Government Seeks Regulatory Approval for Industrial and Agricultural Relief Package
The federal government has submitted a proposal to the National Electric Power Regulatory Authority (NEPRA) for an industrial and agricultural relief package. The initiative aims to address the significant drop in power consumption across these sectors, which have seen declines of 14% and 47%, respectively, over the past three years. These reductions are primarily attributed to sluggish economic activity, structural adjustments, and the increasing adoption of alternative energy sources such as net metering, which has reached 6,035 megawatts.
The Power Division has proposed a flat rate of Rs22.98 per unit for both Time-of-Use (ToU) and Non-ToU categories of industrial and private agricultural consumers connected to XW-DISCOs and K-Electric. This rate will apply to electricity consumed above reference levels determined from December 2023 to November 2024 and will remain in effect for three years from the date of approval. NEPRA is scheduled to hold a public hearing on November 11, 2025, to discuss the motion seeking approval for this incremental consumption package.
The proposed package is designed to revive power demand, improve system utilization, and reduce the financial burden associated with idle generation capacity. According to the motion filed by the Ministry of Energy (Power Division), the decline in electricity consumption in Pakistan’s industrial sector has been significant, with a 14% decrease over the past three years. In agriculture, the drop has been even more drastic, at 47%.
The initiative is described as subsidy-neutral, meaning it will not place additional financial strain on the federal budget. Positive Fuel Cost Adjustments (FCAs) will be applicable to eligible consumers, while Quarterly Tariff Adjustments (QTAs), Debt Service Surcharge (DSS), and negative FCAs will not apply to incremental consumption. If incremental usage in these sectors exceeds a 25% growth above baseline, the scheme will be reviewed to account for marginal cost variations.
Key Features of the Proposed Package
- Benchmark Consumption Calculations:All Captives Power Plants (CPPs) will be considered as new consumers for benchmark consumption calculations.
- Net-Metering Consumers:Eligibility for the package will be granted only if there is excess import by the consumer for the current month in the respective peak and off-peak periods. The reference consumption for net-metering consumers will be based on imported units only.
- Incremental Consumption Capping:The incremental consumption will be capped on the net imported units (Imports minus Export during the current month). Additionally, the incremental consumption shall be distributed among peak/off-peak periods on a pro-rata basis of incremental units.
Previous Success of Similar Schemes
The Power Division highlighted that previous schemes, such as the Industrial Support Package (2020-23) and Bijli Sahulat Package (2024-25), successfully boosted industrial consumption by up to 14%. These initiatives demonstrated the effectiveness of targeted incentives in stimulating productivity and employment. To ensure continued alignment between costs and revenues, semi-annual reviews will be conducted. The scheme will automatically terminate if tariff hikes are required for two consecutive reviews.