ISLAMABAD (Kashmir English): The government has come up with a big change to how industrial electricity pricing works and ran the idea by the International Monetary Fund (IMF).
Their goal is to bump up the fixed costs on electricity bills, mainly hitting those industrial users operating at less than full capacity or switching to solar and off-grid power.
This new “two-part industrial tariff policy” is set on recouping idle costs in the power sector, caused by falling electricity needs from the national grid and decreased industrial action. It wants to fix this by cutting down on per-unit electricity prices but raising the fixed fees to make back those system costs.
Industries pulling more power from the national grid would see lower per-unit prices, whereas places using less would get socked with higher fixed rates. The Power Division says this plan could start rolling out in about two months, pending approval from the necessary folks.
Word on the street is that Power Minister Sardar Awais Laghari has already talked the proposal over with the IMF. The hope here is that lower per-unit prices paired with higher fixed costs will nudge industries to boost their grid use and slow down the shift to other energy types.
The policy will first target industrial consumers, but may eventually include commercial and residential users in future stages. The government hopes that better tariff incentives can bump up electricity demand by about 1,000 megawatts in six to twelve months. Still, actual outcomes depend on how the market reacts.
Right now, many industries end up paying way too much per unit because of low consumption and high fixed charges. As an illustration, a factory in Karachi got hit with a bill of Rs8,158 for just four units of electricity. This means they paid Rs2,040 per unit since the fixed charges totaled Rs6,750.
At budget talks, the IMF mentioned worries about falling industrial electricity demand due to high prices, which pushed some businesses to switch to solar and gas. Officials stressed that further shifts could harm the power sector’s finances and shrink its customer base.
Additionally, the IMF stated that the government needs to provide regular data on industrial usage and grid separations before okaying any changes to tariffs.
