Industries reject PM’s power package

ISLAMABAD: The country’s industrial sector has outrightly rejected the Prime Minister’s three-year electricity incremental package of Rs22.98/kWh and demanded a reduction in the base tariff to support the struggling industry.

Industry representatives argue that the incremental package is inherently discriminatory, as it results in wide tariff disparities among factories, with some enjoying rates as low as Rs 30 per unit while others continue to pay up to Rs 38 per unit. This imbalance, they say, would lead to significant distortions in production costs and competitiveness.

“In this scenario, the cost of yarn produced by one unit would be around Rs 250 per pound, while another unit’s cost would be Rs 300 per pound. The first unit would sell yarn at Rs 250, forcing the second into bankruptcy,” said Aamir Sheikh, an industrialist from the textile sector. “This would amount to government-sanctioned destruction of industry. The proper solution is to reduce the overall tariff rather than create such distortions.”

He added that the only period when Pakistan’s exports grew substantially was when the government had offered a fixed tariff of 9 cents per unit to the industry. “That is the only workable solution. The tariff has already increased from Rs 30 per unit in July to Rs 35 in October, and is expected to reach Rs 38 by December due to upcoming QTA adjustments. Any benefit from the incremental package has already been neutralised and by January, average industrial tariffs will be about 20 percent higher than they were in July,” Sheikh noted.

Industry, agri sector: Power tariff fixed at Rs22.98/kWh under PM’s package

Industrialists have also criticised the conditions attached to the package, calling them unrealistic and counterproductive. “The load factor for B3 textile consumers has been set at 60 percent, which is abnormally high compared to 50 percent in the previous package. During that time, the industry had protested, and the Nepra Chairman admitted during the hearing that a 50 percent load factor was too high and should be reduced in future packages,” said Sheikh.

“Instead, it has now been increased to 60 percent. For the package to succeed, the load factor should be reduced to 33 percent — or at most 40 percent — for all B3 industries, similar to what has been done for flour mills. Due to a severe local and international slowdown, most textile units are currently running only one shift, corresponding to about a 30 percent load factor, which further drops to 25 percent for units using solar power. Even if another shift is added, the load factor would barely reach 50 percent. No industry can run three shifts when peak-hour electricity costs remain prohibitively high,” he added.

Most chambers and industrial associations are submitting their comments to the NEPRA on the proposed incremental package ahead of the public hearing scheduled for November 11, 2025.

Another industrialist pointed out that the increase in incremental units during previous packages was largely because captive power users had temporarily shifted from gas to the national grid. “This time, the situation is different — captive users have already moved to the grid. To achieve real incremental consumption, the load factor for all B3 consumers should be set between 25 and 40 percent.

Also, any closed unit restarting operations under this package will hardly be able to achieve even 40 percent capacity utilization initially,” he said.

Industry sources also questioned the government’s decision to use an outdated reference period — from December 2023 to November 2024 — instead of the most recent data (December 2024 to November 2025). “Why is the government relying on old reference values when more updated figures are available? This will create further distortions, as much has changed over the past two years,” an industrialist remarked.

Aamir Sheikh further argued that treating captive power users as “new units” — with a 60 percent load factor based on sanctioned load — effectively excludes the entire export-oriented textile sector, which accounts for nearly 60 percent of Pakistan’s total exports, from the incremental package. “Unless the load factor for B3 consumers is reduced to between 25 and 40 percent, Pakistan’s exports, employment, and revenue collection will be severely impacted,” he warned.

Copyright Business Recorder, 2025