By SKM
January 15, 2026
ISLAMABAD: Warning of an impending industrial crisis, Chairman of the All Pakistan Textile Mills Association (APTMA) Kamran Ashad on Thursday said Pakistan’s electricity pricing structure—laden with cross-subsidies and inflated tariffs—was crippling exports and pushing the country’s industrial base toward irreversible decline.
Talking to media persons, Ashad said textile exports, the backbone of Pakistan’s economy, have posted year-on-year declines for five consecutive months, with a steep 8 percent fall in December 2025 alone. He said the decline directly reflects the impact of uncompetitive power tariffs on export-oriented industries.
Ashad noted that electricity tariffs for large-scale industrial consumers in Pakistan are among the highest in the region. While competitor economies offer industrial power at rates ranging between 5 and 9 US cents per kilowatt-hour, Pakistani industries are paying an effective tariff of around 13 cents per unit.
“This cost gap is destroying Pakistan’s export competitiveness. The cross-subsidy embedded in power tariffs is effectively a hidden tax on industry—one that exporters cannot pass on to international markets,” he said.
He said industrial consumers are being forced to shoulder the burden of subsidies meant for other consumer categories under the existing cross-subsidisation regime. According to regulatory filings, the power sector will require subsidies worth Rs. 629 billion in 2026, against a federal allocation of only Rs. 248 billion. The remaining Rs. 381 billion shortfall, he said, is being recovered primarily from industrial and commercial consumers.
For 2026, the National Electric Power Regulatory Authority (NEPRA) has determined cost-reflective tariffs of Rs. 35 per kWh during peak hours and Rs. 20.63 per kWh during off-peak hours for B-3 industrial consumers. However, the federal government has notified higher tariffs of Rs. 36.68 per kWh for peak hours and Rs. 28.24 per kWh for off-peak hours.
“This results in an additional cross-subsidy burden of Rs. 7.61 per unit during off-peak hours and Rs. 1.68 per unit during peak hours, which is unsustainable for export-oriented industries,” Ashad said.
Replying to a question, he said business leaders from various industries, chambers of commerce, and trade bodies recently held meetings with senior officials of the Special Investment Facilitation Council (SIFC), where high energy costs and other structural issues facing the business community were raised. He hinted that the textile industry and the Power Division are now broadly aligned on the need to end cross-subsidies and bring industrial power tariffs down to around 9 cents per unit.
Ashad stressed that subsidies for lifeline and protected consumers must be funded transparently through the federal budget rather than being passed on to industry. Continuing to burden manufacturers, he warned, would further damage exports, employment, and investment at a time of fragile economic recovery.
He also criticised the existing Time-of-Use (ToU) tariff regime, calling it outdated and misaligned with actual demand patterns. Peak hours, he said, no longer correspond to true system load, making the pricing framework inefficient and counterproductive.
“Excessive peak-hour tariffs disrupt industrial planning, inflate production costs, and discourage grid consumption even when surplus generation capacity is available,” he said, adding that the policy is accelerating the shift of industries toward solar and battery storage, further eroding grid demand.
The textile sector, Ashad said, is already struggling with high interest rates, heavy taxation, and global economic uncertainty. Escalating power tariffs have made many manufacturing units financially unviable, leading to reduced output, scaled-back operations, and, in some cases, complete shutdowns.
Calling for urgent reforms, APTMA demanded the immediate removal of cross-subsidy elements from industrial electricity tariffs and alignment of power rates with regionally competitive levels of no more than 9 cents per kWh. Such measures, Ashad said, would revive export competitiveness, attract investment, improve capacity utilisation, and create jobs.
He concluded by reiterating that social obligations must remain the responsibility of the government and should not be financed through industrial tariffs. “Without restoring rationality in power pricing, Pakistan risks further deindustrialisation and export decline,” he warned. Ends
