Electricity tariffs for Pakistan’s industries are broken. Right now, industrial users are paying around Rs 32–34 per unit (12 cents). That’s down from 14–15cents earlier, but still way too high.
Industry has been asking for 9 cents (Rs 26). People think this is impossible. It’s not. The math is simple. All it needs is to be broken down and addressed individually.
Capacity charges are fixed. They don’t go away by wishful thinking. The only way to dilute them is to increase demand. More industrial demand -more units sold - lower per-unit capacity burden. Every serious grid operator knows this. Pakistan keeps inventing new schemes, but none of them matters if demand isn’t there. Solar just keeps getting added behind the meter.
Peak/off-peak adds about Rs 1.5 per kWh to industrial costs. ISMO data shows it’s backwards: you’re charging more when power is cheap and charging less when it’s expensive. This is completely insane. Removing it saves Rs 1.5 instantly, fixes Disco losses, and ends forced shutdowns that strand capacity.
B3 and B4 users invest billions in their own transformers and EHT connections, absorbing the highest losses in the system—yet they pay more than smaller B2 users. NEPRA’s own data shows B4 users carry ~Rs 7 per unit in cross-subsidies. Why are the largest, most efficient consumers penalized? No one knows. Fixing this saves Rs 2 per kWh and incentivizes industry to move toward B3/B4, while DISCO losses fall automatically.
Industry is paying Rs 4–7 per kWh to cover other categories. Even removing half saves Rs 3 per kWh. That’s enough to stop industries from rushing to install solar, and instead push them to expand production and exports.
Right now, every industrial consumer is paying Rs 1,250 per kW fixed charges, regardless of how they operate. But industries aren’t the same. Some run single shifts (8–12 hours), others run triple shifts (24/7). Where is the incentive to consume more if everyone pays the same fixed charges? This should be split: different scenarios for single-shift and triple-shift industries. Give them a choice, incentivize higher consumption, and let industry decide how to optimize.
At Rs 3.23 per kWh, this isn’t even an energy cost — it’s a debt charge. If DISCOs stay efficient, you can cut it to Rs 1.6 per kWh. Demand growth takes care of the rest.
ISMO and Nepra data show mid-day electricity costs only Rs 10–15 per kWh. Let industries buy incremental daytime power at this price instead of Rs 32–34. They’ll take it immediately. More demand, higher utilization, exports up, and the grid stabilizes.
Now do the math. Start at Rs 33:
• Remove time-of-day: –1.5 - 31.5
• Rationalize B2/B3/B4: –2.0- 29.5
• Cut cross-subsidy by half: –3.0- 26.5
• Halve DSS/PHL: –1.6 - 24.9
That’s Rs 24.9/kWh 8.6¢/kWh below the 9¢ target. And with marginal-price daytime sales, the blended effective cost drops even more.
None of this is rocket science. It’s just basic logic. Industry isn’t asking for subsidies. It’s asking to pay what electricity actually costs in order to compete globally.
If industry runs, it pays more taxes. If exports grow, they bring in more dollars. That’s how we can build our economy instead of wasting time in other schemes, proven tested and tried with historical precedence. Whenever industry is made unfeasible the economy tumbles feet.
The real problem is policy design. Are the Electricity policy makers even willing to listen to industries? Right now, policymakers sit in offices, detached from ground realities. Industries know the way forward as they have the numbers and they see the costs every day. No harm in bringing them on board. In fact, no government has ever done this properly, and that’s why every scheme so far has failed.
Price electricity right: Incentivize demand which will offset capacity charges. Let industries grow. This will hurt a bit in the short term, but the relief it creates will stabilize the economy and bring comfort to the whole nation.
There’s no harm in trying this when we’ve already tried everything else. We’ve piled on surcharges, increased circular debt, shifted slabs, juggled subsidies, and still ended up with stranded capacity, high costs, and falling exports and shutdown of Industries. If the “usual fixes” keep failing, why not give the only proven path and give industrial demand a fair shot.
Copyright Business Recorder, 2025
The writer is an avid power sector expert and a leading industrialist from Karachi. He can be reached at [email protected]
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