Industrial Sector Rejects Government’s Power Tariff Plan, Warns of Factory Closures

Pakistan’s industrial sector has strongly opposed the government’s newly proposed electricity tariff package, warning that its implementation in the current form could lead to widespread factory closures and threaten the country’s export-driven economy. The concerns were raised during a public hearing organized by the national electricity regulator, where industry representatives detailed the potential negative impact of the plan.

Proposed Tariff Plan

The government’s package proposes a rate of Rs. 22.98 per unit for incremental electricity usage by industrial and agricultural consumers. Officials have described the plan as subsidy-neutral and aimed at stabilizing the national power grid. The government argues that the package could help reduce the financial burden of idle power plants and potentially contribute significantly to national economic growth.

However, industry leaders contend that the high load-factor threshold of 60% would exclude many manufacturing units, particularly smaller factories and those using alternative energy sources such as solar or hybrid systems.

Industry Concerns and Demands

Representatives from key industrial bodies, including textile associations and chambers of commerce, criticized the plan as complex, unfair, and developed without proper consultation. The textile sector, which is a major contributor to Pakistan’s exports, highlighted that high tariffs and strict eligibility requirements could jeopardize production and result in factory shutdowns.

Industry representatives suggested several adjustments to make the package viable:

• Fixing the electricity tariff at nine cents per kWh for industrial users.

• Reducing the load-factor requirement from 60% to 40%.

• Offering incentives for industries using captive or hybrid energy systems, including solar power.

Shifts in Energy Consumption

The industrial sector pointed out significant changes in electricity consumption patterns. Approximately 1,300 MW of industrial demand has shifted off-grid through solar and other alternative sources, while agricultural consumption has declined by 40–50%. Peak demand has moved to nighttime hours, creating challenges for grid management and overall reliability.

Industry leaders argue that without addressing these structural changes, the proposed tariff package would place an unfair burden on grid-connected industries and fail to achieve its intended benefits.

Government’s Perspective

The power authorities maintain that the tariff plan is essential to ensure grid stability and reduce inefficiencies in the electricity sector. Officials assert that the package encourages efficient energy use and addresses financial obligations linked to idle power generation capacity.

Despite these assurances, industrial representatives stress that the government must engage in meaningful consultation before finalizing the plan to prevent potential disruptions in production and job losses.

Economic Implications

The proposed tariff package has sparked debate over the balance between fiscal stability and industrial competitiveness. Analysts caution that Pakistan’s export-oriented industries are highly sensitive to energy costs, and sudden increases in tariffs could hinder manufacturing activity, reduce exports, and lead to unemployment.

As discussions continue, industrial groups are calling for revised tariffs, lower thresholds, and supportive policies that protect jobs, maintain exports, and ensure reliable power supply. The final outcome of these deliberations is expected to have a direct impact on Pakistan’s industrial growth and overall economic stability.

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