FPCCI Demands Industrial Tariff Below 9 Cents to Boost Exports

KARACHI: President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Atif Ikram Sheikh, has welcomed the gradual reduction in industrial electricity tariffs from 16 cents to 12 cents per unit over the past two years, while calling for a further cut to below 9 cents for all industrial consumers to boost exports and reduce imports.

In a statement, Sheikh said the existing 12-cent tariff and selective relief schemes were temporary measures, stressing that a uniform reduction for the entire industrial sector, including B3 and B4 consumers, was essential to improve industrial competitiveness and expand Pakistan’s export base.

He thanked Prime Minister Muhammad Shehbaz Sharif and Federal Minister for Power Sardar Awais Ahmad Khan Leghari for providing relief to industry. He also appreciated the government’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.

The FPCCI president acknowledged the power minister’s engagement with industrial stakeholders, noting that three consultation sessions had been held to discuss the proposed measures.

Explaining the Incremental Consumption Package, Sheikh said it offered a concessional electricity rate on consumption exceeding a consumer’s historical baseline, while existing consumption continued to be billed under the prevailing tariff. The incentive, therefore, applied only to additional electricity units consumed.

Under the proposed Two-Part ToU Tariff, electricity bills would comprise a fixed capacity charge per kilowatt per month and a variable charge based on consumption and the time of use. The structure envisaged different rates for non-solar, solar and peak-hour consumption.

The initiative aims to encourage industries to increase electricity consumption during daylight hours, when solar power generation is abundant, and help address the challenge of the so-called “duck curve”, which reflects fluctuations in net electricity demand as solar generation rises and falls.

However, Sheikh said the industrial sector had conveyed its reservations about the Two-Part ToU 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 ongoing war had made the tariff unworkable for industry under prevailing conditions.

He further argued that the benefits offered to one segment of industry could ultimately be recovered from other consumers, effectively shifting the financial burden rather than reducing the overall cost of electricity.

According to the FPCCI chief, industries had already optimized their operations around daytime and solar-hour consumption, leaving limited scope to shift additional demand from night-time to daylight hours. He added that solar power remained cheaper than grid electricity under the proposed rates, making it unlikely that the tariff would encourage industries to return to grid-based power during solar hours or resolve the duck-curve challenge.

Sheikh called for greater consideration of industry feedback during the design of future electricity tariff proposals, emphasizing that sustainable relief required a structural reduction in electricity costs rather than temporary incentives.

He also highlighted the position of B3 and B4 industrial consumers, who, despite receiving electricity at higher voltage levels and generally costing less to serve, continued to bear cross-subsidies. He said their tariffs could be reduced alongside those of other industrial consumers, benefiting both businesses and the overall power system.

Addressing concerns about international financial commitments, the FPCCI president said reducing industrial electricity tariffs should not pose a problem for the International Monetary Fund (IMF), arguing that lower energy costs could stimulate industrial production, improve competitiveness and increase exports.

Sheikh said the FPCCI was ready to assist the government in developing future tariff policies through the expertise of private-sector energy professionals.

He stressed that the ultimate objective of energy-sector reforms should be to expand Pakistan’s overall industrial output and export capacity, rather than merely redistribute production and electricity costs among different industries.