Business bodies urge Nepra to cut industrial tariff under PM’s incremental power package

Key business associations — including the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the Korangi Association of Trade and Industry (KATI), and the Bin Qasim Association of Trade and Industry (BQATI) — have called on the government to revise the Prime Minister’s proposed incremental power package by reducing the incremental tariff rate from Rs22.98 to Rs16 per unit.

As per reports, in separate letters to the National Electric Power Regulatory Authority (Nepra), the bodies argued that the existing tariff is too high to meaningfully boost industrial consumption and competitiveness. Nepra is scheduled to hold a public hearing on the package on Tuesday [today], which has already been approved by the federal cabinet.

The FPCCI said that while the plan could reduce subsidy requirements by up to Rs300 billion, industries continue to bear a Rs131 billion cross-subsidy burden. It urged the government to use fiscal space to correct this imbalance rather than make industries subsidise other consumers.

Industrial tariffs, the FPCCI added, have risen from Rs34 to nearly Rs38 per unit due to quarterly and fuel cost adjustments. “A fixed incremental rate of Rs22.98/kWh offers limited relief,” it said, recommending a Rs16/kWh rate to encourage grid consumption.

The FPCCI also proposed revising the benchmarking rules to ensure fairness across industrial users. It suggested calculating baselines using a three-year weighted average of verified consumption — 50% from FY2024–25, 30% from FY2023–24, and 20% from FY2022–23 — rather than fixed load factors and annual escalation formulas.

According to the FPCCI, this method would provide a more accurate reflection of industrial performance, prevent distortions between efficient and underperforming units, and encourage a shift from captive to grid power.

The business community also emphasised that any incentive scheme must remain in place long enough to accommodate new industrial investment and production cycles.

“The entire purpose of this package is to stimulate demand,” the FPCCI said, stressing that its proposed methodology ensures predictability and transparency for both utilities and consumers.

It warned that the current structure risks failing to deliver the expected growth in consumption and revenue, urging Nepra and the Ministry of Energy to adopt a simplified, data-driven formula aligned with industrial realities.