2 min read
Pakistan’s industrial sector is under severe pressure as soaring electricity costs force businesses to shoulder the government’s failures in the power sector, experts warn. Gohar Ejaz, former caretaker federal minister and chairman of the Economic Policy and Business Development (EPBD) think tank, highlighted the crisis during the NEPRA tariff rebasing hearing.
Gohar Ejaz said the power sector will need an enormous Rs 629 billion in subsidies this year. The government, however, has allocated only Rs 248 billion. The remaining gap, he explained, is unfairly covered through cross-subsidization, leaving industrial consumers to carry the heaviest load.
“This is essentially a hidden tax on industry,” Gohar Ejaz said. “The government is not paying its share, so businesses are forced to subsidise other categories of consumers. This makes Pakistani industry uncompetitive, both regionally and internationally.”
He added that if industrial electricity tariffs reflected the actual cost of service, without cross-subsidies, prices for industrial users would be around 9 US cents per unit even with current inefficiencies and systemic losses.
Gohar Ejaz warned that high energy costs are stifling industrial activity, forcing plant closures, reducing exports, and threatening jobs nationwide. He asked policymakers to consider the consequences if the industry collapses.
“If factories shut down, who will employ millions of industrial workers? Who will generate the foreign exchange needed to sustain the economy?” he questioned.
Cross-subsidy policies, he argued, are economically damaging. They weaken Pakistan’s manufacturing base and accelerate de-industrialisation. Gohar Ejaz urged immediate reforms, including full budget funding of power sector subsidies, ending cross-subsidies that penalise productive sectors, reducing inefficiencies in distribution companies, and aligning industrial electricity rates with regional competitors. “Industry can no longer bear the power sector’s burden,” he added.
Without urgent reforms, analysts warn, Pakistan risks further industrial decline, lower exports, and growing unemployment, which could stall the country’s economic recovery.
