APTMA seeks abolishment of ToU tariff structure for industry

ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has demanded of the government to abolish peak –rate electricity for industrial consumers.
In a letter to Prime Minister, Shehbaz Sharif, APTMA’s Secretary General, Shahid Sattar appreciated the government for recent efforts to rationalize electricity tariffs, which have led to a welcome reduction in industrial power rates. These steps signify a positive direction toward addressing one of the most critical challenges faced by the industrial sector.
However, APTMA is of the view that despite this progress, the prevailing electricity tariff of 10-11 cents/kWh remains above the regionally competitive benchmark of 9 cents/kWh. Competing economies provide electricity at rates ranging between 5 to 9 cents/kWh, placing Pakistan’s industrial base-particularly the energy-intensive textile sector-at a distinct disadvantage. The high cost of energy continues to pose a severe barrier to export competitiveness and manufacturing growth.
“A further reduction in the industrial power tariff can be attained by abolishing the Time of Use (ToU) power tariff structure for industrial consumers. This is a revenue neutral measure as industry will consume approximately 32% more electricity during the current peak hours, as per actual data available with NEPRA, offsetting revenue loss from the higher ToU tariff,” he added.
Based on our assessment, this will directly reduce the effective weighted average tariff for industrial power consumers from Rs. 29.48/kWh (10.57 cents/kWh) to Rs. 28.36/kWh (10.16 cents/kWh)-a reduction of Rs. 1.12/kWh. The consequent increase in electricity consumption will enhance grid utilization and reduce stranded capacity, resulting in a further Rs. 0.14/kWh decrease in the average power purchase price.
This reduction may be passed on to all consumers through Quarterly Tariff Adjustments (QTA).
“The ToU structure is an archaic mechanism, from when Pakistan faced acute power shortages and needed to discourage consumption during peak hours. However, in the present context-where the country has surplus generation capacity and stranded capacity is a key contributor to some of the highest electricity tariffs globally-the continuation of ToU pricing is counterproductive,” said the Association.
APTMA stated that it is imperative to replace it with a uniform tariff at the off-peak rate to incentivize maximum power consumption, thereby improving grid utilization, reducing per-unit costs, and supporting industrial competitiveness and growth.
After sharing background, APTMA APTMA has urged the Government to abolish the ToU tariff structure for industrial consumers and transition to a uniform electricity AS-II tariff based on the current off-peak rate.