By SKM
January 19, 2026
LAHORE: Pakistan’s textile industry has issued a stark warning to the government, saying punitive electricity tariffs and an entrenched cross-subsidy regime are pushing the country’s largest export sector toward collapse.
The All Pakistan Textile Mills Association (APTMA) on Sunday demanded the immediate removal of cross-subsidies from power tariffs, arguing that industry is being forced to finance social subsidies at the cost of exports, jobs, and investment.
Addressing a well-attended press conference in Lahore, APTMA Chairman Kamran Arshad said the government had failed to pass on the benefit of a recent reduction in the base electricity tariff determined by the National Electric Power Regulatory Authority (NEPRA). Instead, he said, industrial tariffs were kept unchanged to offset subsidies extended to domestic consumers.
“Costly electricity has crippled industrial activity,” Kamran said, revealing that around 150 large textile units have shut down over the past two years, rendering thousands of workers jobless. “This is not just an industry issue — it is an economic emergency.”
The warning comes as textile exports, which make up over 60 percent of Pakistan’s total exports, continue to slide. APTMA said exports have declined for five consecutive months, including a sharp 8 percent drop in December 2025, underscoring the growing impact of uncompetitive energy pricing.
Kamran pointed out that industrial electricity tariffs in Pakistan exceed 12 cents per kilowatt-hour, while competing regional economies offer power at 5 to 7.5 cents per kWh. “This gap has destroyed our competitiveness. Cross-subsidy is a hidden tax on exports — and you cannot export a tax,” he said.
According to regulatory filings, the power sector will require Rs 629 billion in subsidies in 2026, while the federal budget has allocated only Rs 248 billion. The remaining Rs 381 billion, Kamran said, is being recovered through cross-subsidisation, with industrial consumers bearing the largest burden.
APTMA North Chairman Asad Shafi echoed the concerns, strongly opposing what he termed a covert levy on industry. He demanded that subsidies for lifeline and protected consumers be funded transparently through federal or provincial budgets rather than being shifted onto manufacturers.
“Loading social welfare costs onto industry is strangling manufacturing, exports, and employment at a time when the economy can least afford it,” Asad said.
He also criticised the existing Time-of-Use (ToU) tariff structure, calling it outdated and economically irrational. According to him, peak pricing hours no longer reflect actual system demand, inflating industrial costs and disrupting load planning. He urged the government to abolish peak-hour tariffs for industry and replace them with a single, flat electricity rate.
Asad warned that manufacturers are already under severe pressure from high interest rates, heavy taxation, and global economic uncertainty. “Inflated power tariffs have tipped many businesses into financial distress, forcing shutdowns and scale-backs across the sector,” he said.
Other leading textile exporters present at the briefing called for urgent tariff rationalisation, demanding electricity rates be capped at no more than 7.5 cents per kWh. They said competitive energy pricing would revive exports, attract new investment, improve capacity utilisation, and create millions of jobs.
Industry leaders also argued that a cost-of-service-based tariff regime would boost electricity demand, improve generation utilisation, and lower per-unit costs across the power sector — delivering efficiency gains for the entire economy. Ends
