ISLAMABAD  -  The federal government has sought the nod of the National Electric Power Regulatory Authority (NEPRA) for the winter demand initiative (Bijli Sahulat Package) aimed at providing a relief of up to Rs26 per unit, for various categories of consumers, for the upcoming three winter months. The initiative, outlined in a summary submitted by the Ministry of Energy (Power Division) to NEPRA, aims to address rising electricity consumption during winter months. Under the proposed plan, a tariff of Rs26.07 per kilowatt-hour will be charged on incremental consumption that exceeds the benchmark levels for corresponding months. This measure is intended to encourage efficient energy use while remaining subsidy neutral.

The three-month billing period for this initiative is set to take effect from December 2024 through February 2025. The baseline for determining the additional charges will be calculated based on either the relevant month’s consumption from fiscal year 2024 or the highest consumption recorded over the past three years. National Electric Power Regulatory Authority (NEPRA) has decided to hold a public hearing on November 26, 2024, to discuss the winter demand initiative for fiscal year 2024-25. The hearing will focus on proposed changes affecting electricity consumers across various categories, including domestic, commercial, and industrial users. Notably, Prime Minister Shahbaz Sahrif on November 9 announced Bijli Sahulat Package to provide a relief of up to Rs26 per unit, for various categories of consumers, for the upcoming three months. The government introduced the ‘Bijli Sahulat Package,’ a temporary initiative providing reduced tariffs for consumers during the winter season from December 2024 to February 2025, in a bid to stimulate winter electricity usage and promote economic activity.

The Bijli Sahulat Package introduces a flat rate of Rs 26.07 per unit for electricity consumed above each consumer’s historical usage benchmark for domestic, commercial and industrial consumers. Under the winter package, a relief of upto Rs26/unit will be provided to domestic consumers on incremental consumption, upto Rs22.7/unit to commercial consumers and up to Rs15.05/unit relief for industrial sector. However, there’s a cap on benefits, as the discounted rate will only apply to incremental usage up to 25 per cent above the benchmark. Any additional usage beyond that threshold will be billed at the normal rate, as per the government’s notification. With electricity demand dropping significantly during winter months, the package aims to encourage higher consumption by offering discounted rates on additional electricity usage, especially beneficial for households and industries alike. By comparison, standard rates can range significantly higher across various consumer categories, with domestic users typically paying between Rs37.49 and Rs52.07 per unit. This reduction in cost is expected to ease financial burdens on consumers and incentivize industries to increase production during the low-demand winter period. Industries, a critical focus of the package, stand to benefit from an estimated 18-37 per cent reduction on incremental electricity costs.

Commercial establishments also enjoy savings between 34 to 47 percent on incremental power consumption. Under this package, domestic consumers could see reductions ranging from 30 to 50 per cent for incremental electricity usage beyond the established benchmarks. The determination of each consumer’s base usage benchmark relies on a weighted calculation of electricity consumption over the last three fiscal years, prioritizing recent consumption with weights of 50 per cent for fiscal year 2024, 30 per cent for 2023, and 20 per cent for 2022. Pakistan is facing a dilemma of sharp decline in the electricity consumption from the peak of approximately 25000MW, in summer, to as low as 8000MW in peak winter. The decline in demand results in a sharp increase in the capacity payments, which enhances the electricity cost significantly for the consumers. At the same time the demand of the gas in winter goes up to 6.5 billion cubic feet and the in absence of enough indigenous gas, the government fills the demand supply gap by resorting to gas load management plan or import of costly LNG. The Bijli Sahulat Package reflects the government’s efforts to align electricity demand more evenly across seasons, promote cost-effective industrial growth, and provide financial relief to households. The introduction of Bijli Sahulat Package aims to increase the electricity demand during winter season, to curtail capacity payments, on one hand and on the other to reduce the consumption of gas, to save foreign exchange on the import of costly LNG, to avoid gas loadshedding.