The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to reduce electricity tariffs for all industrial consumers to below 9 cents per unit, saying lower and uniform energy costs are necessary to improve export competitiveness, increase industrial production and reduce reliance on imported goods. FPCCI President Atif Ikram Sheikh acknowledged that industrial electricity tariffs had declined from 16 cents to 12 cents per unit over the past two years, but maintained that the existing rate remained insufficient to provide lasting relief to manufacturers. He called for a broader reduction that would benefit industrial consumers across different tariff categories rather than relying on limited or temporary concessions.
Sheikh said the existing 12-cent tariff, the Incremental Consumption Package and the proposed Optional Two-Part Time-of-Use (ToU) Tariff did not resolve the wider problem of high industrial electricity costs. According to the FPCCI president, these arrangements offer relief under specific conditions but do not provide a comprehensive reduction for the industrial sector. Electricity expenses affect production costs, pricing decisions and the ability of manufacturers to compete with international suppliers. The business body believes that reducing the underlying tariff for all industrial consumers would provide more predictable support for businesses planning production, investment and export orders.
The FPCCI has particularly called for tariff reductions to include consumers in the B3 and B4 categories. Sheikh said these industrial users continued to bear cross-subsidy costs despite receiving electricity at higher voltages and being relatively less expensive to serve. He argued that extending lower rates to these categories alongside other industrial consumers would benefit businesses and the wider electricity system. The association’s position is that industrial energy policy should focus on reducing overall costs rather than shifting financial burdens between different groups of electricity users.
The proposed Two-Part ToU Tariff has also drawn reservations from the FPCCI. Under the proposed structure, industrial electricity bills would include a fixed monthly capacity charge calculated per kilowatt, along with variable charges based on consumption during non-solar, solar and peak hours. The mechanism is intended to encourage businesses to consume more electricity during periods of high solar generation and help address the imbalance between daytime supply and evening demand, commonly known as the duck curve. However, Sheikh said the arrangement could prove difficult for industry under current operating conditions because fixed capacity charges remain high and ongoing conflict-related disruptions have affected logistics.
Sheikh also questioned whether the proposed tariff would provide a sufficient incentive for manufacturers to shift additional electricity consumption towards daytime hours. He said many industries had already adjusted their operating schedules around daytime and solar availability, leaving limited room to move further consumption from night-time periods. Industrial operations cannot always be shifted freely because production schedules, machinery requirements, labour arrangements and supply commitments can restrict changes in working hours. These operational constraints may limit the benefits businesses can obtain from time-based electricity pricing, particularly where a significant portion of their consumption has already been moved to solar hours.
The availability of self-generated solar power presents another challenge for the proposed arrangement. Sheikh said electricity produced through industrial solar installations remained cheaper than grid supply even under the proposed solar-hour rates. This price difference could reduce the incentive for manufacturers to purchase additional electricity from the grid. For industries that have invested in solar generation to manage high energy expenses, the financial case for increasing grid consumption would depend on the overall tariff structure, including fixed charges and the rates applied at different times of the day.
The FPCCI president also cautioned that selective tariff concessions could redistribute electricity costs among consumers without reducing the overall energy burden on industry. He raised similar concerns about the Incremental Consumption Package, under which concessional rates apply only to electricity consumed above a consumer’s historical baseline. Consumption within the existing baseline continues to be billed at prevailing rates. As a result, businesses may receive lower rates on additional usage while continuing to face higher charges on their established consumption levels. Sheikh argued that a general reduction in industrial tariffs would provide more direct and consistent relief than schemes tied to particular consumption patterns.
Sheikh acknowledged the government’s efforts to reduce industrial electricity prices and thanked Prime Minister Shehbaz Sharif and Power Minister Sardar Awais Ahmad Khan Leghari for the reductions introduced over the past two years. He also appreciated the power minister’s engagement with industry representatives through three consultation sessions. However, he said concerns raised by businesses about the Two-Part ToU Tariff over the preceding six months should be incorporated into future policy decisions. The FPCCI has offered to contribute private-sector energy expertise to help develop tariff arrangements that better reflect the operating conditions of manufacturers.
The association maintains that reducing industrial electricity tariffs below 9 cents per unit could support production, strengthen exports and help Pakistani manufacturers compete in international markets. Sheikh also said he did not expect the International Monetary Fund (IMF) to oppose such a measure. The proposal would need to be assessed alongside the wider financial requirements of the power sector, including capacity payments, cross-subsidies and the costs of supplying electricity to different consumer groups. The FPCCI’s central demand is that the government pursue an overall reduction in industrial energy expenses instead of relying primarily on targeted concessions.
The debate highlights the importance of electricity pricing for Pakistan’s industrial and export performance. High energy costs can affect manufacturers’ margins, production decisions and ability to offer competitive prices abroad, while tariff schemes based on specific consumption periods may not suit every industrial operation. The FPCCI is calling for a uniform approach that includes B3 and B4 consumers and lowers the effective cost of electricity across the industrial sector. The government has introduced tariff reductions and proposed additional mechanisms, but no decision on the FPCCI’s latest demand for rates below 9 cents per unit was included in the announcement.
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