Govt Plans Multi Tariff Power System For Industries

The Government of Pakistan is currently evaluating the introduction of an optional multi-tariff Time-of-Use (ToU) framework aimed at reducing electricity costs and enhancing operational efficiency for industrial consumers.

According to the Power Division, the initiative is being spearheaded under the leadership of Sardar Awais Ahmed Khan Leghari, with ongoing technical and consultative deliberations to finalise the proposed mechanism.

The proposed model seeks to provide industrial users with the option to adopt a multi-slab tariff structure, whereby electricity charges will be determined based on marginal cost signals across different usage periods. This structure is intended to reflect the actual cost of electricity during peak and off-peak hours, thereby enabling more efficient energy consumption practices.

Under the framework, a fixed tariff component will be introduced based on Maximum Demand Indicators, likely set at a higher level to discourage excessive consumption during peak hours. Concurrently, variable energy charges will be rationalised and aligned with actual supply costs, ensuring greater transparency and cost-reflective pricing.

Industry stakeholders indicate that the mechanism will incentivise a shift in energy consumption towards off-peak periods, improving load distribution and overall system efficiency. Enhanced off-peak utilisation is expected to increase the system load factor, while reduced peak demand may alleviate pressure on the national grid and limit the need for costly capacity expansion.

The initiative is also anticipated to strengthen industrial competitiveness by offering more predictable and potentially reduced electricity costs, thereby contributing to sustainable economic growth.

Following the development of initial proposals, the government has directed that the framework undergo comprehensive stakeholder consultation. Engagements with industrial consumers, chambers of commerce, and trade associations are planned to ensure a balanced and inclusive policy design.

The first consultative session regarding the proposed tariff regime is scheduled to take place online on March 26, initiating a broader consultation process prior to final policy implementation.

SOURCE: TAXHELPLINE TEAM