Incremental consumption package: Industry, PD lock horns over financial impact

ISLAMABAD: The country’s industry and the Power Division have locked horns over the financial impact of the incremental consumption package on the overall electricity tariff, with both sides presenting conflicting claims about whether the relief measure led to new demand or merely shifted industrial load from captive generation to the national grid.

The debate emerged during a public hearing held on Tuesday regarding quarterly adjustments on account of variation in Power Purchase Price (PPP) for the second quarter (October –December) of FY 2025-26.

The proposed adjustment carries an impact of 43 paisa per unit (Rs10.762 billion), replacing the 33 paisa per unit adjustment of the first quarter of the current fiscal year.

READ MORE: Incremental consumption package: Nepra questions PD over ‘negligence’

The hearing was presided over by NEPRA Chairman Waseem Mukhtar, along with Member (Development) Maqsood Anwar Khan and Member (Tariff & Finance) Amina Ahmed.

It was noted during the hearing that capacity charges amounting to Rs 431 billion were billed to Discos during the second quarter of FY 2025-26, of which Rs 408 billion were recovered, leaving a shortfall of Rs 23 billion.

Representing the industry, Rehan Javed argued that demand already existed prior to the incremental package. He stated that electricity consumption from May 2025 to November 2025 showed almost the same number of units as December 2025. In fact, November 2025 units were higher than December 2025 even without the incremental package.

He contended that the reported 26.6 percent grid growth (609 million units) was driven by shutdown of captive generation rather than fresh demand, as captive generation declined by 83 percent (916 million units). According to him, only part of the captive loss shifted to the grid, while 306 million units (13.4 percent) were effectively destroyed, indicating curtailed industrial activity.

“The shift is concentrated in large users (B3–B4), confirming substitution of energy source rather than broad industrial expansion. Almost no one benefitted in the B2–B1 category,” he maintained.

The industry further argued that incremental-package units are excluded from quarterly adjustments, yet they represent existing demand, not new consumption. During the period under review, 609,434,677 units were reclassified under the incremental package. These units were previously being sold at a negative margin of Rs 34 per unit before December 2025 and are now being sold at Rs 22.98 per unit, resulting in an effective revenue loss of Rs 11 per unit.

“Since demand did not increase, this revenue shortfall is being shifted into quarterly adjustments — meaning beneficiary consumers pay less while non-beneficiary consumers bear higher quarterly charges to accommodate the loss,” Javed argued, urging the government to discontinue the incremental package as it has no linkage with demand growth.

However, a Nepra official claimed that the financial impact of the incremental consumption package during the second quarter of the current fiscal year stood at Rs 7.519 billion. The official added that the overall positive Quarterly Tariff Adjustment (QTA) would have exceeded Rs 17 billion had the incremental package not been introduced.

RehanJaved challenged the figures presented by the Power Planning and Monitoring Company (PPMC) and requested Nepra to independently verify the numbers.

Chief Financial Officer (CFO) Naveed Qaiser maintained that 47 percent of industrial consumers had benefitted from the incremental consumption package, which offers electricity at Rs 22.98 per unit.

He argued that the system’s marginal cost is not above Rs 15–16 per unit, and consumers who increased consumption under the package effectively extended a benefit of Rs 7–8 per unit to the rest of grid consumers.

“Industrial demand was declining prior to the announcement of the incremental package. Now 47 percent of consumers are benefiting from the package as their electricity rate has effectively reduced by Rs 2.25 per unit,” he said.

The CFO further stated that the capacity charge figures shared by the Discos would be verified and indicated the possibility of zero increase in QTA for the second quarter of FY 2025-26.

Member (Tariff & Finance) directed Nepra’s tariff department to also verify the figures shared by the industry, noting that the Power Division had already presented its position.

During the hearing, Aamir Sheikh expressed surprise that Discos claiming increased consumption were simultaneously seeking billions of rupees in capacity charges. He questioned why entities with sales exceeding reference levels were still demanding higher capacity payments.

“If capacity charges are to increase either way, then what is the logic behind QTA mechanism,” he asked.

Member (Tariff & Finance) supported the remarks and directed Nepra’s team to re-verify the figures.

Copyright Business Recorder, 2026