The New "Two-Part" Industrial Tariff: How Pakistan Plans to Tax Factories for Going Solar — And What to Do About It

• By Best Solar Company PK
• 17 Jul, 2026
• Solar Policy
• 9 min read

For three years, Pakistani industry has voted with its feet. Faced with grid tariffs that climbed past Rs40–50 per unit at peak, thousands of factories in Faisalabad, Sialkot, Karachi and Gujranwala poured money into rooftop and ground-mounted solar. It worked. Grid demand from industry has been falling steadily — and that is precisely the problem the government is now trying to solve.

In June 2026, the Power Division confirmed it had shared a **"two-part industrial tariff"** plan with the International Monetary Fund. The design is blunt: reward factories that keep buying heavily from the national grid, and financially penalise those that have reduced their grid draw — most of whom did so by going solar or building captive plants.

Why the government is doing this

Pakistan's power sector is drowning in **fixed costs**. Capacity payments to independent power producers (IPPs) — money owed whether or not a single unit is consumed — run into hundreds of billions of rupees a year. When a factory shifts to solar and stops buying grid electricity, those fixed costs don't disappear. They get spread across the shrinking pool of remaining grid consumers, pushing their tariffs even higher. That, in turn, pushes *more* users to leave. Regulators call it the **utility death spiral**.

The IMF has repeatedly flagged this. The two-part tariff is the government's answer: recover fixed costs through a **capacity/fixed charge** that you pay regardless of how many units you actually consume, and lower the **energy (per-unit) charge** for those who consume more.

How the two-part tariff actually works

Under the proposal shared with the IMF and reported by *Dawn*, *The Express Tribune* and ProPakistani:

• **The bill splits into two parts.** A **fixed (capacity) charge**, and a separate **energy charge** per unit consumed. Crucially, the fixed charge is proposed to be levied **per kW of sanctioned load**, not a flat per-connection fee — so the bigger your sanctioned connection, the bigger your fixed bill, even if your meter barely moves.
• **High grid users win on the per-unit rate.** Industries drawing **more than 50% of their sanctioned load** from the grid could see energy tariffs cut by roughly **1–2 US cents/kWh**, bringing effective rates to about **7–8 US cents (~Rs20–23/unit)**. At even higher utilisation, officials suggested rates could fall toward **6 US cents (~Rs17/unit)** — genuinely competitive by regional standards.
• **Low grid users lose.** A factory that has slashed its grid consumption to, say, 20% of sanctioned load after installing solar still pays the full fixed charge on its whole sanctioned load — but no longer earns the cheaper per-unit rate, because it isn't consuming enough units to qualify.

The government insists the scheme is **optional** — the Power Division stated "there will be no compulsion for any consumer to switch." It is under consultation and could be implemented within a couple of months of the June announcement. But "optional" is doing a lot of work here: if the alternative default tariff is deliberately set higher, the choice becomes theoretical.

This lands on top of the net-billing cut

The two-part tariff does not exist in isolation. It stacks on top of another blow to solar economics delivered in late 2025.

Under **NEPRA's Prosumer Regulations 2025** (notified 16 December 2025), net metering was replaced by **net billing** for new solar consumers:

• The buyback rate for exported units was slashed to around **Rs8.13/unit** (linked to the National Average Energy Purchase Price), down from the roughly **Rs27/unit** existing consumers enjoyed — a cut of more than two-thirds.
• System size limits were tightened from **1.5x to 1.0x of sanctioned load**, and contract terms shortened from **7 years to 5 years**.
• **Existing net-metering agreements were grandfathered** at the older rates until their contracts expire.

Read together, the policy direction is unmistakable. Exporting surplus solar to the grid is now barely worth it, and *not* consuming from the grid may soon cost you through fixed charges. The economics of the old "oversize the system and sell everything back" model are dead. For background on that shift, see our guide on Pakistan's move from net metering to net billing.

What this means for your factory's numbers

Consider a mid-size unit with a **1 MW (1,000 kW) sanctioned load**. If the fixed charge lands at even a modest few hundred rupees per kW per month, that is a **six-to-seven-figure monthly bill before a single unit is consumed**. A business that went 70% solar to escape Rs45/unit grid power now faces a fixed cost it cannot solar away — because it is tied to sanctioned load, not consumption.

That changes the optimal strategy. The winners under this regime are not the factories that eliminate the grid, but the ones that use solar and grid **intelligently together**.

How businesses should respond

**1. Recalculate your solar payback with the new rules — before you sign anything.** Any proposal built on old net-metering export rates (Rs27/unit) or that ignores a possible fixed charge on sanctioned load is out of date. Model your savings on **self-consumption** — offsetting Rs20–45/unit you would otherwise buy — not on export income at Rs8/unit.

**2. Right-size the system for daytime self-use, not export.** With buyback at ~Rs8 and capacity capped at 1.0x load, the sweet spot is a system that your factory **consumes in real time** during working hours. Oversizing to sell surplus no longer pays.

**3. Review your sanctioned load — this is now the key lever.** Because the fixed charge is proposed per kW of *sanctioned* load, a connection sized for peak demand you no longer draw is a liability. If solar has permanently reduced your grid requirement, applying to **reduce sanctioned load** could cut your fixed exposure. Do this carefully — you must retain enough headroom for cloudy days, night shifts and future growth.

**4. Add battery storage to the equation.** Storage lets you shift solar generation into evening/night operations and shave expensive peak-hour grid units, improving self-consumption without leaning on export credits. Falling lithium prices make this far more viable than it was two years ago.

**5. Run both tariff scenarios.** Since the two-part tariff is "optional," model your annual cost under **both** the existing single-part tariff and the proposed two-part structure. For some high-utilisation units, the cheaper 6–8 cent energy rate may actually be worth opting in.

**6. Engage through your association.** The scheme is still under consultation. APTMA and chambers of commerce are actively contesting the design. Fixed charges tied to sanctioned load, thresholds and grandfathering are all still negotiable — collective feedback matters.

Frequently Asked Questions

**Is the two-part industrial tariff already in force?** Not yet. As of mid-2026 it was shared with the IMF and placed under consultation, with the Power Division indicating possible implementation within roughly two months of the June 2026 announcement. Confirm the current NEPRA-notified status before making decisions, as details may change.

**Does this mean solar is no longer worth it for my factory?** No. Solar still eliminates the most expensive grid units you buy during daytime — often Rs30–45/unit. The reform changes the *optimal design* (self-consumption over export) and adds a fixed-cost consideration, but daytime self-generation remains strongly positive for most industrial users.

**Will existing solar and net-metering agreements be affected?** Existing net-metering contracts were grandfathered under the Prosumer Regulations 2025 until they expire. The two-part *tariff* is a separate grid-charge reform; how it treats current installations will depend on the final notified rules, so verify with your DISCO.

**Is the two-part tariff compulsory?** The Power Division stated there is no compulsion to switch. However, whether it becomes the effective default depends on how the alternative single-part tariff is priced — watch the final NEPRA determination closely.

**What is the single most important step to take now?** Have your solar and load profile re-analysed under the new rules — net billing at ~Rs8 export and a possible per-kW fixed charge — and review whether your sanctioned load still matches your actual grid needs.

Best Solar Company PK designs and installs reliable solar systems in Rawalpindi, Islamabad, Lahore, Multan, Taunsa Sharif and Karachi. Contact us for a free survey and the best advice for your home or business.