ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to reduce industrial electricity tariffs to below 9 cents per unit, saying affordable energy is essential to boost exports, expand industrial production and reduce the country’s reliance on imports.
FPCCI President Atif Ikram Sheikh acknowledged the government’s efforts to reduce industrial electricity tariffs from 16 cents to 12 cents per unit over the past two years. However, he stressed that further relief must be extended uniformly to all industrial consumers to deliver sustainable economic benefits.
He cautioned that the existing 12-cent tariff and selective relief schemes were temporary measures, arguing that a uniform reduction covering all industrial categories, including B3 and B4 consumers, was necessary to improve competitiveness.
Sheikh thanked Prime Minister Shehbaz Sharif and Federal Minister for Power Sardar Awais Ahmad Khan Leghari for providing relief to the industrial sector. He also acknowledged the minister’s efforts to introduce two measures aimed at increasing industrial electricity consumption: the Incremental Consumption Package and the Optional Two-Part Time-of-Use (ToU) Tariff.
He appreciated the Power Division for holding three consultation sessions with industry representatives on the proposed measures.
FPCCI explains industrial electricity relief schemes
According to the FPCCI president, the Incremental Consumption Package offers a concessional rate on electricity consumed above an industrial consumer’s historical consumption baseline. Existing consumption continues to be billed under the applicable tariff, while the incentive applies only to additional units consumed.
The Optional Two-Part ToU Tariff, meanwhile, divides electricity bills into a fixed capacity charge per kilowatt per month and a variable charge based on electricity consumption. The variable component includes different rates for non-solar, solar and peak-hour consumption.
The proposed structure aims to encourage industrial units to increase electricity use during daylight hours, when solar generation is abundant, and help manage fluctuations in demand commonly associated with the so-called duck curve.
However, Sheikh said FPCCI had communicated its reservations about the two-part tariff to the Power Division over the past six months.
He maintained that the proposed fixed charges were too high and that disruptions to logistics caused by the war had made the tariff unworkable for industry under prevailing conditions.
Concerns over cross-subsidies and solar-hour tariffs
The FPCCI president warned that tariff concessions benefiting one group of consumers could ultimately shift costs to other electricity users, turning relief for some into an additional burden for others.
He also argued that industries had already optimised their operations around daytime electricity availability and solar generation, leaving limited scope to shift further consumption from night-time to daytime hours.
Furthermore, he said solar power remained cheaper than grid electricity under the proposed solar-hour rates, undermining the incentive for industrial consumers to return to the national grid during those hours.
In his view, the two-part tariff would therefore neither encourage sufficient industrial demand during solar hours nor resolve the duck-curve challenge.
Sheikh called on the government to give industry feedback appropriate consideration when designing future electricity pricing proposals.
Uniform tariff reduction sought for all industries
The FPCCI president reiterated that the existing 12-cent rate, incremental consumption package and proposed two-part tariff should be treated as interim measures rather than lasting solutions.
He argued that B3 and B4 industrial consumers continued to bear cross-subsidies despite receiving electricity at higher voltage levels and generally costing less to serve. According to Sheikh, their tariffs could be reduced alongside those of other industrial consumers, benefiting both businesses and the wider electricity system.
He also maintained that reducing industrial electricity prices should not conflict with Pakistan’s commitments to the International Monetary Fund (IMF), arguing that lower energy costs could support industrial output and export growth.
Sheikh said FPCCI was ready to assist the government in developing future tariff policies by drawing on the expertise of private-sector energy professionals.
He emphasised that the objective of electricity tariff reform should be to expand Pakistan’s overall industrial output rather than simply redistribute production and electricity costs between different industries.
The FPCCI has therefore called for a comprehensive reduction in industrial electricity tariffs to below 9 cents per unit, arguing that affordable and predictable energy costs are vital to strengthening Pakistan’s export competitiveness and supporting sustainable industrial growth.
