The government’s decision to include net metering electricity consumers in the Winter Demand Initiative is a calculated retreat. Initially excluded, these users were deemed less dependent on the grid. But pressure from industrial stakeholders forced a U-turn. Oddly, the government sidestepped taking responsibility, instead shifting the decision to NEPRA. For a matter so firmly within the government’s remit, this deflection is curious.
The logic for inclusion is clear. Net metering users account for nearly half of industrial electricity consumers. Excluding them would have drastically reduced the scheme’s effectiveness. Designed to boost electricity consumption during the winter lull, the package offers a marginal rate of Rs26 per kWh for incremental use above benchmark levels. The goal is to nudge consumers towards greater electricity usage while cutting reliance on gas and utilizing surplus grid capacity. For industries, this makes sense.
Domestic users, on the other hand, are unlikely to move the needle. Winters naturally bring lower electricity demand for households, with limited heating needs and high tariff rates discouraging discretionary use. Even a 25 percent increase over last year’s usage would be optimistic, at best. Industrial consumers, particularly energy-intensive sectors, hold the key to making this package work.
The inclusion of net metering industries was the logical step, but execution will not be straightforward. Large-scale manufacturing has been in a slump for years, and demand from the textile sector—a traditional heavy user of energy—has fallen significantly. Textile firms, predictably, are pushing for a deeper cut in the marginal rate, demanding Rs17 per kWh. Such requests ignore fiscal reality. The system is already groaning under the weight of circular debt and high fixed costs.
If anything, industries should use this package to show they can deliver. The cost of financing, a significant pain point in recent years, has eased considerably. Calls for additional subsidies seem tone-deaf in this context. The power sector’s financial health cannot withstand further concessions to energy-intensive users unwilling to adapt to changing market conditions.
Despite its flaws, the package’s expansion to net metering users is a step in the right direction. Solar-powered industries have grown rapidly and play an important role in stabilizing demand. Their inclusion adds scope for incremental growth, though it remains to be seen whether they will make a significant dent in overall consumption patterns. This belated decision highlights the need for a more cohesive energy policy.
Policymakers must resist the temptation to treat this package as a cure-all. Governance issues and operational inefficiencies remain the sector’s Achilles’ heel. Transmission losses, outdated infrastructure, and poor enforcement of efficiency standards weigh heavily on system costs. Boosting winter demand, while useful, will not resolve these systemic flaws. The sector’s financial strain is structural, not seasonal.
For now, the Winter Demand Initiative is a useful experiment. It buys some time and leverages existing capacity during a traditionally low-demand period. But the long-term health of Pakistan’s power sector depends on a broader reform agenda. Stakeholders, from policymakers to industries, must look beyond short-term relief and address the root causes of inefficiency. The clock is ticking.
Comments