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Pakistan’s business community has strongly rejected the government’s new incremental electricity consumption package, calling it anti-industry, overly complicated, and economically unsustainable.
During a public hearing organized by the National Electric Power Regulatory Authority (NEPRA) on Tuesday, industrial associations including APTMA, FPCCI, and KCCI warned that the proposed power tariff structure could cripple production, trigger factory closures, and jeopardize export competitiveness if implemented without major revisions.
Govt’s New Power Tariff Plan: What It Proposes
The Power Division’s new proposal seeks to offer electricity to industrial and agricultural users at Rs. 22.98 per unit for incremental consumption. The scheme aims to encourage higher energy use during off-peak hours and stabilize grid load amid rising solar adoption.
According to the Power Division, the policy is “subsidy-neutral”, designed to reduce idle capacity payments and stimulate GDP growth. Officials argue that the plan could potentially add Rs. 1.16 trillion to the national GDP and help offset Rs. 1.7 trillion in capacity payments to inactive power plants.
“This package is based on lessons learned from earlier schemes and is essential for grid stability,” said Additional Secretary Power Division Mehfooz Bhatti during the NEPRA hearing.
However, industrial leaders across the country disagree, claiming that the proposed structure ignores ground realities and would push electricity costs beyond affordability for factories already struggling with inflation, energy crises, and weak export demand.
Business Leaders Unite Against the Power Package
The strongest criticism came from Pakistan’s leading business associations, who labeled the package as “discriminatory” and “finalized without consultation.”
1. All Pakistan Textile Mills Association (APTMA)
APTMA’s representative, Syed Absar Ali, said the plan would exclude most textile exporters from any meaningful benefit.
“Nearly 60% of Pakistan’s exports come from the textile sector, yet this plan does nothing for us,” Ali argued. “The load factor conditions and lack of incentives for hybrid power users make the policy impractical.”
He added that the government should instead fix industrial tariffs at nine cents per kilowatt-hour and reduce the load factor requirement from 60% to 40%, ensuring inclusivity for all manufacturers.
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2. Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
FPCCI Vice President Rehan Jawed called the proposal “economically unrealistic.”
“None of the policymakers seem to understand the financial realities of factory operations,” he said. “Industrial policy should promote growth, not restrict it through bureaucratic complexity.”
3. Karachi Chamber of Commerce and Industry (KCCI)
KCCI’s Tanveer Barry warned that the high tariff would accelerate industrial closures and hurt exports, particularly from Karachi’s manufacturing hubs.
“High energy costs and cross-subsidies have already pushed many industries to the brink,” Barry noted. “If this package is approved as-is, we will see mass shutdowns.”
NEPRA Hearing Highlights – Clash Between Govt and Industry
The NEPRA public hearing, chaired by Chairman Waseem Mukhtar, turned into a heated debate between government officials and business representatives.
NEPRA’s technical member, Rafique Ahmad Shaikh, questioned why the Power Division did not consult stakeholders before finalizing the proposal.
“Wouldn’t it have been better to find a middle ground before seeking approval?” Shaikh asked during the session.
Industrialists pointed out that similar incremental consumption schemes in the past had failed due to unrealistic assumptions about energy use and poor implementation frameworks.
Core Industry Objections to the Power Package
Pakistan’s industrial community has listed several key objections to the proposed power package:
| Issue | Industry’s Concern |
|---|---|
| High Tariff (Rs. 22.98/unit) | Unaffordable for export-driven sectors; makes Pakistan regionally uncompetitive. |
| Load Factor Requirement (60%) | Excludes most medium-scale factories from eligibility. |
| Lack of Consultation | Finalized without dialogue with industry associations. |
| No Support for Hybrid or Solar Users | Penalizes companies already investing in clean energy. |
| Complex Billing Mechanism | Difficult for factories to predict incremental benefits. |
| Unclear Review Mechanism | No clarity if costs rise further due to capacity charges. |
APTMA and FPCCI both demanded that NEPRA suspend approval of the plan until a simplified, fairer framework is introduced.
Government’s Defense – ‘Essential for Grid Stability’
The Power Division defended the package as a reform measure, not a subsidy. Officials claim the plan would help improve grid reliability and discourage energy wastage.
“The policy aims to encourage industries to operate during off-peak hours and reduce dependence on captive generation,” said Mehfooz Bhatti, Additional Secretary of Power.
Officials revealed that approximately 1,300 megawatts of power demand had shifted off-grid due to the rapid growth of solar energy, while agricultural power usage has declined by 40–50%, creating severe imbalances in the grid.
They further argued that incremental consumption incentives could bring idle power plants back into operation, optimizing existing capacity without increasing subsidies.
NEPRA Raises Concerns About Transparency and Feasibility
NEPRA members were not fully convinced by the Power Division’s arguments. The authority questioned the plan’s lack of clarity on monitoring and absence of a review clause for future tariff adjustments.
“If fuel prices or capacity charges rise further, who will bear the cost? The plan must have a review mechanism,” said a NEPRA member.
The regulator also noted that no detailed cost-benefit analysis had been presented to justify the government’s claims of GDP growth or industrial benefits.
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Impact on Textile and Export Sectors
Pakistan’s textile and manufacturing sectors, which together contribute more than 60% of exports and 40% of industrial employment, are among the hardest hit by high electricity tariffs.
Energy costs already account for up to 35% of total production expenses in textile mills. With the new tariff exceeding Rs. 22.98 per unit, factories fear their cost of production will rise beyond regional competitors like Bangladesh and India, where power rates average Rs. 14–16 per unit.
“This policy could wipe out Pakistan’s export competitiveness,” warned APTMA’s Absar Ali. “Factories in Faisalabad, Karachi, and Multan are already operating below capacity due to unaffordable energy.”
Industry Demands for an Alternative Tariff Plan
Business associations proposed several alternative measures during the NEPRA hearing:
- Fixed industrial tariff of nine cents per kilowatt-hour for all manufacturing units.
- Reduction in load factor threshold from 60% to 40%.
- Inclusion of hybrid and captive power users within the incremental framework.
- One-window billing mechanism to simplify calculations.
- Periodic review clause to adjust rates based on global fuel trends.
These recommendations aim to create a regionally competitive, export-oriented tariff model that supports industrial revival rather than constraining it.
Economic Implications of Rising Energy Costs
Pakistan’s manufacturing sector is already under strain due to high inflation, rupee depreciation, and energy crises.
Analysts warn that another tariff hike could lead to:
- Factory closures in key industrial cities.
- Job losses across textile, steel, and chemical sectors.
- Reduced export earnings, widening the trade deficit.
- Decline in foreign direct investment (FDI) due to uncompetitive production costs.
“If energy prices continue to rise, even surviving factories will cut shifts or relocate operations abroad,” said economic analyst Dr. Shahid Jameel.
The Broader Energy Crisis Context
Pakistan’s energy sector has long suffered from capacity payments, circular debt, and poor demand forecasting.
The country currently pays over Rs. 1.7 trillion annually in capacity charges to power plants that remain idle due to reduced consumption and oversupply.
The government’s new incremental package seeks to encourage higher consumption and stabilize grid usage, but critics say this approach shifts the burden to industry instead of addressing system inefficiencies.
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NEPRA Expected to Revisit Proposal
After listening to both sides, NEPRA announced that it would review the proposal in detail before granting final approval.
The authority is likely to request revisions to the package, considering the strong backlash from industrial stakeholders.
Sources indicate that NEPRA may push for a simplified tariff model, possibly introducing a hybrid formula that balances grid needs with industrial affordability.
Business Community’s Final Warning
Pakistan’s major trade bodies have jointly warned that if the incremental power package is approved without major revisions, it will result in widespread factory closures, mass unemployment, and further contraction of exports.
“This policy punishes the very sectors that keep Pakistan’s economy alive,” said Rehan Jawed of FPCCI. “The government must choose between short-term fiscal optics and long-term industrial survival.”
APTMA and KCCI urged the government to engage in meaningful consultation and craft an energy policy that ensures affordable, predictable, and regionally competitive tariffs.
Conclusion About Industry rejects government power package:
The industrial backlash against the government’s new power package underscores a deep divide between policy design and ground realities.
While the government argues that higher tariffs will improve grid stability, the business community insists that affordability and competitiveness must come first.
Unless the plan is revised, Pakistan risks further industrial decline — at a time when boosting exports and sustaining jobs is crucial to economic recovery.
As NEPRA reconsiders its decision, the outcome will determine whether Pakistan’s power policy supports growth and production or adds another chapter to the country’s energy and economic struggles.
Frequently Asked Questions (FAQs)
1. What is the new power package introduced by the government?
It is an incremental electricity consumption plan offering industrial and agricultural users electricity at Rs. 22.98 per unit, intended to boost off-peak demand and grid stability.
2. Why is the business community rejecting this package?
Businesses say the package is too expensive, discriminatory, and finalized without consultation, making it impossible for industries to remain competitive.
3. What tariff rate does industry recommend instead?
Industry associations propose a fixed rate of nine cents per kilowatt-hour with a lower load factor requirement of 40%.
4. Which organizations opposed the plan?
The All Pakistan Textile Mills Association (APTMA), Federation of Pakistan Chambers of Commerce and Industry (FPCCI), and Karachi Chamber of Commerce and Industry (KCCI) were the leading voices against it.
5. What are the expected consequences if the plan is approved?
Factory closures, job losses, reduced exports, and rising production costs are likely outcomes.
