ISLAMABAD: The cold chain industry has slammed the National Electric Power Regulatory Authority (Nepra) for its blanket classification of all cold storage facilities under the “commercial” tariff category.
On December 23, 2024, Nepra, in its decision had directed Discos and K-Electric to consider all cold storages under commercial tariff category
According to the industry, the move, attributed to Nepra Chairman’s directive, is being criticised for its adverse impact on food security, investment prospects, and the modernisation of the country’s cold chain infrastructure.
The cold chain industry, critical for reducing food wastage and enhancing export potential, is now at risk of losing both domestic and foreign investment due to the policy. Industry stakeholders argue that the decision runs contrary to the government’s vision of strengthening food security and attracting investments in modern logistics and warehousing.
The Ministry of National Food Security had initiated the “Cold Chain Industry” program to establish industrial-scale cold storage facilities aimed at reducing post-harvest losses and meeting export standards. However, Nepra’s reclassification has created significant financial challenges for existing operators, the industry stakeholders maintained. These challenges are compounded by the increased cost of operations under the commercial tariff, making it difficult for businesses to sustain operations, let alone to plan for expansion.
The industry is of the view that foreign investors and global financial institutions, including the International Finance Corporation (IFC) and the World Bank, had expressed interest in supporting Pakistan’s cold chain projects. These projects were envisioned to reduce food wastage, improve export readiness, and bolster food security. However, stakeholders warn that Nepra’s policy undermines investor confidence and signals a lack of commitment to creating conducive business environment.
“The decision to categorise specialised industrial cold storage facilities as commercial entities contradicts the Prime Minister’s recent declaration recognising warehousing and logistics as an industry,” said industry stakeholders. This declaration was part of broader efforts to promote job creation, foster economic growth, and strengthen Pakistan’s export capabilities.
Cold storage, a vital component of the logistics sector, plays a critical role in preserving perishable goods and supporting export-oriented industries. Collapsing these industrial functions into a commercial tariff framework disregards their specialised nature and hinders Pakistan’s efforts to enhance its competitive edge, including the growth of its “blue economy,” said sources.
The industry also fears that imposing commercial tariffs on industrial-scale cold storage operations could lead to cost-cutting measures that compromise safety, quality, and regulatory compliance. Stakeholders warn that this shift from global best practices could increase food wastage and hurt Pakistan’s export ambitions.
Stakeholders have urged the government, relevant ministries, and Nepra to reconsider the sweeping classification and adopt a more nuanced approach, adding that a tailored policy that recognises industrial cold storage as distinct from commercial facilities is essential to foster growth in this sector,” said, a representative of the industry.
Revisiting the tariff structure could ensure alignment with the government’s broader economic and food security goals, attract foreign direct investment, and modernize Pakistan’s cold chain infrastructure. Without such measures, stakeholders warn that Pakistan risks losing both local and international investment in an industry crucial for its economic and food security interests.
Member (Technical ) Rafique Ahmad Shaikh in his dissenting note said that based on the research and comments of Consumers Affairs Division (CAD) and interveners, he dissents with the majority decision to classify all cold storages under a single commercial tariff for the reasons: (i) cold storages, which are involved in large scale processing, value addition and long-term preservation of goods, especially in sectors like agriculture, food processing and pharmaceuticals shall be placed under the Industrial Tariff; (ii) cold storage, which handle short-term storage for retail and distribution without significant value addition, should be given under commercial tariff; and (iii) blanket commercial classification of all types of cold storages (large & small) would unfairly increase costs for this
particular industrial sector, which is critical to Pakistan’s economy.
Member (Law) Amina Ahmed in her dissenting note also disagreed with the Authority’s decision to categorise the cold storage facilities under commercial tariff category, adding that cold storage facilities are classified as industrial or manufacturing operations rather than commercial/ retail. Many US states, such as California, New York, and Texas, classify cold storage as an industrial activity, charging these facilities industrial electricity and utility rates. The cold storage facilities in India are generally charged industrial electricity tariffs by state-level power distribution companies. However, practices vary across EU member states, but countries like the Netherlands and Poland apply industrial tariffs to cold storage based on their energy intensive nature and industrial zoning.
Chairman Nepra Waseem Mukhtar in his note stated that since Member (Tariff) was “on leave” on the day of decision and Member (Technical) and Member (Law) dissented to the Decision of the Authority; therefore, being a presiding person and having powers of casting vote in case of a tie in terms of section 5 (4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997), I cast my vote in favour of the decision of the Authority reflected at Paras 10, 11 and 12.
Copyright Business Recorder, 2025