Amir Khan

The government is set to introduce a nationwide ‘winter package’ to bolster industrial growth and reduce financial burden on the power plants, reports WealthPK. This initiative would be implemented on incremental consumption basis. The package, including the K-Electric jurisdiction, awaits the green light of the federal cabinet and International Monetary Fund (IMF). The impact of this incremental package is estimated to be around Rs25 billion and the federal government might face restrictions from the IMF and World Bank in this regard. To tackle the issue of cross-subsidization for domestic users, which has been eroding the competitiveness of exports, the Special Investment Facilitation Council (SIFC) has directed the Power Division, Finance Division, Commerce Division, and Chairman FBR to furnish a financial plan with the Executive Committee. The plan aims to introduce industrial tariffs based on the cost of service.

The power, commerce, and finance secretaries have received directives to develop mechanisms for reducing the cost of electricity. These mechanisms include the implementation of wheeling at the cost of one cent per unit and establishment of a committee to address capacity charges and debt restructuring in the power sector. The government is considering extending the winter package to domestic consumers, allowing them to access affordable electricity for heating, especially in regions where the gas availability is limited, a K-Electric official told WealthPK, pleading anonymity. He said an initiative called "Use More Pay Less Package" was launched in 2020, offering a discounted rate of Rs11.97 per kilowatt-hour for incremental consumption between November 2019 and February 2020.

The package was available to domestic, commercial, and industrial consumers, leading to a remarkable 16% increase in electricity consumption. The Power Division reports that the previous industrial support package had already resulted in substantial growth in electricity consumption. The consumption surged from 4.29% in November 2020 to over 18% by June 2021. Based on the existing trends, the Power Division anticipates a growth of over 25% for the distribution companies (Discos) and over 35% for the K-Electric system in 2023-24, promising substantial benefits in the coming years. “There is a surplus of power during the winter months, ensuring the package implementation will not negatively impact the fiscal balance, as the excess electricity generated will be consumed during the four winter months,” said the official.

Credit: INP-WealthPk