive a reduction in energy tariffs of around one to two US cents per kWh, bringing effective rates down to roughly seven to eight US cents per kWh.
Officials say tariffs could fall further to nearly six US cents per kWh at even higher utilisation levels, potentially making Pakistan’s industrial power prices more competitive internationally.
The Power Division says aligning tariffs more closely with the sector’s underlying cost structure could benefit both the government and industrial consumers, especially those operating at higher load utilization.
The policy is still being finalised and will require approval from relevant authorities and regulators before implementation. If approved, continuous-process industries and other energy-intensive sectors are expected to be among the first likely adopters.
Officials also believe the new pricing mechanism could influence industrial investment decisions related to captive generation and solar installations, particularly if daytime grid tariffs become comparable to the levelized cost of solar power.
what a short……hafiz sb and it’s team…..
only distributing free contraceptives to government and giving them incentives to not produce more of themselves can save pakistan.