ISLAMABAD: Former commerce minister and Patron-in-Chief of the All Pakistan Textile Mills Association (APTMA) Dr Gohar Ejaz has warned the government in unequivocal terms that Pakistan’s industrial sector is at a breaking point, as soaring electricity and gas prices continue to erode the competitiveness of Pakistani products in international markets.
He said Pakistan is rapidly losing export orders to regional competitors where electricity tariffs average around 9 US cents per unit, compared to 12 cents or higher for Pakistan’s industrial sector. “No exporter can survive such a structural disadvantage. Energy costs alone are now determining winners and losers in global markets — and Pakistan is losing,” he said.
Meanwhile, according to well-placed sources, the Special Investment Facilitation Council (SIFC) is scheduled to hold a meeting with business leaders today (Thursday) to hear concerns related to high taxation, reportedly as much as 60 per cent, poor governance and elevated energy costs.
Drawing attention to the recent Nepra tariff rebasing hearing, Dr Ejaz stated on his X (formerly Twitter) account that it was disclosed during the hearing that the power sector would require a total subsidy of Rs629 billion in the coming fiscal year. However, the government has allocated only Rs248 billion, leaving a significant shortfall.
He said this gap is being filled through cross-subsidisation, which disproportionately burdens industrial consumers through higher electricity tariffs. According to Dr Ejaz, if industries were not compelled to subsidise other consumer categories, industrial electricity tariffs would be close to 9 US cents per unit even today, despite persistent inefficiencies, governance failures, and mismanagement in the power sector.
“This burden rightly belongs to the state,” he argued, adding that the current approach is economically unsustainable. “Industry is already struggling with high energy costs, shrinking margins, and declining competitiveness. When industrial units shut down or scale back, the consequences ripple across the economy — millions of jobs are lost, exports decline, and fiscal pressures intensify.”
Dr Ejaz stressed that subsidies are a government responsibility, not an industrial tax. While subsidies are a legitimate policy tool, he said, they must be transparently funded by the government rather than quietly extracted from productive sectors. “Making industry uncompetitive by forcing it to cross-subsidise other consumers is not social policy; it is a clear policy failure,” he maintained.
Responding to Dr Ejaz’s statements, the Power Division said that since March 2024, when the current government assumed office, the industrial cross-subsidy burden has been reduced from Rs225 billion (Rs8.9 per unit) to Rs102 billion (Rs4.02 per unit) — a reduction of Rs123 billion.
It added that the industrial tariff (including taxes) has declined from Rs62.99 per unit in March 2024 to Rs46.31 per unit by December 2025, while the national average tariff has been reduced from Rs53.04 to Rs42.27 per unit.
According to the Power Division, these improvements stem from decisive government actions, including the termination of inefficient power plants and the successful renegotiation of contracts with independent power producers (IPPs). Negotiations with remaining IPPs are ongoing and are expected to yield further tariff relief.
The Power Division also highlighted the introduction of a surplus power package, under which industrial and agricultural consumers can avail additional electricity at a reduced rate of Rs22.98 per unit for three years, helping lower average tariffs.
In addition, a circular debt settlement plan has been launched to eliminate outstanding liabilities within five to six years. Once cleared, the debt servicing surcharge of Rs3.23 per unit will be removed, providing further relief to consumers.
The Power Division further noted that the rapid rise of off-grid and hybrid solar consumers has significantly distorted subsidy requirements. The number of protected consumers has doubled from 11 million in 2021 to 22 million, placing severe strain on fiscal resources.
This shift has increased the cross-subsidy burden borne by industrial, commercial, bulk, and higher-consuming domestic users. It added that the cross-subsidy paid by commercial and high-end domestic consumers is now higher than that paid by industry, although the cumulative effect continues to undermine overall industrial competitiveness.
