ISLAMABAD: The All Pakistan Textile Mills Association (Aptma) has warned the prime minister that the ongoing electricity tariff rebasing exercise, if not corrected, risks inflicting severe and lasting damage on industrial competitiveness, exports and grid stability.
In a formal letter written on January 6 to Dr Syed Tauqir Hussain Shah, adviser to the prime minister, Chairperson of Aptma Kamran Arshad cautioned that current power tariffs for industry are already among the highest in the region and are pushing businesses toward shutdowns, relocation or grid defection.
Aptma informed the prime minister that industrial electricity tariffs presently carry a cross-subsidy burden of Rs131 billion, rising to Rs160 billion when K-Electric (KE) is included. This burden adds approximately Rs6.5 per kWh to B3 industrial tariffs, pushing Pakistan’s industrial power cost to nearly 12.5 US cents per kWh. By contrast, competing export economies — including China, India, Bangladesh and Vietnam — offer electricity to industry in the range of 5 to 9 cents per kWh, creating a structural cost disadvantage for Pakistani exports.
The association warned that unless the industrial cross-subsidy is removed, Pakistan’s export sector will remain uncompetitive, regardless of exchange rate adjustments or incentive packages. It stressed that removing this burden is the only viable policy option to reduce industrial tariffs to around 9 cents per kWh, a level necessary to sustain exports, attract new investment, and protect employment. Aptma further cautioned that continued overpricing of industrial power is forcing firms to divert capital away from productive investment into expensive self-generation and alternative energy solutions, weakening long-term industrial growth.
Aptma also highlighted that high industrial tariffs are suppressing electricity demand, worsening under-utilisation of existing generation capacity and inflating capacity payments per unit. The association warned that this dynamic is creating a vicious cycle of falling demand and rising tariffs, whereas removing the cross-subsidy could trigger a virtuous cycle of higher consumption, improved capacity utilisation and lower system-wide costs.
Referring to the government’s commitment under the IMF programme, Aptma reminded the prime minister that electricity subsidies are to be rationalized and shifted to the Benazir Income Support Programme (BISP) by FY27. It warned that delaying this transition, particularly for industrial consumers, will prolong distortions in the power sector and undermine economic recovery, urging immediate action rather than gradual adjustment.
In addition to the cross-subsidy issue, Aptma issued a strong warning regarding the current time-of-use (ToU) tariff regime, stating that its indiscriminate application to industries operating 24/7 on three shifts is economically irrational. The association stressed that such industries provide stable baseload demand to the grid and were never the intended targets of ToU pricing, which internationally is used only to manage discretionary consumption.
Aptma warned that punitive peak-hour tariffs are forcing continuous-process industries to either curtail production during peak hours or shut down operations entirely, resulting in lost output and exports. Alternatively, firms are being compelled to invest in costly alternative energy systems simply to survive, representing a net economic loss and inefficient allocation of capital at the national level.
The association further cautioned that the existing ToU framework has become outdated, as actual system peak demand no longer coincides with officially notified peak hours. It warned that the excessive peak-off-peak differential is accelerating the shift toward imported solar and battery storage solutions, threatening grid demand and increasing the risk of stranded generation capacity.
Addressing concerns raised by the Ministry of Power that lowering peak tariffs could raise system costs, Aptma clarified to the prime minister that such concerns are no longer valid under the incremental tariff regime. Any consumption above the reference level is already charged at Rs22.98 per kWh, regardless of timing, meaning that consumer behaviour is unaffected by whether tariffs are ToU-based or a single weighted-average tariff.
Aptma warned that failure to adopt a single weighted-average tariff for large industrial consumers will continue to incentivize grid defection, distort gas levy calculations for captive power plants, and destabilize electricity demand. The association urged the Prime Minister to intervene directly to ensure that tariff rebasing supports, rather than undermines, industrial growth and grid sustainability.
Aptma said that without immediate correction, through removal of industrial cross-subsidies and rationalization of the ToU regime, Pakistan risks accelerating de-industrialization, export contraction, and further deterioration of the power sector’s financial health.
