Govt proposes new industrial power tariff, seeks IMF approval

ISLAMABAD: The government has proposed a major restructuring of industrial electricity tariffs and shared the plan with the International Monetary Fund (IMF), aiming to increase fixed charges for certain industrial consumers while reducing per-unit electricity rates to improve grid utilisation and recover rising power sector costs.

According to official sources, the proposed “two-part industrial tariff policy” is designed to address the growing burden of idle capacity payments caused by declining electricity consumption from the national grid and slower industrial activity.

The policy seeks to balance cost recovery by lowering energy charges and increasing fixed charges for industries operating below their sanctioned load or shifting to solar and other off-grid energy sources.

Sources said Federal Minister for Power Sardar Awais Ahmad Khan Leghari has already discussed the proposal with IMF officials. Under the plan, industries consuming larger volumes of electricity from the national grid would benefit from lower per-unit tariffs, while consumers with lower utilisation levels would face higher fixed charges.

The Power Division expects the policy to be finalised and implemented within the next two months, subject to regulatory and IMF approvals.

Officials believe the revised tariff structure will encourage industries to increase electricity consumption from the national grid and reduce their reliance on alternative energy sources, including solar power and captive generation.

Initially, the new tariff regime will apply only to industrial consumers, although authorities are considering extending the model to commercial and residential consumers in later phases.

Government estimates suggest the policy could increase electricity demand by approximately 1,000 megawatts within six to twelve months, depending on the response from industrial consumers.

The proposal comes amid concerns over declining industrial electricity consumption. During recent budget consultations, the IMF reportedly raised questions about the continued migration of industrial consumers toward solar and gas-based energy solutions due to high grid electricity tariffs.

Officials warned that further reductions in grid demand could undermine the financial sustainability of the power sector and increase the burden of capacity payments.

The Power Division stated that fixed costs account for nearly 75 percent of total electricity generation expenses, while energy costs represent around 25 percent. As overall consumption declines, fixed infrastructure costs are spread across fewer units, resulting in higher per-unit electricity prices.

Under the proposed system, industries utilising more than 50 percent of their sanctioned load could receive tariff reductions ranging from one to two US cents per kilowatt-hour, bringing electricity rates down to approximately seven to eight cents per unit. Consumers with even higher utilisation levels may see tariffs fall to nearly six cents per unit, improving Pakistan’s industrial competitiveness.

Officials said the initial phase would focus on energy-intensive and continuous-process industries, to improve grid efficiency, reduce idle capacity costs and supporting industrial growth.

The IMF has requested regular data on industrial electricity consumption and the number of consumers disconnecting from the national grid before granting final approval to the proposed tariff reforms.

According to the Power Division, the proposed changes align with IMF objectives of improving efficiency, increasing electricity demand and strengthening cost recovery across the power sector.