Karachi: Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), has acknowledged the government’s reduction of the industrial electricity tariff from 16 cents to 12 cents per unit over the last two years. He said that a further reduction to below 9 cents, extended to all industrial consumers, is the definitive way to raise exports and reduce imports.
Atif Ikram Sheikh cautioned that the 12-cent rate and selective schemes are temporary fixes, and that only a uniform reduction for all industry, including B3 and B4, can lift exports and cut imports.
Atif Ikram Sheikh thanked Prime Minister Muhammad Shehbaz Sharif and Federal Minister for Power Sardar Awais Ahmad Khan Leghari for the relief. He also acknowledged the Minister’s effort, under7 the Prime Minister’s leadership, to bring forward two measures for industrial demand: an Incremental Consumption Package and an Optional Two-Part ToU Tariff. He also thanked the Minister for holding three sessions with industry on them.
FPCCI Chief said that the Incremental Consumption Package offers a concessional rate on electricity consumed above a consumer’s own baseline – which is its previous consumption. Existing load is billed as before, and the incentive applies only to additional units. The Two-Part ToU Tariff splits the bill into a fixed capacity charge per kW per month and a variable charge per unit that differs by time of use – with separate rates for non-solar, solar and peak hours. Its aim is to encourage industry to consume more during the day, when solar generation is abundant, and so ease the duck curve.
Mr. Atif Ikram Sheikh stressed that the industry had put its reservations on the Two-Part ToU Tariff before the Power Division, over the last six months – and, maintained that the fixed charges were too high; and, with logistics disrupted by the war, the tariff was not workable for industry in present conditions.
FPCCI President recommended that a benefit to one industry would also be recovered from all consumers; so, the gain of one would become the burden for another. Industry has already optimized around daytime and solar hours; which leaves little room to move demand from night to day; and, even at the proposed solar-hour rates, solar remains cheaper than grid supply across all calculations. The tariff would therefore neither bring industry back to the grid in solar hours nor resolve the duck curve. He hoped that industry’s input will be given due weight at the design stage of future proposals.
Mr. Atif Ikram Sheikh described the 12-cent rate, the incremental package and the two-part tariff as temporary measures. A lasting remedy requires a lower tariff for all industrial consumers, he added.
Atif Ikram Sheikh explained that B3 and B4 consumers still carry a cross-subsidy, even though they take supply at higher voltage and cost less to serve. Their tariff can readily be reduced together with the rest of the industry to the benefit of both the consumers and the system. He added that the IMF should have no problem with reducing the industrial tariff, since it raises industrial output and exports.
Mr. Atif Ikram Sheikh said that FPCCI is ready to support future tariff policy with the expertise of private-sector energy professionals. The collective objective must be to increase Pakistan’s total industrial output – not merely redistribute production and electricity costs from one industry to another, he added.
