Power & gas supply: Textile body seeks single tariff based on ‘WACOG’

ISLAMABAD: The Pakistan Textile Council (PTC) has sought a single tariff based on WACOG (Weighted Average Cost of Gas), doing away with the cross-subsidy, and the reclassification of the combined heat power plants.

In a letter to Advisor to the Prime Minister, Dr. Tauqir Hussain Shah has submitted that the export-oriented industries are facing severe challenges due to the growing inefficiencies and policy inconsistencies in the energy sector.

The uncoordinated expansion of power plants and solar generation has disrupted grid stability, while the current mechanism for selling excess capacity remains ineffective and urgently requires reassessment.

PTC concerned at gas price hike for CPPs

On the gas side, exporters are burdened with multiple anomalies for example the recently imposed levy on captive power is incorrectly based on peak tariff alone; the captive O&M charge has been arbitrarily raised from Rs. 1.65/kWh to Rs. 4.31/kWh; and the inclusion of a debt- servicing surcharge is unjustified since it does not appear in Nepra’s approved tariff.

At Rs. 3,500/MMBtu, captive gas power is already costlier than the grid before applying the levy. Similarly, electricity tariffs have reached an unsustainable average of Rs. 33.50/kWh, with peak-hour pricing severely disrupting multi-shift operations, leading to idle labor, reduced productivity, and underutilized overheads.

The persistence of high peak tariffs despite surplus generation is both contradictory and economically damaging.

Furthermore, the furnace oil levy of Rs 84,000 per ton has compelled exporters to sell furnace oil abroad at prices below the local market, resulting in losses for both industry and the national exchequer.

The PTC is of the view that to achieve the export target envisaged in “Uraan Pakistan” program (USD 60 billion exports by fiscal year 2028-2029), the following recommendations are submitted: (i) there should be a single tariff based on WACOG and subsidy can be given to consumers; (ii) no cross-subsidy should be given to any other sector; (iii) peak tariff should be abolished as we have surplus electricity, and it has no correlation with power generation; (iv) levy on captive power should be correctly calculated based on average rates instead of on peak tariff only; (v) reclassify combined heat power plants from “captive power” to the “industrial process” for achieving efficiency; and (vi) levy of Rs 84,000/ton on furnace oil should be abolished.

Copyright Business Recorder, 2025