Power division proposes new tariff plan to boost industrial efficiency

ISLAMABAD: Under a special initiative by the Federal Minister for Power Division Sardar Awais Ahmed Khan Leghari, the Division is considering the introduction of a new optional tariff mechanism aimed at facilitating industrial consumers and enhancing overall efficiency in electricity utilization.

Several internal consultative and technical meetings have already been undertaken by the Minister in this regard.

Under this proposed framework, industrial consumers will have the flexibility to opt into a multi-slab tariff structure, where energy pricing is based on average marginal cost signals across defined time-of-use slabs. This approach is designed to better reflect the actual cost of electricity supply during different periods.

The tariff will consist of two primary components

Fixed Charges: These will be determined based on Maximum Demand Indicators (MDI) and are expected to be relatively higher. This will incentivize consumers to optimize and reduce their peak demand.

Variable Energy Charges: These will be significantly rationalized and aligned closer to actual energy costs, enabling more cost-reflective pricing.

This structure is expected to deliver the following benefits

• Encourage efficient load management by allowing industries to align their operations with lower-cost time periods.
• Promote higher electricity consumption during off-peak hours, improving system load factor.
•  Incentivize peak demand reduction, thereby reducing stress on the grid and minimizing the need for costly capacity additions.
• Support industrial productivity and competitiveness through more predictable and potentially lower energy costs.

Overall, this tariff reform is expected to act as a catalyst for sustainable industrial growth in Pakistan, improving energy efficiency while supporting long-term economic development.

The Federal Minister after technical proposals has now directed to ensure inclusivity and effectiveness for the proposed regime by extensive stakeholder consultations.

In this regard stakeholders consultations will be conducted with industrial consumers, chambers of commerce, and trade bodies across the country. Feedback from these engagements will be incorporated to refine the mechanism.
First consultative confrence will be held tomorrow March 26, online.