The government’s winter incentive demand package has landed with a whimper. The plan to incentivize incremental electricity consumption from December to February by offering a marginal cost of Rs26 per unit for up to 25 percent additional usage was always ambitious. The first month’s results are in, and they paint a rather grim picture.
Despite electricity sales having plummeted to multi-year lows over the past two years, the incentive appears to have barely moved the needle. According to the Central Power Purchasing Agency (CPPA), the scheme resulted in an increase of just 45 million units — a drop in the ocean compared to historic December sales, which typically hover around 8 billion units. With fewer than a million consumers out of 37 million across all categories taking advantage of the package, it’s hard to call this anything but a miss.
The domestic sector’s lukewarm reception isn’t entirely surprising. The economics of winter energy consumption remain tilted heavily in favor of domestically produced natural gas, with a price differential of nearly threefold.
What’s more alarming is the lack of uptake from the industrial sector. Even with a low baseline, the anticipated industrial response has been underwhelming. Persistent load shedding by distribution companies (DISCOs) might partly explain this disinterest. For years, DISCOs have used load shedding as a blunt instrument to manage aggregated technical and commercial (AT&C) losses. By cutting supply to high-loss areas, they’ve aimed to curb electricity theft and non-payment. But the collateral damage is significant. Honest, paying consumers are penalized alongside defaulters, and available generation capacity goes underutilized.
The regulator’s critique of this approach in its recent report is scathing but fair. Discos’ reliance on extended load shedding, sometimes exceeding 12 hours a day, not only alienates consumers but also exacerbates inefficiencies in the power sector. Underutilized generation capacity means fewer units to distribute fixed costs across, driving up tariffs for compliant consumers.
Instead of addressing systemic inefficiencies, discos have leaned on this counterproductive strategy, neglecting infrastructure upgrades, governance improvements, and system optimization. This short-sighted approach hampers operational efficiency, increases costs, and diminishes consumer trust.
If the winter incentive package’s lackluster results underscore anything, it’s the need for deeper structural reforms. No pricing gimmick will suffice when the foundational issues remain unaddressed. The power sector needs robust investments in infrastructure, better management practices, and a shift away from punitive load-shedding policies. Until these systemic challenges are tackled, incremental consumption schemes will continue to struggle for traction.
As it stands, the winter package’s underwhelming debut is yet another chapter in the long saga of missed opportunities in Pakistan’s power sector.
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