BQATI says concerned at cross-subsidy on industrial electricity tariffs

KARACHI: Shakil Ashfaq, President of the Bin Qasim Association of Trade and Industry (BQATI), has expressed grave concern over the continued imposition of cross-subsidy on industrial electricity tariffs, stating that this policy is directly undermining industrial productivity, discouraging investment, and eroding Pakistan’s export competitiveness.

He noted that industrial electricity tariffs currently carry a cross-subsidy ranging from Rs 4.5 to Rs 7 per unit, adding nearly 20 percent to power costs that are already uncompetitive by regional standards. He stated that industry is no longer in a position to absorb this burden, and many industrial units are operating under extreme financial stress.

Shakil Ashfaq pointed out that despite having a broad base of small industrial units, Pakistan has failed to build and sustain large-scale industry—particularly in energy-intensive sectors operating in the Bin Qasim industrial zone. He emphasised that distorted and punitive electricity pricing discourages expansion, modernization, and long-term planning, forcing industries to remain small, underutilized, or unviable.

He further highlighted that the number of protected consumers has increased substantially in recent years. However, instead of supporting these consumers through fiscal measures, the government has chosen to recover the cost directly from industry. He termed this approach unfair and economically damaging, noting that industry has been treated as a convenient adjustment mechanism even while it faces declining demand, rising input costs, and persistent uncertainty.

Commenting on the Incremental Consumption Package, Shakil said the scheme suffers from serious design flaws and structural anomalies. He pointed out that industries which maintained higher electricity consumption during the reference period December 2023 to November 2024 have been declared ineligible, despite being consistent contributors to system demand.

He also questioned the load factors applied in the package, stating that they have no technical or regulatory basis for an incentive framework. He said these factors appear to be borrowed from theft and detection billing methodologies, which are meant for enforcement and not for incentivizing demand growth, adding that the package has therefore lost its intended purpose.

“This design will not increase overall electricity demand,” he warned. “It will only shift demand within the industrial sector, create artificial distortions, and reward behavior that has no connection to real economic productivity.”

Shakil Ashfaq also challenged repeated claims by the Power Ministry regarding improvements in the performance of the power sector. He stated that if the sector has genuinely improved, a competitive industrial tariff of around 9 cents per unit should already be achievable. The continued absence of such a tariff, he said, raises serious concerns about policy direction and priorities.

He urged the government to immediately remove cross-subsidy from industrial electricity tariffs, correct the anomalies in the Incremental Consumption Package, and align energy policy with the national objective of industrial growth rather than short-term revenue recovery.

He concluded by stating that Pakistan cannot achieve export expansion, employment generation, or economic stability while systematically weakening its productive sector. Unless these structural distortions are removed, industrial confidence will continue to erode and the economy will remain trapped in stagnation.

Copyright Business Recorder, 2026