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 last two years. He called 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 is temporary measures, stressing that a uniform reduction for the entire industrial sector, including B3 and B4 consumers. It is 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 FPCCI president acknowledged the power minister’s engagement with industrial stakeholders, noting that three consultation sessions had been held to discuss the proposed measures.

FPCCI explains

Explaining the Incremental Consumption Package, Sheikh said it offered concessional electricity rates on consumption above a consumer’s historical baseline. Existing consumption would continue to be billed at the prevailing tariff. The incentive would apply only to additional electricity units consumed.

Under the proposed Two-Part Time-of-Use (ToU) Tariff, electricity bills would include a fixed capacity charge per kilowatt per month. A variable charge would depend on consumption and the time of use. The proposed structure includes different rates for non-solar, solar and peak-hour consumption.

New Tariff Aims to Increase Daytime Electricity Use

The initiative aims to encourage industries to use more electricity during daylight hours, when solar power generation is abundant. It also seeks to address the “duck curve” challenge. This phenomenon reflects changes in net electricity demand as solar generation rises and falls throughout the day.

However, Sheikh said the industrial sector had raised concerns about the proposed Two-Part ToU Tariff with the Power Division over the past six months. He argued that the proposed fixed charges were too high. He also said ongoing war-related logistical disruptions had made the tariff unworkable for industries under current conditions.

FPCCI Warns Against Shifting Electricity Costs

Sheikh argued that the proposed tariff could shift costs to other consumers instead of reducing the overall electricity burden. He said the benefits offered to one industrial segment could ultimately be recovered from other consumers.

According to the FPCCI chief, industries have already optimized their operations around daytime and solar-hour consumption. This leaves limited scope to shift additional electricity demand from night-time to daylight hours.

He added that solar power remained cheaper than grid electricity under the proposed rates. As a result, industries would have little incentive to switch back to grid electricity during solar hours. Sheikh also questioned whether the tariff could resolve the duck-curve challenge.

FPCCI Calls for Lower Industrial Electricity Rates

Sheikh urged policymakers to consider industry feedback when designing future electricity tariff proposals. He stressed that sustainable relief requires a structural reduction in electricity costs rather than temporary incentives.

He also highlighted the concerns of B3 and B4 industrial consumers. These consumers receive electricity at higher voltage levels, which generally costs less to supply. However, Sheikh said they continue to bear cross-subsidies.

He called for lower tariffs for B3 and B4 consumers, alongside other industrial users. According to Sheikh, this approach could benefit businesses and improve the overall efficiency of Pakistan’s power system.

FPCCI Says Lower Power Costs Could Boost Exports

Addressing concerns about international financial commitments, Sheikh said reducing industrial electricity tariffs should not pose a problem for the International Monetary Fund (IMF).

He argued that lower energy costs could boost industrial production, improve competitiveness and increase exports. Reduced electricity costs could also help Pakistani industries compete more effectively in international markets.

Sheikh said FPCCI was ready to assist the government in developing future electricity tariff policies. He offered the expertise of private-sector energy professionals to support the process.

He stressed that energy-sector reforms should focus on expanding Pakistan’s industrial output and export capacity. Rather than redistributing electricity costs among industries, he said, policymakers should aim to reduce the overall cost of production.

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