ISLAMABAD/LAHORE: The All Pakistan Textile Mills Association (APTMA) has warned that the continued failure to ensure regionally competitive energy pricing is pushing Pakistan’s economy towards a dangerous breaking point.
Despite firm government commitments to bring down electricity tariffs for industry to 9 cents per kilowatt-hour (kWh) by April 2025, the opposite has occurred. Industrial electricity rates have instead climbed to 11.6 cents/kWh in August, up from 10.4 cents in May. That figure is already well above the 5-9 cents/kWh being charged in key competitor countries like India, Bangladesh, Vietnam and China — where manufacturing is booming under more business-friendly energy pricing.
APTMA argues that these rising costs are undermining economic recovery, deterring investment and accelerating deindustrialisation, particularly in the export sector. In a press statement issued from Lahore, the association called the current pricing model “economically irrational” and “fiscally unsustainable”, warning that without urgent reforms, Pakistan’s ability to remain competitive in global markets is in jeopardy.
A key part of the crisis stems from the government’s decision to impose a gas levy on captive power, energy generated by industries for their own use. This measure, aimed at raising Rs105 billion, has instead backfired. Industrial gas demand collapsed, and many companies were forced to shut down high-efficiency Combined Heat and Power (CHP) plants. Those that attempted to switch to the national grid faced frequent outages, voltage fluctuations, and exorbitant costs to upgrade connections.
APTMA noted that some industrial units don’t even have reliable access to grid electricity and rely solely on gas to operate. These businesses, already struggling with global economic pressures, have now been further weakened by local policy missteps. “Millions of rupees are being lost every day due to production stoppages and equipment damage from unstable electricity supply,” the association said.
Meanwhile, the broader energy sector is also under stress. Pakistan’s gas circular debt has crossed Rs. 2.6 trillion, and OGDC, the state-owned oil and gas company, has reported projected losses of $378 million due to falling production. In a major setback to future energy security, 22 of the 23 oil and gas exploration blocks offered in the most recent licensing round failed to attract any bids, highlighting growing investor scepticism.
Industry leaders are also critical of the government’s continued use of surcharges and cross-subsidies, particularly the Rs3.23/kWh circular debt surcharge, which was supposed to be temporary but has now been extended for another six years. According to APTMA, these measures have turned paying industrial consumers into the financial backstop of a broken system. While the actual cost of delivering electricity to industry is 8-9 cents/kWh, manufacturers are being charged much more to subsidise other user categories.
The problem is compounded by the rise of rooftop solar. As more consumers — especially middle and upper-income households — shift to solar power, their grid consumption falls. Yet many of them still fall into subsidized slabs based on monthly usage, not total demand. As a result, the cost burden shifts further onto the shrinking pool of industrial and commercial users, who are now being asked to cover the cost of power they don’t consume and subsidies they don’t benefit from.
APTMA warns that this is creating a “utility death spiral” — where rising tariffs drive more consumers off the grid, further increasing costs for those who remain. With the cost of solar and battery storage falling rapidly, this exodus is expected to accelerate. The association stressed that energy policy must be reoriented toward supporting production and exports, rather than maintaining consumption subsidies that are no longer economically viable.
In the realm of policy design, APTMA also criticised the government’s implementation of the Competitive Trading Bilateral Contract Market (CTBCM) — intended to liberalise power supply. They argue that with wheeling charges set at Rs12.55/kWh and a cap of just 800MW, the market is effectively inaccessible to most industries. Even those who attempt to access bilateral power face pricing based on marginal cost, making it unfeasible for hybrid use with grid electricity.
Exporters, already weighed down by double taxation, inconsistent refunds, and harassment by tax authorities, are now being priced out of international markets. Countries like India and Bangladesh, when faced with external trade pressures, responded by reducing tax burdens and lowering energy costs. Pakistan, APTMA says, has done the opposite — raising costs, reducing predictability, and creating a hostile environment for businesses trying to compete abroad.
Despite the grim outlook, APTMA insists there is still a path forward. The association is urging the government to take immediate action: reduce electricity tariffs for industry to regional levels, eliminate punitive surcharges, provide fair access to gas at RLNG cost, and end discriminatory pricing practices that penalize exporters. These measures, they argue, would not only revive industrial activity but also increase exports, employment, and tax revenue.
“The textile industry alone has the capacity to export $25 billion annually,” the statement concluded. “But that potential will remain untapped unless the government enables industry to compete fairly on energy costs.”
In APTMA’s view, supporting the industrial sector is not about special treatment — it’s about ensuring Pakistan’s economic survival. Without competitive energy pricing, the country risks losing its place in global supply chains, watching investment dry up, and facing long-term stagnation just as others in the region surge ahead.
