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–Govt proposes optional multi-slab industrial tariff to boost power use and improve system efficiency
Aftab Maken
ISLAMABAD: The Ministry of Energy (Power Division) held a consultative session on a proposed multi-slab Time-of-Use industrial tariff regime, seeking industry input on a plan designed to raise electricity consumption and improve cost recovery.
The session in Islamabad brought together major industry bodies, including Federation of Pakistan Chambers of Commerce and Industry, All Pakistan Textile Mills Association, and Lahore Chamber of Commerce and Industry, alongside energy officials and technical experts. Officials said the initiative forms part of a broader policy push led by Energy Minister Awais Leghari to reform industrial power tariffs through stakeholder consultation.
The proposed framework introduces an optional tariff structure with higher fixed charges and three Time-of-Use slabs offering lower variable rates. Officials said the model aims to ensure recovery of capacity payments while encouraging industries to shift consumption toward off-peak hours and daytime solar generation periods.
Energy Advisor Syed Faizan Ali and other technical experts outlined the proposal, stressing that the tariff would remain voluntary. Smart meters would be installed for participating consumers to enable accurate measurement and billing under time-based pricing.
Pakistan’s power sector has long struggled with underutilized capacity and rising circular debt. Installed generation capacity exceeds 45,000 megawatts, according to recent government data, while average demand remains significantly lower outside peak months. Capacity payments to independent power producers have surged in recent years, reaching over Rs 2 trillion annually, according to Ministry of Finance disclosures, placing pressure on tariffs and public finances.
Officials said the proposed tariff seeks to address these structural issues by incentivizing higher industrial consumption. Increased utilization during off-peak hours could reduce per-unit costs and improve system efficiency, aligning with broader reforms backed by international lenders including the International Monetary Fund.
Pakistan’s industrial electricity tariffs remain among the highest in the region, according to the World Bank’s 2024 energy report, affecting export competitiveness, particularly in the textile sector. The government has introduced several temporary relief packages in recent years, including regionally competitive energy tariffs, but policymakers have struggled to create a sustainable long-term pricing mechanism.
During the session, industry representatives raised concerns over key design elements, including sanctioned load limits, fixed charge levels, and the treatment of fuel cost adjustments and quarterly tariff adjustments. Participants emphasized the need for a practical framework that reflects operational realities across different industrial segments.
Textile exporters, represented by APTMA, highlighted the importance of predictable energy costs for maintaining global competitiveness. Pakistan’s textile exports account for nearly 60% of total exports, according to State Bank of Pakistan data, making energy pricing a critical policy lever for economic growth.
Officials from Power Planning and Monitoring Company, including Managing Director Abid Lodhi, noted that the tariff design incorporates international best practices in demand-side management. Time-of-Use pricing is widely used in advanced power markets to smooth demand curves and reduce reliance on expensive peak generation.
The proposed rollout of smart metering infrastructure is also aligned with Pakistan’s Advanced Metering Infrastructure programme, which aims to reduce losses and improve billing transparency. Distribution losses and inefficiencies have historically contributed to the accumulation of circular debt, which stood above Rs 2.6 trillion as of early 2025, according to official estimates.
Industry participants welcomed the consultative approach, calling it a positive shift toward inclusive policymaking. Representatives from FPCCI and LCCI expressed support for continued dialogue and pledged to provide detailed feedback to refine the tariff structure.
Energy economists say stakeholder engagement is critical for the success of such reforms, given past resistance to tariff changes. Previous attempts to rationalize industrial tariffs faced pushback due to concerns over cost increases and uneven impacts across sectors.
The Ministry of Energy said it would incorporate feedback from the session into the final design of the tariff regime. Further consultations are planned as part of an ongoing process to finalize the framework.
Pakistan’s power sector is undergoing broader reforms under a multi-year plan aimed at reducing inefficiencies, improving governance, and aligning tariffs with actual costs. Recent policy measures include renegotiation of power purchase agreements and stricter regulatory oversight by the National Electric Power Regulatory Authority.
Analysts say the success of the proposed tariff will depend on balancing cost recovery with industrial growth incentives. If implemented effectively, the model could support higher electricity consumption, reduce idle capacity, and ease financial pressures on the sector.
The Ministry reiterated that collaboration between government and industry remains essential for achieving a sustainable energy future, with the proposed Time-of-Use tariff seen as a key step in Pakistan’s ongoing power sector reform agenda led by the Ministry of Energy (Power Division).
