ISLAMABAD: To encourage power usage in the face of high tariffs and a slump in the economy, the Economic Coordination Committee (ECC) formally approved subsidy-neutral discounted energy rates on Tuesday for incremental consumption during the winter months (December to February).
It is anticipated that the program, which targets residential, business, and industrial users, will boost consumption by up to 16% while maintaining adherence to International Monetary Fund (IMF) regulations.
The transfer of Rs3.14 billion from the former Emergency Relief Cell (ERC) to the National Disaster Management Authority (NDMA) to conduct its rescue and relief activities both domestically and abroad was also agreed at the ECC meeting, which was called by Finance Minister Muhammad Aurangzeb.
The decision was made with the understanding that the NDMA would use the ERC’s balances for relief, rescue, and rehabilitation of flood and earthquake victims because they were composed of public donations.
A “recent surge in electricity tariffs coupled with challenging economic conditions had led to reduced demand across various consumer categories,” the power division informed the audience, citing a 6 percent decrease in demand during the winter of last year and an additional 8 percent decline in fiscal year 2024. Additionally, the average winter demand was 11,196 MW less than the summer demand.
The electricity division emphasized the accomplishments of earlier such programs, which resulted in increases in consumption of 16 percent in FY20, 15 percent in FY21, and 14 percent in FY22. But in FY23 and FY24, demand fell by 8% and 2%, respectively.
According to the power division, “any increase in the demand for electricity during the winter months will not only allow for the best use of the system’s generation capacity, but it will also help reduce gas demand due to the shifting of favorable demand towards electricity.”
The bundle would include home, commercial, industrial, and general services consumers—including K-Electric users—who use more than 200 units per month nationwide. It was mentioned that more LNG, which was already in excess, might be needed for this as well. It was reported at the meeting that lower tariffs had caused problems for K-Electric customers.
“To enable optimum use of system generation capacity besides reducing gas demand due to the shifting of favourable demand towards electricity,” stated an official announcement announcing the ECC’s approval of the winter demand initiative for industrial, domestic Time of Use (ToU) and non-ToU consumers exceeding 200 units, as well as commercial and general services consumers of Discos and K-Electric.
Depending on the different consumer groups and consumption slabs, the package would apply to incremental consumption over the previous years and contain discounts ranging from 18% to 50%. The IMF is said to have approved the deal since it is subsidy-neutral.
A weighted average calculation based on usage over the previous three years will be used to determine incremental consumption. According to historical trends, consumption will be 25 percent for FY2022, 30 percent for FY2023, and 50 percent for FY2024. For instance, by increasing usage by 25,000 units at a discounted rate, an industrial client who now pays Rs40 per unit for 100,000 units might lower their average cost to Rs37.21 per unit.
The power division states that the base tariff for domestic customers is Rs37.49 per unit with a maximum of Rs52.07 per unit; however, both groups would be charged Rs26.07 per unit for additional use. This would be 50pc (Rs26 per unit) less expensive than the maximum rate and 30pc (Rs11.42 per unit) less expensive than the minimum rate of Rs37.49.
