Making Grid Power Affordable for Industries?

Pakistan is shifting industries from captive power generation to grid electricity due to IMF agreements. The government is raising gas connection prices and imposing surcharges to push industries towards grid power. However, businesses hesitate to switch due to high costs and a lack of financial incentives.

The Problem: No Clear Benefits

Industries are unsure why they should invest in high-voltage and medium-voltage grid connections without any financial gain. Pakistan’s energy policies often change without long-term planning, making industries cautious.

Pakistan’s Industrial Tariff System

NEPRA categorizes industrial consumers based on load and voltage:

• B-2: 25 kW – 500 kW, 400V (low voltage)
• B-3: Up to 5,000 kW, 11kV (medium voltage)
• B-4: 132kV (high voltage), no load limits

However, the tariff system does not reflect actual costs. B-3 and B-4 consumers pay higher rates than B-2 users, even though they put less strain on the grid. This discourages industries from investing in higher-voltage infrastructure.

Grid Losses and Costs

• 220kV Level: 3% losses, 1.54 PKR per unit
• 132kV Level: 5% losses, 2.7 PKR per unit
• 11kV Level: 9% losses, 4.7 PKR per unit
• 400V Level: 15% losses

Yet, these cost differences are not reflected in tariffs, making grid power unattractive for industries. Countries like India and Bangladesh offer lower rates for high-voltage connections, unlike Pakistan.

Proposed Tariff Reforms

1. Reduce B-4 tariffs by 4–5 PKR per unit.
2. Reduce B-3 tariffs by 2–2.5 PKR per unit.
3. Lower wheeling charges for high-voltage users.

Encouraging Grid Adoption

Industries need stable, affordable power. The government must introduce incentives:

• Remove grid-sharing charges for industries moving from captive power.
• Allow shared grid investments for industries in the same area.
• Introduce Time-of-Use (TOU) tariffs for solar power.
• Review security deposits for grid connection.
• Offer prepaid tariffs in specific sectors.

Conclusion

Pakistan’s transition to grid power must be financially viable for industries. Tariff reforms, incentives, and a stable policy are needed to encourage industries to switch. Without these changes, the transition will be difficult, and businesses will continue to rely on captive power generation.