Peak-hour power tariff: APTMA urges govt to share constraint details
ISLAMABAD: The All Pakistan Textile Mills Association (Aptma) has requested the government to share details of the constraints preventing the removal of the peak-hour electricity tariff for the industrial sector.
In a letter addressed to Prime Minister Shehbaz Sharif, Aptma Secretary General Shahid Sattar stated that, despite some progress, the prevailing electricity tariff of 10–11 cents/kWh remains above the regionally competitive benchmark of 9 cents/kWh.
Competing economies offer electricity at 5–9 cents/kWh, putting Pakistan's energy-intensive textile sector at a disadvantage. The high cost of energy continues to hinder export competitiveness and manufacturing growth, he noted.
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'A further reduction in industrial power tariffs can be achieved by abolishing the Time of Use (ToU) power tariff structure for industrial consumers,' Sattar adding, 'This would be revenue-neutral, as industry is projected to consume about 32% more electricity during current peak hours, according to Nepra data, thereby offsetting revenue losses from the higher ToU tariff.'
According to Aptma's assessment, this adjustment would reduce the effective weighted average tariff for industrial consumers from Rs29.48/kWh (10.57 cents/kWh) to Rs28.36/kWh (10.16 cents/kWh)—a reduction of Rs1.12/kWh. Increased electricity consumption would improve grid utilization and reduce stranded capacity, potentially lowering the average power purchase price by an additional Rs0.14/kWh. This reduction could be passed on to consumers through Quarterly Tariff Adjustments (QTA).
'The ToU structure is an outdated mechanism, introduced when Pakistan faced acute power shortages and needed to discourage peak-hour consumption,' the Association argued. 'However, with surplus generation capacity today and stranded capacity contributing to high tariffs, the continued application of ToU pricing is counterproductive.'
Aptma emphasized the need to replace the ToU structure with a uniform tariff at the off-peak rate, to promote maximum power usage, improve grid efficiency, lower per-unit costs, and enhance industrial competitiveness.
The Association called on the government to eliminate the ToU structure for industrial consumers and implement a uniform AS-II tariff based on the current off-peak rate.
In a recent communication with the Power Division, Aptma noted that its team met with senior officials on April 18, 2025, to discuss the issue. During the meeting, Power Division officials outlined existing challenges to removing the peak-hour tariff, citing system limitations, demand fluctuations, and fuel cost dynamics as key factors.
The Power Division assured Aptma that the analysis presented, along with detailed data on real-time system demand and fuel costs, would be shared with the Association.
'We look forward to receiving this information at the earliest, so we can review it thoroughly and develop a practical proposal to reduce industrial energy costs while increasing demand on the national grid—ultimately contributing to broader economic growth,' Aptma concluded.
Copyright Business Recorder, 2025
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