ISLAMABAD: The All Pakistan Textile Mills Association (Aptma) has sounded a strong alarm over the ongoing electricity tariff rebasing exercise, warning Prime Minister Shehbaz Sharif that failure to correct current policies could cause lasting damage to industrial competitiveness, exports, and grid stability.
In a formal letter dated January 6 to the prime minister’s adviser Dr Syed Tauqir Hussain Shah, Aptma Chairman Kamran Arshad said Pakistan’s industrial electricity tariffs are already among the highest in the region, forcing businesses toward shutdowns, relocation, or complete defection from the national grid.
Aptma pointed out that industrial tariffs currently carry a cross-subsidy burden of Rs131 billion, rising to Rs160bn when K-Electric is included. This adds around Rs6.5 per kWh to B3 industrial tariffs, pushing the effective power cost for Pakistani industry to nearly 12.5 US cents per kWh. In contrast, competing export economies such as China, India, Bangladesh, and Vietnam offer electricity to industry at 5–9 cents per kWh, placing Pakistan at a severe structural disadvantage.
The association warned that unless the industrial cross-subsidy is removed, Pakistan’s exports will remain uncompetitive regardless of exchange rate movements or incentive packages. It stressed that eliminating this burden is the only way to bring industrial power tariffs down to around 9 cents per kWh, a level critical to sustaining exports, attracting new investment, and protecting jobs.
Aptma also cautioned that excessive power tariffs are pushing industries to divert capital from productive expansion into expensive self-generation and alternative energy solutions, weakening long-term industrial growth.
Highlighting broader system impacts, Aptma said high tariffs are suppressing electricity demand, leading to under-utilisation of generation capacity and higher per-unit capacity payments. This, it warned, is creating a vicious cycle of falling demand and rising tariffs, whereas removing cross-subsidies could initiate a virtuous cycle of higher consumption, improved capacity utilisation, and lower system-wide costs.
Referring to Pakistan’s commitments under the IMF programme, Aptma reminded the government that electricity subsidies are to be rationalised and shifted to the Benazir Income Support Programme (BISP) by FY27. Delaying this transition—particularly for industrial consumers—would prolong distortions in the power sector and undermine economic recovery, it said.
The association also issued a strong warning over the time-of-use (ToU) tariff regime, calling its blanket application to 24/7, three-shift industries economically irrational. Aptma said such industries provide stable baseload demand and were never the intended targets of ToU pricing, which internationally is used to manage discretionary consumption.
According to Aptma, punitive peak-hour tariffs are forcing continuous-process industries to curtail production or shut down during peak hours, resulting in lost output and exports. Alternatively, firms are being pushed into costly alternative energy investments merely to survive—an inefficient allocation of national capital.
Aptma further warned that the ToU framework has become outdated, as actual system peak demand no longer aligns with officially notified peak hours. The large peak-off-peak differential, it said, is accelerating the shift toward imported solar and battery storage, threatening grid demand and increasing the risk of stranded generation capacity.
Addressing concerns from the Ministry of Power that lowering peak tariffs could raise system costs, Aptma argued that under the incremental tariff regime, such fears are misplaced. Any consumption above the reference level is already charged at Rs22.98 per kWh, regardless of timing, making ToU pricing ineffective in influencing consumer behaviour.
The association urged the prime minister to intervene directly and adopt a single weighted-average tariff for large industrial consumers, warning that failure to do so would accelerate grid defection, distort gas levy calculations for captive power plants, and further destabilise electricity demand.
Aptma cautioned that without immediate corrective measures—particularly the removal of industrial cross-subsidies and rationalisation of the ToU regime—Pakistan risks rapid de-industrialisation, shrinking exports, and further deterioration of the power sector’s financial health.
