Winter demand initiative: Not more than Rs2.5/unit saving even with 40pc rise in consumption

LAHORE: The industrial consumers have apprehended that the maximum saving would not exceed Rs2.5 per unit even with a 30-40 percent increase in consumption under the Winter Demand Initiative (WDI) which is insufficient to cover even the financial costs of ramping up production to consume more electricity.

Therefore, they have stressed that the initiative risks would fail primary objective of stimulating electricity demand during winter months without revising the incremental rate to Rs10.94 per unit.

Talking to this scribe, they proposed that the government should actively engage with industries and commercial entities before finalizing such initiatives. They further emphasized that the government policymakers lack the commercial and industrial vision to foresee the cause-and-effect relationships of such packages.

While acknowledging the WDI as a potentially beneficial program, they have feared that it would be non-viable under the current proposed tariff of Rs26.07 per unit.

With the tariff set at Rs 26.07, they said, incremental consumption over the previous years’ reference is unlikely during the three-month winter period. All existing costs in the prevalent tariff already incorporate projected consumption. Incremental use costs are mainly attributable to fuel cost and variable O&M, estimated at Rs10.94 per unit. A tariff of Rs10.94 for incremental units is proposed as the feasible rate for the WDI to achieve its goals, they stressed.

According to one energy expert, since all other cost factors in the prevalent tariff have already been incorporated, keeping in view the projected consumption; the only difference in the incremental use would be fuel cost and variable O&M. This energy cost is Rs10.94, which should be the WDI incremental tariff instead of 26.07, he stressed.

It may be noted that the government has received a lacklustre response from the industry to the recently announced ‘winter package’. From large-scale industrial entities to small manufacturers, no one seems interested in purchasing incremental electricity at a tariff of Rs26.07 per KWh. Most of them are considering it too little, too late.

So much so, the recent visit of Federal Energy Minister Awais Leghari to the businessmen apex body also proved a futile exercise, as majority of the participants rejected the package outright, forcing the minister to listen to the industry concerns before finalizing it.

Copyright Business Recorder, 2024