By SKM
March 16, 2026
ISLAMABAD: Pakistan’s textile industry has sharply criticised persistent inefficiencies in the power sector, warning that structural bottlenecks and policy distortions are keeping electricity tariffs for industry far above regionally competitive levels despite recent government relief measures.
In a letter addressed to Sardar Awais Ahmad Khan Leghari, Federal Minister for Power, Kamran Arshad, chairman of the All Pakistan Textile Mills Association (APTMA), said the government’s recent decision to eliminate cross-subsidies from industrial tariffs was a welcome step but warned that the impact of the relief is already being eroded by rising adjustments and systemic inefficiencies.
Industrial electricity tariffs remain around 12 cents per kilowatt-hour, well above the 7–8 cents per kWh range considered competitive in the region, the association said. In comparison, competing manufacturing economies such as China provide electricity to industry at rates as low as 4 cents per kWh, giving their exporters a significant cost advantage.
According to APTMA, while the government recently reduced industrial tariffs by Rs4.04 per kWh, almost half of the benefit has already been offset by a Rs1.78 per kWh fuel cost adjustment and a Rs0.35 per kWh quarterly tariff adjustment.
The textile body argued that the core problem is not the cost of electricity generation itself but structural inefficiencies and distorted incentives across Pakistan’s power sector that continue to inflate consumer tariffs.
A key issue highlighted in the letter is the long-standing south-to-north transmission constraint, which restricts the flow of cheaper electricity generated in southern regions to demand centres in the north. Because of these transmission limitations, the system frequently relies on more expensive fuels such as RLNG, residual furnace oil (RFO) and diesel-based generation, pushing up the overall fuel cost component of electricity tariffs.
Citing information from the National Electric Power Regulatory Authority (NEPRA), APTMA pointed to the delayed completion of the 500 kV Lahore North Grid Station, which was originally scheduled to be operational by September 2021 but was only commissioned in December 2025.
Even after the project’s completion, the Matiari–Lahore HVDC Transmission Line remains significantly underutilised due to insufficient transmission capacity between key generation hubs such as Port Qasim and Matiari and between Thar and Matiari, the association said.
As a result, low-cost power plants remain underused despite consumers already paying billions of rupees in capacity payments.
APTMA said coal-fired plants in Thar, including Thar Coal Block-1, Thar Energy and ThalNova, operated at capacity factors of 60–70 percent in FY2025, compared to nearly 90 percent under optimal conditions. Wind power plants have also seen utilisation rates stuck at 20–30 percent, largely because transmission bottlenecks prevent their electricity from being dispatched.
The association warned that consumers are effectively being forced to bear the cost of inefficiencies within the power system.
“Consumers are paying for generation infrastructure through tariffs and circular debt surcharges, yet they are again being made to pay for its underutilisation through higher fuel costs,” APTMA said, adding that the situation reflects a persistent lack of accountability in the sector.
The textile body urged the government to ensure that the financial burden arising from transmission delays and system inefficiencies is borne by the responsible institutions, including the national grid operator, rather than being passed on to industry.
APTMA warned that without internationally competitive electricity tariffs, **Pakistan’s industrial growth and export expansion will remain severely constrained.
“Affordable and competitive electricity is the single most critical requirement for Pakistan’s industrial growth,” the association said, calling for urgent structural reforms to bring power costs in line with regional competitors.
Ends
