ISLAMABAD: Pakistan Association of Large Steel Producers (PALSP) has requested minister for Power to extend Winter Incentive Package to all industrial consumers to boost industrial production.
In a letter to Power Minister, Muhammad Ali, PALSP noted that an unprecedented increase in power cost has sky-rocketed cost of steel production, making large scale industry unviable to operate and putting millions of jobs at stake.
PALSP claimed that steel industry is overburdened compared to other sectors because one of the major inputs in production of steel is electricity/power which now accounts for almost 60% of the total cost of production.
In order to ease the situation, PALSP has proposed Winter Incentive Package, designed to stimulate industrial electricity consumption to bolster steel sector as well as promote economic growth of the country. This proposal is aligned with the broader objectives of the Ministry of Energy, which aims to promote efficient resource utilization and competitive regional tariffs.
PALSP submitted following proposals to the minister with respect to Winter Incentive Package especially during low demand months: (i) inclusion of all industrial users irrespective of their net metering status.
This step will ensure effective and consistent offsetting of capacity charges for power plants; (ii) recognizing the substantial drop in winter demand across thecountry, sometimes as low as 10,000 MW, and propose incentivizing industrial users to increase their consumption by offering discounts without incremental consumption requirements; (iii) if benchmarking units are a must then it can be calculated at 25% of the sanctioned load consumption for the entire month for all industries.
This approach would ensure that all industries can benefit from this initiative, regardless of their historical consumption, which may have been influenced by economic conditions; (iv) offering discounted electricity at the cost price of Rs 22.82 per unit, as opposed to the regular National Sale Price of Rs 29.72, without including PHL, surcharge for the winter months.
This pricing adjustment will render the package more appealing to industrial consumers; and(v) heating from gas to electricity be promoted.
This transition can significantly reduce gas demand and contribute to the overall success of the package.
“We believe incorporating PALSP recommendations into the Winter Incentive Package will not only provide support to the sector but also align with the Ministry of Energy’s objectives of facilitating an accelerated energy transition and fostering economic growth,” CEO/ Secretary General of the Association in his letter.
Copyright Business Recorder, 2023