APTMA says power package unacceptable

ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) on Wednesday termed the government’s three-year electricity incremental package, priced at Rs 22.98/kWh for the industrial and agriculture sectors, as unacceptable.

“Based on the discussion during the hearing on November 11, 2025, we reiterate that the incremental consumption package proposed by the federal government is wholly unacceptable to the industrial sector in its current form. This position is clearly evidenced by the unanimous and firm opposition from representative bodies across all major industrial sectors of Pakistan,” said Aptma Secretary General Shahid Sattar in a letter addressed to the Registrar of the National Electric Power Regulatory Authority (Nepra).

According to the Aptma, the structure of the proposed package — with its complex and differentiated eligibility baselines—systematically excludes large segments of the industry. Of particular concern, it added, is the treatment of captive users in the textile sector, who are subject to an unrealistic eligibility threshold of 60 percent of sanctioned load or maximum demand indicator (MDI), whichever is higher.

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The Aptma referred to its earlier letter dated September 25, 2025, addressed to the Ministry of Energy (Power Division), in which it recommended that all industrial consumers connected to the national grid —including solar net-metered, captive, and hybrid users under wheeling arrangements —should be deemed eligible for the incremental package. The association argued that this recommendation was aligned with the core objectives of the policy: to stimulate industrial activity, support export growth, and enhance grid utilization.

The association further stated that, contrary to its stated objectives, the proposed framework effectively disqualifies a significant portion of the export-oriented textile industry, which contributes around 60 percent of Pakistan’s total exports and relies heavily on captive power generation for primary (though now rare due to gas levies), secondary, or backup needs. The imposition of an arbitrary benchmark, without acknowledging the operational realities of these consumers, renders the package ineffective.

Currently, a significant number of industries operate on a single shift. The Aptma suggested that lowering the eligibility benchmark to 40 percent would encourage them to add a second shift, thereby achieving the intended goal of increased industrial activity and higher grid utilization.

The Aptma further argued that unless the government revises the eligibility threshold for captive users to a more realistic 40 percent of sanctioned load, ensures uniform treatment for consumers with load enhancements and category changes, and allows wheeling-based consumers to revert to grid supply to avail this package, the proposal will remain wholly unacceptable to the association until these shortcomings are rectified.

To better align the package with the operational challenges of the national grid—especially the growing risk of brownouts and blackouts during periods of low grid load in the solar generation window — Aptma proposed the introduction of a lower incremental tariff for daytime hours. This, it said, would incentivize industrial consumers to increase or shift electricity consumption to daylight periods, thereby improving grid stability and optimizing system utilization.

Furthermore, the Aptma maintained that the proposed package is inherently distortionary, as it risks creating an uneven playing field by granting benefits to select consumer categories while excluding others. Even under the most optimistic scenarios presented during the hearing —assuming a 50–100 percent increase in incremental consumption, which the Aptma called implausible under current industrial conditions — the average tariff reduction would still result in rates of 10.3–11 US cents/kWh. This, Aptma noted, remains substantially higher than the effective industrial tariffs in peer economies such as India, China, Vietnam, and Bangladesh, where electricity is available at 5–9 US cents/kWh.

Considering these realities, the Aptma reiterated its earlier recommendation that surplus power available at low marginal cost should be utilized to eliminate the peak-hour tariff and reduce the base variable tariff for all industrial consumers. This approach, it said, based on the Ministry’s own estimates of electricity demand elasticity shared during the hearing, would ensure a broader and more sustainable increase in industrial electricity consumption—without reliance on historical baselines or discriminatory incentives.

Copyright Business Recorder, 2025